CompanyCode:600346CompanyName:HengliPetrochemical

HengliPetrochemicalCo.,Ltd.

2024AnnualReport

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LettertoShareholders,PartnersandEmployeesDearshareholders,investors,andfriendswhocareaboutandsupportHengliPetrochemical:

Springsurgeswithvitality,andthefragranceoflocusttreesfillsthecity.OnthisradiantAprilday,wepresenttoyouHengliPetrochemical’s2024milestonesasatestamenttoourrelentlessdrive,extendingourdeepestgratitudeandsharingavisionforabrighterfuture.Lookingback,whetherweareimmersedinthegrandnarrativeoflonghistoryorfocusontheminutedetailsofindividualdestiny,itevokesadeepchill.Amidsttheundercurrentsofthechangingcentury,geopoliticalrivalriesgetlockedinstalemate.Theglobaleconomygrowsevermoreturbulentandunpredictable,furtherintensifyinguncertainties.Forenterprisesinparticular,withupstreamrawmaterialpricesremainingpersistentlyhighanddownstreammarketdemandstayingsluggish,HengliGrouphasforgedaheadagainstthedualpressuresofongoingglobaltradewarandfrequent"blackswan"events—wielding"innovation"asitsswordtobreakthroughbarriers,andshieldingitsgrowthwith"unwaveringcommitmenttocraftsmanship",anchoringthedirectionamidturbulentseaandemergingasafrontrunnerinthefiercecompetition.In2024,thecompanyachievedoperatingrevenueof236.2billionyuan,netprofitattributabletoshareholdersof7.044billionyuan,andnetcashflowfromoperatingactivitiesof22.733billionyuan.

Innovationbreaksboundaries,redefiningindustrystandards."Innovationisthelifebloodofenterprisevitality.Itbeginswithliberatingminds,shiftingperspectives,andbreakingfreefromconventionalthinking—proactivelyembracingtransformation."Henglihasengraved"creatingstandardsandsettingstandards"intoitsgenes.In2024,HengliandDalianUniversityofTechnologyhavejointlyestablishedthe"Hengli-DUTResearchInstitute"toseizethetechnologicalcommandingheightswiththedeepintegrationofindustry,academiaandresearch;HengliPetrochemicalChemical'shigh-densitypolyethylene(HDPE)pipe-gradematerial23050hasearnedPE100certification,fillingthegapinthedomestichigh-endpipemarket;HengliChemicalFiberhasachievedmass

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productionofultra-finefiber27D/144f,withafilamentof9,000metersweighingjust

0.18gandafilamentofasinglespool(7.14kg)stretchingfromEarthtoMoon.Henglideliverskilometer-scalevaluethroughmillimeter-scaleprecision.Eachbreakthroughembodiesitssteadfastcommitmentto"Refinement,Meticulousness,andPerfection".

Intelligent&greensynergyforgessustainablecompetitiveness.Intelligenceandgreeningarethewingsofacompany'slongevity.KanghuiNewMaterialshasbeenrecognizedasthe"NationalGreenFactory"and"LiaoningProvinceManufacturingChampionEnterprise"foritsoutstandingperformanceinsustainableandintelligentdevelopment;JiangsuKanghuiwonthetitleof"JiangsuProvinceIntelligentManufacturingWorkshop"withitsBOPETintelligentworkshop,whileHengkeAdvancedMaterials'"IntelligentSpinningCraftsman"wasdesignatedasaprovinciallaborbenchmark,turningintelligentmanufacturingfromanabstractconceptintotangibleproductivity.HengliChemicalFiberhasbeenhonoredasYangtzeRiverDeltaGreenDevelopmentLeader.Weoptimizeeverydropofwaterandeverykilowatt-hourtoengineersustainablesolutions,whichbringsour'Green-to-Core'commitmenttolife.

Withaglobalvision,weareshapinganewindustrialbenchmarkforChina.AtHengli,werecognizethatonlyviaboundary-breakingthinkingandtransformativeapproachescanwesecureenduringleadership.Wehavebrokenthe"bottleneck"problemthroughlocalizedproductionofHDPEpipingmaterials,regaineddominanceinglobaltextilemarketsthroughmassproductionofultra-finefiber,andsetatransformationmodelfortheindustrywithintelligentandgreenmanufacturingpractices.TheseaccomplishmentsstandasHengli'sfirmresponsetonationalstrategicimperativesandasolemnaccountabilitytothetrustofshareholders.

Ourfoundingmissionstandsunshakableasbedrock,asweembarkonaresolutejourneythroughalltrials.Duringcorporatedevelopment,weatheringstormsistheenduringnorm,navigatingtempestsdefinesourrelentlessposture,anddefyingsquallsembodiesourunwaveringmindset.ReflectingonHengliPetrochemical'sgrowthtrajectory,wehavebeentemperedthroughtrials,fortifiedthroughadversities,innovatedthroughexpansion,andultimatelyrisenasanindustryleaderthroughsustainedbreakthroughs.Weremainanchoredinmanufacturingandrootedincorecompetencies,withnationalresponsibilityengravedinourethosandfusedintoourcorporategenes.Weare

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convincedthatonlybyaligningourpurestaspirationswiththenation'spulse,andsynchronizingourstrideswiththeepoch'srhythm,canweforgeacentennialfoundation,craftingmagnificentchaptersworthyofbothhistoryandfuture.Asthelastvestigesofwinterrecede,springrainsheraldrenewedvitality.HereinDalian,ourstrategicheartland,favorablecurrentsconvergeunderclearskies.Withpropitiouswindsfillingoursails,thehourforrelentlessendeavorisuponus.Soundingtheclarioncallofthe"Three-YearDecisiveVictoryCampaign",weforgeaheadwithironcladresolveandinnovativedynamism,infusingtransformativeindustrieswithunyieldingmomentumwhileshoulderingthemantleofdomesticindustrialascendancy.

Hengliiswillingtostandshoulder-to-shoulderwithshareholders,throughrelentlessoperationaldisciplinethatsustainsindustrialexcellence,bychannelingstrategicaccumulationintobreakthroughinnovations,advancingtowardafuturemarkedbymorecompetitiveresilienceandsustainabledevelopment.

Chairman:范红卫

April2025

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ImportantTipsI.Thecompany'sboardofdirectors,boardofsupervisors,directors,supervisors,andseniormanagersguaranteethatthecontentoftheAnnualreportistrue,accurate,andcomplete,andthattherearenofalserecords,misleadingstatements,ormajoromissions,andassumeindividualandjointlegalresponsibilities.II.Alldirectorsofthecompanyattendedtheboardmeeting.III.ZhonghuiCertifiedPublicAccountants(SpecialGeneralPartnership)issuedastandardunqualifiedauditreportforthecompany.IV.FanHongwei,thepersoninchargeofthecompany,LiuXuefen,thepersoninchargeof

accountingwork,ZhengMinxia,thepersoninchargeoftheaccountingdepartment(accountingsupervisor),declarethattheyguaranteetheauthenticity,accuracyandcompletenessofthefinancialreportintheannualreport.V.Profitdistributionplanforthereportingperiodapprovedbytheboardofdirectorsorplanfor

capitalizationofpublicreservefundsThecompany'sprofitdistributionplanfor2024isasfollows:basedonthetotalsharecapitalontheequitydistributionregistrationdate,acashdividendof0.45yuanpershare(includingtax)willbedistributedtoallshareholders.Thisprofitdistributionplanhasbeendeliberatedandapprovedatthetwenty-sixthmeetingoftheninthboardofdirectorsandtheseventeenthmeetingoftheninthboardofsupervisorsofthecompany,andneedstobesubmittedtothecompany's2024annualgeneralmeetingofshareholdersforconsideration.VI.DisclaimerofForward-LookingStatements√适用□不适用

Forward-lookingdescriptionssuchasfutureplansanddevelopmentstrategiesinvolvedinthisreportdonotconstitutethecompany'sactualcommitmenttoinvestors.Investorsarerequestedtomaintainsufficientriskawarenessandunderstandthedifferencesbetweenplans,forecastsandcommitments.VII.Whetherthereisanynon-operationaloccupationoffundsbycontrollingshareholdersandother

relatedpartiesNo

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VIII.Whetherthereisanyexternalguaranteeprovidedinviolationoftheprescribeddecision-making

proceduresNoIX.Whethermorethanhalfofthedirectorscannotguaranteetheauthenticity,accuracyandcompletenessoftheannualreportdisclosedbythecompanyNoX.SignificantRiskWarningDuringthereportingperiod,thecompanyhadnoparticularlysignificantrisksthatwouldhaveasubstantialimpactonproductionandoperation.XI.Others

√适用□不适用

ThisannualreportispreparedinChineseandEnglishrespectively.IfthereisanydiscrepancybetweenChineseandEnglish,theChineseversionshallprevail.

