Forging a New Paradigm of High-Quality Development for Yuegong’s Future Through Endeavor — New Year Message from Chen Bailiang, Chairman of the Board of Yuegong Group, 2024

Over the course of one year, the Binhai Manufacturing Center has cultivated a fresh image and a new look by deepening its implementation of 6S management. From the initial foundation work to the acceptance of the main structural framework, construction of the multi‑purpose building has progressed steadily, with curtain wall and interior finishing works also under intensive development. As the largest technological upgrade investment in Yuegong’s 30‑year history, the Binhai Manufacturing Center serves as the cornerstone for ensuring the company’s high‑quality growth going forward.

The celebration marking the 30th anniversary of Yuegong and the commissioning of the Binhai Manufacturing Center received widespread acclaim and achieved results that exceeded expectations. This event saw broad participation from the Group, particularly from employees in the Zhejiang region, who meticulously planned, organized in an orderly manner, and supported one another—demonstrating a corporate culture characterized by attention to detail, seamless collaboration, and proactive initiative. It stands as a remarkable collective achievement of the Yuegong team. Similarly, the 20th-anniversary celebrations of the Shandong Company were both vibrant and effective, strengthening team cohesion, enhancing the company’s public image, and boosting the visibility of the Yuegong brand.

Over the course of this year, Zhejiang Company’s general contracting qualifications played a pivotal role. In early August, we successfully secured the Binhai Talent‑Related Housing Project through a joint venture with a central state‑owned enterprise, with a contract value of RMB 530 million—setting a new record for the highest single‑project contract amount in Yuegong’s history and also marking the company’s highest annual contract value to date. For the full year 2023, our cumulative contracted value increased by 65.19% year over year, with general contracting accounting for 55% of the total—surpassing steel‑structure business for the first time and fundamentally reshaping Yuegong’s traditional focus on steel structures. This milestone represents a decisive step forward in our strategic transformation toward engineering general contracting.

The construction and commissioning of the new coastal base have further expanded Yuegong’s asset base, ensuring a stable source of funding. Once the project is completed, accepted, and the relevant property rights are obtained, the existing guaranteed loans can be gradually converted into asset‑backed loans by 2024, thereby fully mitigating the risks associated with those guarantees—truly a cause for celebration! Zhejiang Company has achieved notable results in receivables collection and settlement; through legal measures, we have resolved challenges related to commercial acceptance payments and outstanding receivables on several projects. Meanwhile, the Group’s leadership and the heads of individual subsidiaries have personally stepped in, providing full support to address settlement and collection issues for major projects. As a result, the company’s total year‑end collections increased by 16.33% year over year, effectively easing its liquidity pressures.

Looking back on the past year, as we celebrate our achievements, we must remain humble, build on our strengths, and continue to write new chapters of success. However, in 2023, our work also revealed a number of shortcomings: for instance, the planning and design of the new Binhai base contained numerous deficiencies; the manufacturing center has yet to reach its planned production capacity on schedule; and the construction of the multi‑purpose building has progressed slowly. Moreover, the evolving marketing landscape has brought mixed results: while our general contracting business has grown significantly, our green‑building segment has run into difficulties, and our steel‑structure business has entered a downturn. Furthermore, both of our core subsidiaries have experienced a decline in revenue from steel‑structure and traditional processing operations. In addition, resolving the challenge of outstanding receivables remains a long and arduous task. These issues and emerging trends call for us to respond proactively, rationally, and with determination in 2024.

The chimes of the New Year have sounded the prelude to a fresh start. 2024 marks the year when Yuegong’s new base will be fully completed and poised for takeoff, while also presenting a pivotal moment as the company confronts multiple challenges and breaks through entrenched obstacles. In an era of profound global transformation, market pressures compel us: innovation is the sole path to high‑quality development, our destiny, and, above all, our opportunity. To that end, I am setting forth three new imperatives for the year ahead: a new vision, new priorities, and new initiatives.

