Xiwang Special Steel Company Limited provided group earnings guidance for the year ended December 31, 2022. The board of directors of the company informed the shareholders of the Company and potential investors that, based on the unaudited management accounts of the Group for the period from January to December 2022, the Group is expected to record a net loss not exceeding RMB 1,400 million for the year ended 31 December 2022 as compared with a profit of approximately RMB 65 million for the year ended 31 December 2021. This is mainly because the costs of the major raw materials of the Group, such as coking coal, for the Year increased significantly when compared to the Previous Year, while the cost of iron ore remained high during the Year.

The average unit cost for the Group's ordinary steel and special steel products was approximately RMB 4,127 per tonne for the Year (Previous Year: approximately RMB 4,173 per tonne). The Group was not able to raise the selling price to the same extent despite such increase in cost of sales, in order to maintain its competitiveness. The Group experienced a sharp drop in the average selling price of the products plus a decrease in the sales volumes.

The average selling price of the ordinary and special steel products recorded a decrease of approximately 13%. The revenue of the Group decreased accordingly and squeezed the Group's profit margin. As a result, the Group is expected to record a gross loss margin of approximately 5.2% for the Year, compared to a gross profit margin of approximately 4.1% for the Previous Year.