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Content

Chapter1Definitions ...... 7

Chapter2CompanyProfileandKeyFinancialIndicators ...... 11

Chapter3ManagementDiscussionandAnalysis ...... 19

Chapter4orporateGovernance ...... 57

Chapter5EnvironmentalandSocialResponsibility ...... 78

Chapter6ImportantEvents ...... 99

Chapter7ShareholdingChangesandShareholderInformation ...... 108

Chapter8InformationofPreferredShares ...... 119

Chapter9InformationofBonds ...... 120

Chapter10FinancialReports ...... 127

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Chapter1Definitions

InterpretationInthisreport,thetermslistedbelowaredefinedasfollows,unlessthecontextotherwiseimplies:

2024AnnualReportDefinitionsofFrequently-UsedTerms

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2024AnnualReportHengliInvestment

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2024AnnualReportMETHYLENEGLYCOL(MEGOREG)

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2024AnnualReportandhasgoodantistaticproperties.

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Chapter2CompanyProfileandKeyFinancialIndicators

I.CompanyInformation

2024AnnualReportChineseNameoftheCompany

II.Contactsandcontactinformation

III.Basicinformation

IV.Informationdisclosureandlocation

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V.CompanyStockProfile

reportisreadyforinspection

CompanyStockProfile

VI.Otherrelevantinformation

VII.Keyaccountingdataandfinancialindicatorsinthepastthreeyears(I)Keyaccountingdata

Unit:ten-thousand-yuanCurrency:RMB

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(II)KeyFinancialIndicators

Noteofthekeyaccountingdataandfinancialindicatorsofthecompanyinthepriorthreeyearsattheendofthereportingperiod

□适用√不适用VIII.Differencesinaccountingdataunderdomesticandoverseasaccountingstandards(I)DifferencesbetweennetprofitandnetassetsattributabletoshareholdersoflistedcompanyinfinancialreportsdisclosedinaccordancewithInternationalAccountingStandardsandChineseaccountingstandards

□适用√不适用(II)DifferencesbetweenNetprofitandnetassetsattributabletoshareholdersoflistedcompanyinfinancialreportsdisclosedinaccordancewithOverseasAccountingStandardsandChineseAccountingstandards

□适用√不适用(III)Noteondifferencesinaccountingstandardsbetweendomesticandoverseas:

□适用√不适用IX.Mainfinancialdatabyquarterin2024

Unit:ten-thousand-yuanCurrency:RMB

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(January-March)

Explanationofthedifferencebetweenquarterlydataanddisclosedperiodicreportdata

□适用√不适用X.Non-recurringgainsandlossitemsandamount

√适用□不适用

Unit:yuanCurrency:RMB

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effectivehedgingbusinessrelatedtotheCompany'snormalbusinessoperations,gainsandlossesonfairvaluechangesarisingfromnon-financialenterprisesholdingfinancialassetsandfinancialliabilities,aswellasgainsandlossesondisposaloffinancialassetsandfinancialliabilities

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subsidiariesfortheperiodfrombeginningoftheyeartodateofacquisitionbybusinesscombinationundercommoncontrol

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unfairtransactionprices

Ifthecompanyrecognizesitemsnotlistedinthe"ExplanatoryAnnouncementNo.1onInformationDisclosurebyCompaniesthatOfferSecuritiestothePublic-Non-recurringGainsorLosses"asnon-recurringgainsorlosseswithsignificantamounts,anddefinesthenon-recurringgainsorlosseslistedinthe"ExplanatoryAnnouncementNo.1onInformationDisclosurebyCompaniesthatOfferSecuritiestothePublic-Non-recurringGainsorLosses"asrecurringgainsorlosses,thereasonsshouldbeexplained.

□适用√不适用XI.Itemsmeasuredatfairvalue

√适用□不适用

Unit:ten-thousand-yuanCurrency:RMB

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XII.Others

□适用√不适用

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Chapter3ManagementDiscussionandAnalysis

I.DiscussionandAnalysisofBusinessPerformance

(I)MacroeconomicOverviewIn2024,theinternationalpoliticallandscapeunderwentprofoundtransformations,withescalatinggeopoliticalconflictsandarisingtrendofunilateralismandprotectionism.Globalindustrialandsupplychainsfacedrestructuringpressures,andthepaceofworldwideeconomicrecoveryslowedsignificantly.Againstthisbackdrop,China'seconomicdevelopmentencounteredincreasinglycomplexandsevereexternalchallenges,includingheightenedvolatilityininternationalmarkets,shrinkingexternaldemand,anddomesticstructuralcontradictionssuchasinsufficienteffectivedemand,overcapacityincertainindustries,andgrowingoperationalpressuresofenterprises.However,thesupportingconditionsandbasictrendsofmycountry'slong-termpositiveeconomicdevelopmenthavenotchanged,andthecharacteristicsofastableeconomicfoundation,manyadvantages,andgreatpotentialarestill.mycountryadherestothegeneraltoneofworkofseekingprogresswhilemaintainingstability,fully,accuratelyandcomprehensivelyimplementsthenewdevelopmentconcept,takessupply-sidestructuralreformasthemainline,andimplementsmorepreciseandeffectivemacroeconomiccontrolpolicies.

Nevertheless,thefundamentaldriversandlong-termpositivetrajectoryofChina'seconomyremainedunchanged,withitssolidfoundation,multipleadvantages,andvastpotentialstillprominent.Adheringtothegeneralprincipleofseekingprogresswhilemaintainingstability,Chinafully,accuratelyandcomprehensivelyimplementedthenewdevelopmentphilosophy,focusingonsupply-sidestructuralreformasthemaintaskandadoptingmoretargetedandeffectivemacroeconomicpolicies.Throughthecontinuedadvancementoftheinnovation-drivendevelopmentstrategy,theacceleratedconstructionofamodernindustrialsystem,andthefullunleashingofdomesticdemandpotential,avirtuouscycleofmutualreinforcementbetweenconsumptionandinvestmenthasbeenformed.Notably,underthestrongimpetusoftheCPCCentralCommittee'scomprehensiveincrementalpolicies,marketsentimentimprovedsignificantly,developmentmomentumstrengthenedsteadily,andthenationaleconomyachievedbotheffectivequalitativeenhancementandreasonablequantitativegrowth.

In2024,China'sGDPsurpassedthehistoricmilestoneof134.9trillionyuan,successfullymeetingthe5%growthtarget.Thishard-wonachievementinjectedmuch-neededcertaintyintotheuncertainglobaleconomy,fullydemonstratingtheremarkableresilienceandvitalityofChina'seconomyandvividlyillustratingthesuperiorityofthesocialistsystemwithChinesecharacteristics.

(II)IndustryOverview

Backtotheindustry,asavitalpillarofthenationaleconomy,thepetrochemicalsectorhasdemonstratedremarkableresiliencewhilenavigatingnumerouschallengesamidacomplexandvolatileeconomiclandscape.In2024,underthestrongleadershipoftheCPCCentralCommitteeandtheStateCouncil,theindustryadheredtotheprincipleof"seekingprogresswhilemaintainingstability",balanceddevelopmentandsecurity,andachievednewbreakthroughswhilemaintainingoveralleconomicstability.

AccordingtothelatestdatafromtheNationalBureauofStatistics,thepetrochemicalindustrygeneratedoperatingrevenueof16.28trillionyuanin2024,representingayear-on-yearincreaseof

2.1%;totalprofitsreached789.71billionyuan,down8.8%year-on-year;andtotalimport-exportvolumestoodat948.81billionUSdollars,adecreaseof2.4%year-on-year.