I. A New Vision : Within ten years, we will establish ourselves as an industry benchmark; in another twenty years, we will build a factory of the future—what we call a “Lighthouse Factory.” Starting now, we must set new, ambitious, and world‑class goals, cultivate a holistic mindset of innovation, and adopt bold, cutting‑edge approaches. Grounded in self‑reliance and resilience, we will carry forward the “Four Thousand” entrepreneurial spirit, forging through hard work a new paradigm for high‑quality, sustainable development in the years ahead.

II. New Priorities In 2024, we will focus on three key priorities: first, cost reduction and efficiency improvement; second, business expansion; and third, team building.

III. New Measures ： First, implement refined management to reduce costs and boost efficiency. We must study the management philosophy of entrepreneur Cao Dewang, implement lean management, and systematically reduce product costs across the board, striving to reach the industry’s leading standards. I instruct all company general managers to dedicate three months to focusing on establishing and refining workshop quota‑based management systems, fully rolling out tonnage‑based wage assessment and distribution, thereby fully motivating employees’ initiative and creativity. Our goal is to progressively achieve the industry’s lowest manufacturing cost target and thoroughly address the longstanding issue of the “paying by the bell” system that has plagued our workshops for thirty years. (It is recommended to read Cao Dewang’s autobiography, “Heart Like Bodhi.”) Second, we will expand our business and mitigate the risks associated with accounts receivable. On the basis of fully leveraging our general contracting qualifications, we must remain steadfast in consolidating and expanding our core steel‑structure business; unwaveringly pursue specialization, excellence, and strength in the steel‑structure sector; and resolutely aim to become a leading “small giant” in niche segments of the steel‑structure industry. In particular, we must devote significant effort to further developing green, environmentally friendly new‑infrastructure projects in the steel‑structure field—namely, green prefabricated buildings and bridges. At the same time, we will adopt a dual‑pronged approach to receivables management, ensuring that collections neither increase nor slow down, while rigorously managing milestone payments and final settlements for newly awarded projects. This will help prevent any rise in outstanding receivables and enable us to implement multiple targeted measures to tackle longstanding overdue accounts, swiftly reducing them and mitigating potential risks. Third, focus on team building. For an enterprise to achieve specialization, excellence, and strength, its leadership team must do the same. The Group must strengthen the training, education, and practical experience of leadership teams at all levels, while rigorously assessing their performance and integrity, ensuring that cadres can be promoted or demoted as appropriate and that employees are weeded out based on merit. We should prioritize the cultivation and deployment of young cadres, building our team into one that not only harbors lofty ideals but also remains grounded in reality—upholding high moral standards, brimming with passion and vitality, willing to shoulder responsibility, bold in innovation, highly competent and capable, and adept at tackling tough challenges. Let us always remember: when the team is strong, the enterprise is strong; when the leadership is capable, the employees are capable. Leaders at all levels must keep team building—and, above all, their own personal development—at the forefront of their minds: How can we enhance our own capabilities? How can we elevate our management practices? And how can we break new ground? We must keep pace with the times, be eager to learn, strive for continuous improvement, and work tirelessly, becoming pioneers of our era.

In 2024, we will inevitably encounter more formidable obstacles and face an array of unknown challenges. Yet I believe that the Yuangong team possesses the courage to rise to every difficulty, the confidence to look inward and make tough reforms, and the united strength to weather storms together. We are both capable and eager to do what is hard but right. Let us set our sights on our goals, join forces, and, through relentless effort, forge a new chapter in Yuangong’s future development—let’s make 2024 a year of success! Go for it, 2024!

Finally, as the Year of the Dragon Spring Festival approaches, we extend our heartfelt wishes to all members of the Yuegong family and to our friends who care about and support Yuegong: Happy Spring Festival, may your family be blessed with happiness, and may all your endeavors go smoothly!