Affectedbyfactorssuchasintensifiedinternationalgeopoliticalconflicts,fluctuationsintheglobalenergymarket,andinsufficientmarketdemandforsomeproducts,coupledwiththeindustry'sexcessivelyfastproductioncapacitygrowth,prominentstructuralcontradictions,andintensified"involution"competition,thepricesofsomepetrochemicalproductshavecontinuedtobeunderdownwardpressuresince2024,resultinginasignificantimpactonthebenefitsofenterprisesandtheentireindustry,andasignificantdeclineinprofits.Butatthesametime,theindustryactivelypromotes

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transformationandupgrading,acceleratestechnologicalinnovationandgreendevelopment,andaccumulatesnewmomentumforhigh-qualitydevelopment.Theindustryfacedsignificantheadwindsfromintensifiedgeopoliticalconflicts,volatilityinglobalenergymarkets,andinsufficientdemandforcertainproducts,compoundedbyexcessivecapacitygrowth,prominentstructuralcontradictions,andintensified"involution-style"competition.Thesefactorsexertedsustaineddownwardpressureonpetrochemicalproductpricesthroughout2024,substantiallyimpactingcorporateandindustry-wideprofitability,withnoticeabledeclinesinprofits.Despitethesechallenges,theindustryhasbeenactivelypromotingtransformationandupgrading,acceleratingtechnologicalinnovationandgreendevelopmenttoaccumulatenewmomentumforhigh-qualitygrowth.

Bysectoranalysis,theoilandgassegmentdemonstratedrobustperformancewithoperatingrevenueof1.49trillionyuan(up1.5%year-on-year)andprofitsof336.08billionyuan(up12.4%year-on-year),showcasingstrongriskresilience.Thechemicalsectorreportedoperatingrevenueof

9.76trillionyuan(up4.6%year-on-year),butsawprofitsdeclineby6.4%year-on-yearto454.44billionyuanduetorisingcostsandweakdemand,indicatingcertainoperationalpressuresoftheindustry.

Movingforward,thepetrochemicalindustryneedstofurtheroptimizeitsindustrialstructure,enhancehigh-end,greenandintelligentdevelopment,andstrengthencorecompetitivenesstonavigatethecomplexandever-changingmarketenvironment.

(III)AnalysisoftheAromatic-PTA-PolyesterIndustrialChain

1.Costfactors:Stable-to-decliningcrudeoilpricesandcontinuedcoalpricereductionseffectivelyloweredcompanycosts

Fromthecostside,crudeoilpriceshave,andcoalpriceshavefallensignificantly.In2024,crudeoilpriceswillfluctuatewidely,withahighfirstandalowlater.TheannualaveragepriceofBrentcrudeoilforthewholeyearisUS$80perbarrel,ayear-on-yeardecreaseof2.8%;theaveragepriceofWTIcrudeoilisUS$76perbarrel,ayear-on-yeardecreaseof2.3%.

Onthecostside,crudeoilpricesmoderatedwhilecoalpricesdeclinedsignificantly.In2024,crudeoilpricesfollowedahigh-then-lowtrajectorywithwidefluctuationsthroughouttheyear.TheannualaveragepriceofBrentcrudeoilstoodat$80perbarrel,reflectinga2.8%year-on-yeardecrease;whiletheannualaveragepriceofWTIcrudeoilwasrecordedat$76perbarrel,markinga2.3%year-on-yeardecline.

In2024,China'stotalcoalsupplycontinueditsgrowthtrajectory,withimportedcoalvolumesregisteringasignificantyear-on-yearincrease.Throughouttheyear,thecoalmarketremainedinasupply-demandsurplus,characterizedbypersistentlyhighinventorylevelsandfluctuatingdownwardpricetrends.

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Datasource:Wind

2.Demand-SideFactors:SteadyGrowthinTextileDemandBenefitstheAromatic-PTA-PolyesterIndustrialChainChina'stextileandapparelindustryshowedsteadyrecovery,withrapidgrowthindemandforcivilian-usefibers.Fromtheproductionside,fromJanuarytoDecember2024,theindustrialaddedvalueofChina'stextileindustryabovedesignatedsizeincreasedby5.1%year-on-year,up5.7percentagepointsfromthesameperiodin2023,indicatingacceleratedproductiongrowth.Fromtheconsumptionside,supportedbystabilizinghouseholdincome,recoveringconsumerconfidence,andthegradualeffectsofnationalconsumptionstimuluspolicies,domestictextileandapparelsalesmaintainedstablegrowth.Retailsalesofclothing,footwear,hats,andknitwearabovedesignatedsizeroseby0.3%year-on-yearin2024.Fromtheinvestmentside,Textileenterprisessteadilyexpandedinvestmentsinhigh-end,intelligent,andgreentransformation.Fixed-assetinvestmentinthetextilesectorgrewby15.6%year-on-yearin2024.Fromtheenterpriseside,profitabilitycontinuedtoimprove,withrevenueoftextileenterprisesabovedesignatedsizeincreasingby3.6%year-on-yearandtotalprofitsrisingby3.4%year-on-yearin2024.Lookingaheadto2025,hometextiledemandisexpectedtorecoverfurther,supportedbystabilizingrealestatemarketsandstrongconsumptionstimuluspolicies.

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Datasource:Wind

3.ProductPricesShowComplexDivergenceTrendsThe"Aromatic-PTA-PolyesterFiber"industrialchainbenefitedtovaryingdegreesfromsteadygrowthindownstreamtextiledemand.However,individualproductperformanceremainedinfluencedbytheirrespectivesupply-demanddynamics,resultingincomplexdivergencetrends.Fromtheperspectiveofprodctpricetrends,theoverallindustrialchainexhibiteda"highfirst,lowlater"pattern:

Inthefirsthalfoftheyear,withlimitedcrudeoilpricevolatilityandrelativelystabledemand,upstreamproductslikePXmaintainedsteadyprofitmargins.Amongaromatics,benzeneandstyrenepricesrosesignificantlyyear-on-year,withbenzenepricesapproachingfive-yearpeaksdueto

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tighteningsupplyandcrudecostsupport.Downstreamproductspolyesterfilament(POY/FDY/DTY)sawrapidmarginrecovery,supportedbyreboundingend-userdemandandPXcostdynamics.However,inthesecondhalfoftheyear,weakeningcostsupportfromdecliningglobalcrudeprices,coupledwithsluggishdomesticdemand,ledtonoticeablecorrectionsinPXandPTAprices.Polyesterfilamentpricesenteredavolatiledowntrend,pressuredbysofteningdemandandfallingcrudecosts.

Datasource:Wind(IV)OverviewoftheOlefinChemicalIndustryChainPolyolefinproductsareexpectedtoexperiencemarginalimprovementandrecoverydrivenbypolicystimulus.In2024,polyolefinapparentconsumptionmaintainedgrowthmomentum,butend-userdemandshowedstructuraldivergence.Intraditionalsectors,demandforbasic-gradeproductsremainedweakinrealestateandinfrastructure—traditionalpillarindustriesundergoingstructuraladjustments—leadingtodownwardpricepressure.Inmanufacturingsectors,automotiveandhomeapplianceindustriessustained

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relativelystablepolyolefindemand,thoughintensifiedcompetitionandproducthomogenizationhighlightedtheneedforhigh-end,differentiatedupgrades.

Fromthepersepectiveofcosts,polyolefinindustryprofitabilityimprovedyear-on-year,benefitingfromdecliningcoalandcrudeoilprices.Withthegradualeffectsof"propertymarketstabilization"policiesandtheimplementationofconsumptionstimulusmeasures(e.g.,"homeappliancereplacementprograms"),end-userdemandisexpectedtoreboundmarginally,supportingupstreamchemicalpriceandmarginrecovery.(V)CorporateOperationsOverviewInrecentyears,ourcompanyhasstrategicallyaligneditsinnovationchainwithnationalindustrialtransformationpolicies,whiledeployingindustrialchainsaroundthisinnovationframework,withadualfocuson"supplychainreinforcement"and"R&Dinnovation".Buildinguponourindustry-leading"integratedoil-coal-chemicalsmegaplatform",wehaveacceleratedthedevelopmentofhigh-endfinechemicalclustersthroughprecisionparkconstruction,significantlyenhancedindustrialsupportcapabilitiesforpremiumchemicalrawmaterialsandstrengthenedthefoundationalroleofupstream"megachemicalplatform"operations.Ourcompanyhasproactivelycapitalizedonemergingopportunitiesinnewconsumptiontrends,newenergysectorsandintelligentmanufacturingconvergence.Breakthroughsinkeymaterialsectorhavebeenmade,whereourfocuseddevelopmentofstrategicproductportoliosincludesPBS/PBATbiodegradablematerials,functionalpolyestermaterials,high-performanceresinmaterials,premiumfibermaterials,newenergymaterials,andetc.CenteredonourDalianChangxingIslandindustrialbase,weareconstructinganintegratedfinechemicalandnewmaterialsecosystemencompassingR&D,production,andapplication.

Throughverticalsupplychainintegrationandstrengthenedtechnologicalinnovation,weareevolvingintoagloballycompetitiveplatform-basedleaderacrosstheentirechemicalnewmaterialsvaluechain,drivingsustainablehigh-qualityindustryadvancement.

2024markedapivotalyearforachievingtheobjectivesofChina's14thFive-YearPlanandadvancingtowardhigh-qualitydevelopment.Amidcomplexandchallengingdomesticandexternaleconomicconditions,underthestrategicguidanceoftheBoardofDirectors,thecompanyadheredtotheprincipleof"seekingprogresswhilemaintainingstability",consolidatedtraditionalstrengthswhilecultivatingnewgrowthdrivers,acceleratedthedevelopmentofnewqualityproductiveforcesandeffectivelybalancedsafety,environmentalprotection,productionoperations,aswellasprojectdevelopment.

Theseeffortsculminatedinthesuccessfulattainmentofannualoperationaltargetsandkeydevelopmentmilestones,withcomprehensiveprogressacrossallbusinessfronts.In2024,thecompanyhasachievedanOperatingRevenueofRMB236.273billion(+0.63%year-on-year),andNetProfitAttributabletoShareholdersofRMB7.044billion(+2.01%year-on-year).

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Duringthereportingperiod,thecompany'skeyworkisasfollows:

1.Wewillimplementcostreductionandefficiencyimprovement,strengthenthepotentialoftheentireindustrychain,andconstantlyconsolidatetheadvantageofcostmoat.Asa"newproductivity"inthedomesticrefiningandchemicalindustry,thecoreadvantageofprivatelarge-scalerefiningandchemicalindustryliesmainlyinthecostleadershipofsuper-largerefineryunitsandtheproductmanagementof"oilforoil,olefinforolefin,andaromaticforaromatic".Buildingupontheseachievements,thecompanyhasestablisheditselfasanindustrybenchmarkbypursuingoperationalexcellenceandcontinuouslyreinforcingitscorecompetitiveadvantagesthroughacostmoatstrategy.Keyinitiativesincludesustainedcostoptimizationthroughinternalefficiencyimprovementsandexpensereductionandacceleratedendogenousgrowthviahigh-value-addedtechnicalupgradesandpremiumprojectdevelopment.ThesemeasureshaveservedascriticaldriversbehindHengliPetrochemical'ssteadyexpansioninbothoperationalscaleandprofitabilityoverthepastyear.

Astheearliest"privatelarge-scalerefiningandchemical"enterpriseinChinatoputintoproduction,thescaleofsuper-largeplants,thesynergyofintegratedlayout,andtheaggregationofupstreamanddownstreamproductioncapacityhavecreatedasynergisticadvantage,whichisthemainsupportforHengliPetrochemical's"costmoat".HengliPetrochemicalwasthefirstinChinatoimplementtheconceptof"componentrefiningandmolecularrefining",selectinginternationaladvancedtechnicalstandards,adoptingworld-leadingandmaturelyappliedprocesspackages,andusingthebestprofessionalgreenenvironmentalprotectionsewagetreatmenttechnologyintheworld.Theequipmentselectionrequirementsaresignificantlyhigherthanthelevelofrefineriesinthesameperiod,andtheenergyandmaterialconsumption,greenenvironmentalprotection,intrinsicsafety,andlong-termoperationoftheplantareeffectivelyguaranteed.

Duringthereportingperiod,thecompanymadefulluseofitsoperationaladvantagesof"quality,cost,rapidresponse,andmaximizingprofits"aswellasitsflexible,efficient,andflexiblemechanismcharacteristicstoactivelyadapttomarketconditionsandquicklyrespondtomarketchanges.Thecompanystrengthenedresourceplanning,optimizedproductionandsalescoordination,andtimelycombinedwithfluctuationsinrawmaterialpricesandchangesinmarketdemandtoflexiblyadjustrawmaterials,equipment,andproductstructures,givingprioritytoincreasingproductionofhigh-benefitproducts,achieving"oilwhenoilissuitable,olefinwhenolefinissuitable,aromaticwhenaromaticissuitable,andchemicalwhenchemicalissuitable".Thecompanymadeeveryefforttoensureefficientcollaborativeoperationofmajorindustrialparksintherefining,petrochemical,chemical,andnewmaterialindustries,maintainabalancebetweenproductionandsales,smoothoperation,andensurethecompany'shigh-quality,endogenousgrowthwithbenefits.

Fromtheperspectiveofintegratedproductioncapacitylayout,thelistedcompanyhasaunique"oil,coal,chemical"deepintegrationplatformintheindustry.Forthefirsttimeintheindustry,thefourmajorproductioncapacityclustersof20milliontonsofrefining,5milliontonsofcoalchemical,

1.5milliontonsofethyleneand12milliontonsofPTAarearrangedinthesameindustrialpark.Variouslarge-scaleoil,coalandchemicalplantsarecoupledthroughpipelineintegrationintheparktoachieveupstreamanddownstreamconnectivity,significantlyoptimizingtheredundanttransportation,storageandcoolingprocesses,savingalotofintermediateoperatingcostsandlogisticstransportationcosts.Atthesametime,thecompanyhasbuiltthelargestdomesticcoal-to-hydrogenplantinthepark,whichcansupply250,000tonsofscarcepurehydrogenrawmaterialsatlowcosteveryyear.Ithasalsobuiltahigh-powerself-containedpowerplantwithatotalcapacityof520MW,whichisleadinginenergyefficiencyintheindustry.Itprovidesalargeamountofcheapelectricityandsteamatalllevelsforrefineries.Ithasself-operatedtwo300,000-toncrudeoilterminals,6milliontonsofself-containedcrudeoiltankfarms,andothervariouscompleterawmaterial,finishedproductterminals,tankfarms,storageandotherpublicworksfacilities,significantlyreducingvariousproductionandoperatingcosts.

Thecompanyconsistentlyadherestothephilosophyofleanoperations,achievingcontinuousoptimizationofenergyandmaterialconsumptionthroughend-to-endprecisionmanagement.Thisapproachhasestablishedasustainablecost-competitiveadvantagecharacterizedbysteady,long-termaccumulation.Thecompanyfocusesonreducingcostsinkeyelements,strengtheningresearchand

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judgmentonthemarkettrendofrawmaterials,andcontinuouslyimprovingitsrawmaterialprocurementcapabilitiesthroughdomesticandinternationalresourceintegration,strategicandopportunisticcombination,andothermeasures.Italsoreasonablycontrolsrawmaterialinventoryandreducesfinancialcosts.Intermsofequipmentmanagement,itstrengthensdailymaintenanceandrepairofequipment,implementsregularmonitoringandtesting,andconductssystematicanalysisandevaluationtotimelyidentifyandeliminatepotentialrisks,ensuringthelong-termstableoperationofproductionequipment.Thecompanyhasunlockedfacilitypotentialthroughstrategicmaintenanceturnarounds,implementingtechnicalupgradesforcriticalunits.Byadoptingdigitaltwinandotheradvancedtechnologies,operationalefficiencysawmarkedimprovement,establishingavirtuouscycleof"managementoptimization→technologicalinnovation→profitabilityenhancement."Thisapproachnotonlyensureslong-termstableoperationsbutalsosustainsindustry-leadingcostcompetitiveness,layingasolidfoundationforhigh-qualitydevelopment.Incapitalmanagement,thecompanyhasdiversifiedfinancingchannels,optimizeddebtstructureandachievedhistoricallylowfinancingcosts.Notably,thesuccessfulissuanceof2024PhaseI&IIShort-TermFinancingBills(Sci-TechInnovationNotes)totaledRMB2billion,witharecord-lowcouponrateof2.15%–themostfavorabletermsinrecentyears.

Startingfromthesecondhalfof2024,thecompanyhasbasicallyendedthepeakperiodofinvestmentconstructionandcapitalexpenditure,andthefocusofsubsequentoperationswillbemoreon"optimizingoperations,reducingliabilities,andstrengtheningdividends"underrefinedcostcontrol,continuingtobuildavalue-added"growth+return"listedcompany.

2.Newmaterialproductioncapacitywillbegraduallyputintousetoachieve"optimizing,extendingandsupplementing"theindustrychain.

——Thecompany’s1.6milliontons/yearhigh-performanceresinandnewmaterialsprojectwasfullycompletedandputintoproduction.Asanimportantcarrierforimplementingthecompany'sdevelopmentstrategyof"improvingupstreamandstrengtheningdownstream"andacceleratingtheupgradetothe"platform+newmaterials"developmentmodel,theproductsoftheprojectmainlyincludebisphenolA,polycarbonate,electronicgradeDMC,propyleneglycol,ethanolamine,ethyleneamine,polyoxymethylene,aceticacidandotherchemicals,whicharewidelyusedinemergingindustriessuchasnewenergy,electronics,andautomobiles.Thecompletionandcommissioningoftheprojectachievedefficientpenetrationanddeepconnectionfromfeedstocksupplytoproprietaryprocesstechnologiestoendmarkets,reducingtheproportionofbulkchemicalsinthecompany,whileincreasingtheoutputoffinechemicalsandnewmaterialproducts,whichempoweredthecompanytostrengthenandextenditsindustrialchainintodownstreamhigher-value-addedsectors,drivingtheindustrytowardhigh-endspecializationandprecision-orienteddevelopment.

——HengliChemicalFiber's400,000-tonannualcapacityhigh-performancespecialtyindustrialyarnintelligentproductionprojecthasachievedfull-linecommissioning.Withtotalindustrialyarnproductioncapacitynowreaching800,000tons/year,HengliChemicalFiberhasbecometheworld'slargestproductionbaseforhigh-performanceindustrialyarns,providingdownstreamindustrieswithmoreabundantandhigher-qualityrawmaterials,whichsignificantlybooststheadvancementofdomesticautomotive,chemical,andelectronicsindustries

Thehigh-performancespecialtyindustrialyarnsexhibitexceptionalpropertiesincluding:highstrength&highmodulus,abrasionresistanceandcorrosionresistance,andhasbeenwidelyusedindifferentfileds,suchasautomative(tirecordfabrics),Industrial(coveyorbelts),Chemical(filtrationmaterials),Marine(deep-seacables),AerospaceandElectronics(high-endelectroniccomponents).

——TheSuzhouFenhuBasehassuccessfullycommencedfull-scaleproductionacrossits12functionalfilmproductionlines,achievinganannualproductioncapacityof470,000tonsofhigh-endfunctionalpolyesterfilms.ThissignificantexpansionfurtherenhancesKanghuiNewMaterials'competitivepositioninthemid-to-high-endfunctionalfilmmarketsegment.Theseadvancedfilmsfindextensiveapplicationsacrossmultipleindustries:intheelectronicsandelectricalsector,theproductportfolioincludesreleaseandprotectivebasefilms,MLCC(Multi-LayerCeramicCapacitor)releasefilms,andin-linesilicone-coatedreleasefilms;inopticalmaterials,thecompanyproducespolarizerreleaseandprotectivebasefilms,OCA(OpticallyClearAdhesive)releasefilms,andhigh-brightness

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basefilms;whileinultra-thinapplications,thecompanyspecializesinTTR(ThermalTransferRibbon)basefilms,particularlysub-4.5μmTTRfilmsandotherultra-thinfilmsbelow8μmthickness.

Concurrently,theNantongBaseismakingsteadyprogresswithitsadditional12functionalfilmproductionlinesandlithiumbatteryseparatorprojects,withphasedcommissioningscheduledtobeginin2025.ThecombinedoperationalcapabilitiesofboththeFenhuandNantongbaseswillestablishKanghuiNewMaterialsasthegloballeaderinbothproductionscaleandtechnologicalsophisticationforfunctionalfilmmaterials.

3.Innovationdrivesdevelopment,andtechnologyempowersindustrialupgrading.

Focusoncoretechnologybreakthroughsandfillthetechnologicalgapsintheindustry.Adheringtoits"innovation-drivendevelopment"strategy,thecompanyhasleverageditswell-establishedR&Dplatformbuiltoveryearstopursuedevelopmentpathsofmarketdifferentiation,technologicaladvancement,andbusinessintegration.Throughsustainedeffortsincutting-edgetechnologiesandadvancedproductsofdifferentiatedfunctionalmaterials,thecompanyachievedsignificantbreakthroughs.In2024,multipletechnologiesandproductsacrossthecompany'sentireindustrialchainovercame"bottleneck"constraints,madeupfortheshortcomingsoftheindustryandfilledcriticalvoidsintheindustry.

HengliPetrochemicalChemical'shigh-densitypolyethylene(HDPE)pipe-gradematerial23050hasobtainedPE100gradecertification,markingitsattainmentofdomesticfirst-classstandards.HengliChemicalFiberachievedmassproductionofultra-finefiber27D/144F,withasinglefilamentweightofjust0.18gper9,000meters,reachinginternationallyleadingstandardsinfinenessindicators.TheoveralltechnologyofHengkeAdvancedMaterials'projecton"IndustrializationofNewDisperseDyeablePolyesterandItsFibersUnderNormalPressure"attainedinternationallyadvancedlevels,withits10,000-toncontinuouspolymerizationtechnologyfordispersedyeablepolyesterfibersundernormalpressurerankingasgloballyleading.

Thedevelopmentofinnovationplatformshasyieldedremarkableresults.HengliChemicalFiberwasapprovedforthe2024JiangsuProvincialIntellectualPropertyStrategyAdvancementPlan.HengkeAdvancedMaterialshassuccessivelyestablishedprovincialenterprisetechnologycenters,provincialengineeringtechnologyresearchcenters,JiangsuProvincialPostdoctoralInnovationPracticeBases,Provincial-levelEnterpriseTechnologyCenter,Provincial-levelEngineeringTechnologyResearchCenter,andJiangsuPostdoctoralInnovationPracticeBase,etc.,andobtainedofficialcertificationasthe"JiangsuFunctionalPolyesterFiberEngineeringResearchCenter"in2024.

Duringthereportingperiod,thecompany'sR&Dinvestmentreached1.703billionyuan,representingasubstantial24%year-on-yearincrease.AsofDecember31,2024,thecompany'sintellectualpropertyportfoliocomprisedatotalof1,676authorizedpatentsglobally,withover300newpatentsgrantedin2024alone,demonstratingcontinuouslystrengtheninginnovationmomentum.

Deepentheupgradeofintelligentmanufacturingtofuelleanproduction.Thecompanyhasthoroughlypromotedits"IntelligentTransformationandDigitalization"strategy,establishingtheHenglinkIndustrialInternetPlatformasthecoreofitsdigitalecosystem.ThisplatformintegratesintelligentsystemsincludingNCC,MES,AWMS,AGV,andequipmentmanagement,etc.,enablingdatasharingandinteractiontobreakdownsilos.Itachievesend-to-enddigitalcontrolspanningfromrawmaterialprocurementandproductionmanufacturingtosalesandservices,effectivelyimprovingqualitycontrol,reducingproductioncosts,andenhancingoperationalefficiency.

Duringthereportingperiod,thecompany'sintelligentmanufacturingcapabilitiesgainedfurtherauthoritativerecognition:JiangsuKanghuiNewMaterialsTechnologyCo.,Ltd.successfullyobtainedthehighest-levelAAAcertificationfortheIntegrationofIndustrializationandInformatizationManagementSystem.TheBOPETintelligentworkshopwasselectedforthe"2024JiangsuProvincialIntelligentManufacturingWorkshop"list.KanghuiNantongNewMaterialTechnologyCo.,Ltd.formallyreceivedthenationalAAA-levelcertificationfortheIntegrationofIndustrializationandInformatizationManagementSystem.

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4.StrengthenSafetyandEnvironmentalProtectionFoundations,PracticingGreenandLow-CarbonDevelopment.Basedonhigh-standarddesignplanning,constructionandoperation,anddetailmanagement,thecompanyimplementsintrinsicallysafeoperationsandgreen,low-carbonoperationpractices.Thisapproachservesasthelifeline,profitline,andhallmarkforpromotingthestable,efficient,andsustainabledevelopmentofthelistedcompany.

StrengthenIntrinsicSafetyDefensesandBuildaLong-TermGovernanceSystem.Instrictadherencetothe"SafetyFirst,PreventionPrimary,andComprehensiveGovernance"principle,thecompanyexecutesallsafety-relatedworkwithrigorousattentiontodetailinasolidandmeticulousmanner,continuouslyelevatingitsintrinsicsafetystandards.Byfurtherstrengtheningtheimplementationofprimarysafetyresponsibility,asafetyaccountabilityframeworkthat"coversallaspectshorizontallyandpenetratesalllevelsvertically"wasestablished,ensuringfullcoverageofsafetyresponsibilitieswithoutblindspots.

Thecompanyrigorouslyimplementedthedualpreventivemechanismofriskclassificationcontrolandhiddenhazardinvestigationandtreatment,strengthenedsafetyriskassessment,intensifiedon-sitesafetymanagementinspections,andthoroughlyconductedhiddenhazardidentificationandremediationworktoensurecomprehensiveriskmitigation.

Additionally,thecompanyregularlyorganizessafetyandenvironmentalprotectiontraining,emergencydrills,andotheractivitiestoenhanceemployees'safetyawarenessandemergencyresponsecapabilitiesacrossalllevels,whichfurtherconsolidatedthefoundationofsafeproduction,andensuredthatthecompany'ssafetyproductionsituationcontinuestobestableandpositive.

EmbracingGreenandLow-CarbonPrinciplesandLayaSolidtheFoundationforHigh-QualityDevelopment.Thecompanyactivelypracticesthephilosophyof"greendevelopment,circulardevelopmentandlow-carbondevelopmentacrosstheentireindustrialchain",keepingpacewithindustrialtrendandtechnologicalinnovations.Throughaseriesoftargetedinitiatives,ithasachievedenergyconservationandsustainabledevelopmentthroughouttheentireproductionprocess.

Ononehand,byimplementingsystematicoptimizationupgrades,productionprocessimprovements,andrefiningmanagementpractices,thecompanyfullyleveragesintegratedupstream-downstreamindustrialchainsynergiesincludingprocesslinkage,materialmutualsupply,andenergycoupling.Advancedtechnicalmeasuressuchasheatenergycascadeutilizationandwasteheatrecoveryhavebeenadoptedtoeffectivelyreduceresourceandenergyconsumptionwhileenhancingenergyefficiency.

Duringthereportingperiod,HengliPetrochemicalRefiningimplementedaseriesofenergy-savingtransformationprojectssuchasreformingandoptimizatinghydrogendeliveryprocessandasphaltflashgasrecoverytechnologytransformation,achievinganannualenergysavingequivalentto100,200tonsofstandardcoal.HengliPetrochemicalChemicalintroducedaN?Odecompositioncatalystsysteminitsammonia-nitrateplant,wherecatalystsconvertN?OintoN?andO?,reducingN?Oemissionsby

0.275t/h–equivalentto682,000tonsofCO?reductionannually.

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Ontheotherhand,thecompanysustainablyoptimizesitsenergyconsumptionstructuretosupporttheachievementofthe"DualCarbon"goals(carbonpeakandcarbonneutrality).HengliChemicalFiberhasactivelyimplementedcoal-to-gasconversionandbiomassboilerconstructionprojects,successfullydisplacingoriginalcoalfuelsandreducingfossilenergyconsumptionbyover80,000tonsofstandardcoalequivalent(tce).KanghuiNewMaterialhasconstructedthelargestphotovoltaicpowergenerationprojectinLiaoningProvince.In2024,thecumulativepowergenerationreachedover45millionkWh,equivalentto5,586tonsofstandardcoal,reducingcarbondioxideemissionsbyapproximately15,363tons.TheHengli(Nantong)IndustrialParkhasreachedatotalinstalledphotovoltaiccapacityof

106.5MW,generatingover100millionkWhofgreenelectricityannuallyandreducingcarbonemissionsby60,000tons.Additionally,theindustrialparkhasbuilta40MWenergystorageprojecttoeffectivelyabsorbandutilizegreenelectricity,alleviatepeakpowerdemandpressure,lowerelectricitycosts,andstronglypromotethecompany'ssustainabledevelopment,contributingsignificantlytotherealizationofthe"DualCarbon"goals.

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PhotovoltaicPowerGeneration

Hengli(Nantong)IndustrialPark

PhotovoltaicPowerGenerationHengli(Nantong)IndustrialPark

EnergyStorageProject

Perseveranceleadstoexcellence,whilediligenceperfectsthecraft.Duringthereportingperiod,threeenterpriseswithintheHengli(DalianChangxingIsland)IndustrialParkwereconsecutivelyawardedthenational-level"EnergyEfficiencyLeader"titleforthefourthyear,withtheirwaterefficiencyperformancealsorankingamongthetop.HengliChemicalFiberwasrecognizedasthe"GreenDevelopmentLeadingEnterpriseintheYangtzeRiverDeltaEcologicalGreenIntegratedDevelopmentDemonstrationZone".

FollowingHengliPetrochemical(Dalian),HengliPetrochemicalRefining,HengkeAdvancedMaterials,HengliChemicalFiber,andHengliPetrochemicalChemical,KanghuiNewMaterialhasnowbeendesignatedasanational-level"GreenFactory".Withthislatestrecognition,atotalofsixsubsidiariesunderthecompanyhaveachievednational"GreenFactory"certification.

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Hengli(DalianChangxingIsland)IndustrialParkInresponsetothefutureindustrialdevelopmenttrendsof"carbonneutrality",thecompanyremainssteadfastinitstransitiontowardgreenandlow-carbondevelopment.Bydeeplyfocusingonhigh-endmanufacturingasitscorestrategy,itcontinuouslyadvancesorporateinnovation,intelligenttransformation,andgreendevelopment.Thecompanymaintainssustainedcommitmenttoenvironmental,social,andgovernance(ESG)responsibilities,strivingtoforgeahigh-qualitygreensustainabledevelopmentpaththatachievesbothharmoniouscoexistencebetweenindustrialprogressandecologicalprotection,andsynergisticadvancementofeconomicbenefitsandsocialvalue.II.IndustryoverviewduringthereportingperiodPleaserefertotherelevantcontentof“I.DiscussionandAnalysisofBusinessPerformance”inthissectionfordetails.III.Businessoperationsofthecompanyduringthereportingperiod

Thecompany'smainbusinesscoverstheproduction,researchanddevelopment,andsalesofmaterialsproductsinthefieldsofrefining,aromatics,olefins,basicchemicals,finechemicals,andvariousdownstreamapplicationareasfrom"onedropofoiltoeverything".Atthesametime,relyingontheupstream"oil,coal,andchemical"integratedlargechemicalplatform,itdeeplyanchorstherigidconsumermarketof"clothing,food,housing,transportation,anduse"aswellasthehigh-techbarrierandhigh-value-addedhigh-growthnewmaterialtrack.Itcontinuouslystrengthensitsinternalintegrationadvantages,costmoats,andrefinedmanagementandcontrol,andcontinuestobuildavalue-growthlistedenterpriseof"platform+newmaterials".

Thecompanyhasestablishedarobustmidstreamandupstreambusinesssegment,anchoredbyprocessingcapacitiesof20milliontonsofcrudeoiland5milliontonsofrawcoalannually.Thisinfrastructureyieldsanarrayofhigh-value-added,domesticallysought-afterchemicalproducts,including:5.2milliontonsofPX,1.8milliontonsoffiber-gradeethyleneglycol,1.8milliontonsofpurebenzene,850,000tonsofpolypropylene,720,000tonsofstyrene,400,000tonsofhigh-densitypolyethylene(HDPE),850,000tonsofaceticacid,140,000tonsofbutadiene,and720,000tonsofmethanol.Additionally,thecompanyproduceslimitedquantitiesofdieselandaviationkerosene.With16.6milliontons/yearofoperationalPTAcapacity–nowfullycommissioned–thecompanyhasemergedastheindustry’smosttechnologicallyadvancedandcost-competitivePTAsupplier.Thedownstreamchemicalnewmaterialproductsarerichinvarietyandcompleteinspecifications,targetingthemid-to-high-endmarketdemand,coveringpolyesterandchemicalnewmaterialproductssuchascivilianpolyesterfilament,industrialpolyesterfilament,BOPET,PBT,PBS/PBAT,etc.,whichareappliedintextile,medicine,automotiveindustry,environmentalprotectionandnewenergy,electronicandelectrical,photovoltaicindustry,opticalequipmentandotherlarge-scale,differentiatedandhighvalue-addedindustrialmanufacturingandcivilianconsumptionfields.

Withthefullproductionofworld-classrefiningandethylenekeyproductioncapacityandthecontinuousconsolidationandexpansionoftheadvantagesoftheentireindustrialchainintheupstreamofthecompany,thecompanyhasacceleratedthedevelopmentofa"bigchemical"platformsupportingandrawmaterialsupportingconditionsforthedownstreamhigh-endnewmaterialmarket,whichislong-term,deep-goingandrefined.Basedoninternaltechnologyresearchanddevelopmentandexternalindustrialcooperation,thecompanycontinuestoextendthevaluechainofchemicalmaterialsandacceleratesitsentryintothemarketdemandfor"domesticsubstitution"and"rigidconsumption"representedbyadvancedmanufacturing,newenergy,newconsumption,newmaterialsandotherend-usedemand.IV.Analysisofcorecompetitivenessduringthereportingperiod

√适用□不适用

1.StrategicLeadershipinEntireIndustryChainDevelopment

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ThecompanyistheindustryleaderinimplementingthestrategyoffullindustrychaindevelopmentforpolyesternewmaterialsinChina.Itactivelypromotesthecoordinatedandbalanceddevelopmentofvariousbusinesssegmentsandvigorouslyexpandshigh-endcapacityintheupstreamanddownstream.Thecompanyiscommittedtobuildingaworld-classintegratedplatformfortheentireindustrychain,from"crudeoil-aromatics,olefins-PTA,ethyleneglycol-polyester-civilfilament,industrialfilament,films,plastics."TheHengliIntegratedRefiningandPetrochemicalProjectwithanannualcapacityof20milliontonsandtheEthyleneProjectwithacapacityof1.5milliontonshavebeenfullyputintooperation,achievingstrategicbreakthroughsintherefining,aromatics,andolefinssegments.Thecompanyhasbecomethefirstenterpriseintheindustrytoachieveintegratedoperationanddevelopmentoftheentireindustrychainfrom"crudeoil-aromatics,olefins-PTA,ethyleneglycol-polyesternewmaterials."Withthesequentialconstructionandoperationofnewlybuiltcapacities,suchasPTA,chemicalnewmaterials,PBS/PBATbiodegradablenewmaterials,thecompanycontinuouslyupgradesandoptimizesitsindustrialmodel,consolidatesandexpandstheadvantagesofeachlink'sproductioncapacity,promotesthequantitativechangeinbusinessscale,andthequalitativechangeinbusinessstructure.Itestablishesastrategicleadershipadvantageinadaptingtothehigh-qualitycompetitivesituationoftheindustry'sfullindustrychaincollaboration,productioncapacitystructurequality,equipmentscalecost,technologicalprocessaccumulation,projectstart-upspeed,andthedevelopmentoflistedplatforms.

2.ComprehensiveOperationalAdvantageofScale,Technology,andSupport

Thecompanycontinuouslyintroducesinternationallyleadingproductionequipmentandmaturetechnologypackages,digests,absorbs,andutilizesthem,andcontinuouslyinnovatesandimprovestechnologyandprocesses.Ithasestablishedahigh-qualityandefficientproductioncapacitystructureandsupportingpublicengineeringintheupstream,midstream,anddownstreamofthepolyesternewmaterialsindustrychain,characterizedby"large-scaleequipment,large-scaleproductioncapacity,integratedstructure,advancedtechnology,greenandenvironmentalprotection,andcomprehensivesupportingfacilities."Whetheritisindividualequipment,totalproductioncapacity,orproductionprocesses,thecompanyisattheindustry'sleadingprocessingscaleandtechnologicallevel.Thisensuresthecompany'sadvantagesinunitinvestmentcost,materialandenergyconsumptionsaving,unitprocessingcost,productdeliverycycle,productquality,anddiversification.Moreover,thecompanyhasthemostcomprehensivesupportingcapabilitiesintheindustry,includingpowersupply,energy,ports,terminals,tankfarms,storage,andtransportation.Itstandsoutintermsofcomprehensivecostsavings,servicequalityperformance,andoperationalefficiencyimprovement.Thecomplementaryrelationshipsamongrefining,petrochemicals,andcoalchemicalsintheindustrialparkformanefficientsynergyofoperationsandcosts.Therefiningbusinesshasthelargestcoal-to-hydrogenunitinthecountry,producinglow-costcoalchemicalssuchaspurehydrogen,methanol,aceticacid,andsynthesisgas.Inaddition,theadvantagesofrawmaterialandproductstorageandtransportationsystemsgreatlyenhancetheoperationalflexibilityandcomprehensivecostadvantagesofprojects.

3.MarketCompetitiveAdvantageDrivenbyHigh-endResearchandDevelopment

Thecompanyfollowsadevelopmentpaththatemphasizesmarketdifferentiation,high-endtechnology,andlarge-scalefacilitieswhileintegratingbusinessoperations.Ithasalong-termaccumulatedmarket-technologyinnovationmechanismandhasestablishedaninternationalR&Dteamandahigh-levelscientificresearchplatform.Itstechnologicalresearchanddevelopmentstrengthandinnovationcapabilityinnewproductsareleadingintheindustry.Thecompanycanquicklyrespondtothelatestmarketconsumptiondemandchangesandhasastablereserveofmid-to-high-endcustomerresources.Thefourmainoperatingentitiesofthecompany,HengliFibre,DeliFibre,HengkeNewMaterials,andKanghuiNewMaterials,areallnationalhigh-techenterprises.Throughfinemanagementoftheproductionprocessandcontinuousimprovementoftechnologyandprocesses,thecompanyhasindependentlydevelopedandaccumulatedaseriesofdifferentiatedandfunctionalproducts,holdsnumerousproductionpatentsforvariousproducts,andhasgainedwidemarketrecognition.Thecompany'sproductsaresuperiortocompetitorsintermsofqualityandstability.ItistheonlycompanyinChinathatcanproducespecification5DFDYproductsonalargescale.ItsmarketshareinMLCCseparatorfilmsexceeds65%domestically.Itisalsotheonlydomesticandthesecond

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globalenterprisecapableofproducing12-micrometersilicon-coatedstackedlithiumbatteryprotectionfilmsonline.Thecompanyhasabsolutetechnologicaladvantagesandprocessaccumulationinfunctionalfilmsandcivilpolyesterfilament,formingacompetitivemoatthatisdifficulttoreplicateintheindustryintheshortterm.

4.EfficientManagementAdvantageofIntelligenceandLeanManufacturingThecompanystrivestopromotethedeepintegrationof"Internet,bigdata,artificialintelligence,andtherealeconomy"anddevelopadvancedmanufacturingcapacitytoregenerateinternalgrowthmomentum.Itregards"intelligentinterconnection"asanimportantentrypointforindustrialupgradingandtransformation.Bygraduallyimplementingmethodssuchas"machinereplacinghuman,""automaticequipmentchange,""completesetreplacementofsinglemachine,"and"intelligencereplacingdigitization,"thecompanytransformsitsdevelopmentmodelfromrelyingon"populationdividends"to"technologydividends."Throughtheintegrationandapplicationofintelligentmanufacturing,theInternet,andtheInternetofThings,thecompanycontinuouslyimprovesthelevelofintelligentmanufacturingthroughouttheentireprocess.Itseamlesslyintegrateskeylinkssuchascontrol,researchanddevelopment,manufacturing,businessmanagement,andfinancethroughself-developedproducttestingsystems,automaticbarcodesystems,intelligentwarehousingsystems,andsalessystems,andinterfaceswithERPsystemstoachieveproducttraceabilityandfull-processcontrol.Thispromotesthecompany'stransformationfrom"manufacturing"to"intelligentmanufacturing"andfromsinglebusinessmanagementtohighlysynergisticoperationoftheindustrialchain.Thecompanycontinuouslyenhancesrefinedmanagementandcostcontrolcapabilities,adheringtometiculousdailyoperationmanagementandimplementingcostoptimizationimperceptiblythroughinternalpotentialtappingandcostreduction/efficiencyimprovementinitiatives.

Intermsofsalesmodel,thecompanymaintainsanintegratedproduction-tradeapproach,characterizedby"sales-frontloadedpositioning,sales-ledproduction,andproduction-drivensales".Byimplementingmarket-orientedsalesmechanismsandperformance-basedsalesteamincentives,thisinterconnectedproduction-salesmechanismmaximizessalesprofitswhileensuringreal-timeinformationsynergyacrossproduction,distribution,anddemandsectors.Thisenablesthecompanytocapturemarketopportunities,maintainlow-to-zeroinventoryoperations,andensurerapidmarketresponsecapabilities.Through"high-qualityproductsandefficientservices",thecompanyhasbuiltanimpregnableandunassailablemoatforitsproduction-salessystem,continuouslyheighteningcustomertrustandloyalty.Todate,thecompanyhasaccumulatedover20,000long-termdownstreamclients.

5.AccumulatedTalentManagementAdvantage

Thecompanyhasformedamultidisciplinaryandmulti-professionalscientificresearchteam,includingdisciplinessuchasrefining,petrochemicals,polymermaterials,chemicalfiberengineering,textileengineering,electricalengineering,etc.Itsscientificresearchanddevelopmentcapabilitiesareaheadofdomesticpeers.Whileintroducingexternaltalents,thecompanyattachesgreatimportancetothecultivationofinternaltalentsandprovidesagoodcareerdevelopmentpathforemployees.Thecompanyhasalsoestablishedasoundinternaltrainingsystem,coveringresearchanddevelopment,production,sales,management,andotheraspects,andhascultivatedalargenumberofbackbonepersonnel.V.Mainoperatinginformationduringthereportingperiod

Asoftheendof2024,thecompany'stotalassetswere273.083billionyuan,ayear-on-yearincreaseof4.79%,andthenetassetsattributabletoshareholdersoflistedcompanieswere63.399billionyuan,ayear-on-yearincreaseof5.68%.

In2024,thecompanyachievedarevenuefromoperationsofRMB236.273billion,ayear-on-yearincreaseof0.63%;anetprofitattributabletoshareholdersoflistedcompanyof7.044billionyuan,ayear-on-yearincreaseof2.01%.(I)AnalysisofPrimaryoperations

1.Analysisofchangesinitemsrelatedtoincomestatementandcashflowstatement

Unit:ten-thousand-yuanCurrency:RMB

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Detaileddescriptionofmajorchangesinthecompany'sbusinesstype,profitcompositionorprofitsourceinthecurrentperiod

□适用√不适用

2.Revenueandcostanalysis

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(1).Segmentationofmainbusinessbysector,product,region,andsalesmodel

Unit:ten-thousand-yuanCurrency:RMB

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Domestic

Descriptionofmainbusinessbyindustry,byproduct,byregion,andbysalesmodelRevenues,costsandgrossmarginsforrefinedproducts,PTAandpolyesterproductsincludesalerevenues,purchasecostsandgrossmargins.

(2).Productionandsalesvolumeanalysis

√适用□不适用

Explanationofproductionandsalesvolume:

1.RefiningandchemicalproductsincludeallproductsofHengliRefiningandHengliPetrochemical;

2.Newmaterialproductsincludepolyesternewmaterials,engineeringplastics,functionalfilms,andbiodegradablematerials;

3.ThesalesvolumeofrefiningandchemicalproductsandPTAincludestradevolumebutexcludesinternalconsumptionwithinthecompany.

(3).Performanceofmajorprocurementcontractsandmajorsalescontracts

□适用√不适用

(4).Costanalysis

Unit:ten-thousand-yuan

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calindustry

Explanationofcostanalysisandothersituations:

None

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(5).Changesinconsolidationscopeduetosignificantequitychangesinsubsidiariesduringthereportingperiod

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(6).SignificantChangesorAdjustmentsinBusiness,Products,orServicesduringtheReportingPeriod

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(7).Keysalescustomersandkeysuppliers'situationA.Overviewofkeysalescustomers

√适用□不适用Thesalesrevenuefromthetopfivecustomersamountedto23.39billionyuan,accountingfor9.90%ofthetotalannualsales.Amongthesalesrevenuefromthetopfivecustomers,therewerenosalesmadetorelatedparties,representing0%ofthetotalannualsales.Thesalesratiotoasinglecustomerduringthereportingperiodexceeds50%ofthetotal,therearenewcustomersamongthetop5customers,orthecompanyisheavilydependentonasmallnumberofcustomers.

□适用√不适用B.OverviewofKeySuppliers

√适用□不适用Thepurchasingamountfromthetopfivesuppliersamountedto63.26billionyuan,accountingfor

28.38%ofthetotalannualprocurement.Amongthepurchasingamountfromthetopfivesuppliers,therewerenopurchasesmadefromrelatedparties,representing0%ofthetotalannualprocurement.TheproportionofpurchasesfromasinglesupplierintheReportingPeriodexceeds50%ofthetotal,andtherearenewsuppliersamongthetop5suppliersorheavyrelianceonasmallnumberofsuppliers.

□适用√不适用Othernotes:

None

3.Expenses

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4.Researchanddevelopmentinvestment

(1).Tableofresearchanddevelopmentinvestmentstatus

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Unit:hundred-million-yuan

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Expensedresearchanddevelopmentinvestmentinthecurrentperiod

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Percentageofcapitalizedresearchanddevelopmentinvestmenttototalresearchanddevelopmentinvestment(%)

(2).Researchanddevelopmentpersonnelstatistics

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(3).Explanation

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(4).ReasonsforthesignificantchangesinthecompositionofR&Dpersonnelandtheirimpacton

thecompany'sfuturedevelopment

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5.Cashflows

□适用√不适用(II)Explanationofsignificantchangesinprofitsduetonon-corebusiness

□适用√不适用(III)Analysisofassetsandliabilitiessituation

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1.Assetsandliabilitiesstatus

Unit:ten-thousand-yuan

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OthernotesNone

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2.Overseasassetsituation

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(1).AssetscaleIncluding:Overseasassets121.24(unit:hundredmillionyuanCurrency:RMB),accountingfor4.44%oftotalassets.

(2).Explanationofahigherproportionofoverseasassets

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3.Majorassetsunderrestrictionattheendofthereportingperiod

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Unit:ten-thousand-yuanCurrency:RMB

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Item

4.Othernotes

□适用√不适用(IV)Analysisofindustryoperatinginformation

√适用□不适用Analysisofoperationalinformationofchemicalindustry

1.Overviewoftheindustry

(1).Industrypoliciesandtheirchanges

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①"ActionPlanfor2024-2025EnergyConservationandCarbonReduction"InMay2024,theStateCouncilissuedthe"ActionPlanfor2024-2025EnergyConservationandCarbonReduction",whichspecifieskeytasksforthepetrochemicalandchemicalindustries:First,itstrengthensbindingrequirementsforpetrochemicalindustryplanningandlayout,strictlycontrollingnewproductioncapacityinrefining,calciumcarbide,ammoniumphosphate,yellowphosphorusandothersectors.NewandexpandedpetrochemicalprojectsmustmeetenergyefficiencybenchmarklevelsandGradeAenvironmentalperformancestandards,withcapacityreplacementsrequiringtimelyshutdownsanddismantlingofmainproductionfacilitiesasmandated.Itmandatescompletephase-out

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ofatmosphericandvacuumdistillationunitswithcapacitybelow2milliontons/year,aimingtocapnationalprimarycrudeoilprocessingcapacitywithin1billiontonsbyend-2025.Second,itacceleratesenergy-savingandcarbonreductionupgradesinthepetrochemicalindustrythroughenergysystemoptimization,enhancedrecoveryofhigh/low-pressuresteam,ventgas,wasteheatandpressure,andpromotionofenergy-efficientequipmentlikelargehigh-efficiencycompressorsandadvancedgasifiers.Byend-2025,over30%ofrefining,ethylene,syntheticammoniaandcalciumcarbidecapacitymustreachbenchmarkenergyefficiencylevels,whilesub-baselinecapacitymustcompletetechnicalupgradesorexit.Third,itpromotespetrochemicalprocessreengineeringbyacceleratingadoptionofadvancedtechnologieslikenext-generationion-membraneelectrolyzers,vigorouslydevelopingrenewableenergyalternatives,encouragingR&Dofrenewablehydrogenproductiontechnologies,supportinggreenhydrogenrefiningprojectstograduallyreducecoal-basedhydrogenusage,systematicallyreplacingsteamdriveswithelectricdrives,andexploringnuclearenergyapplicationsforsteam/heatsupplyinmajorpetrochemicalparks.

②"WorkPlanforStableGrowthinPetrochemicalandChemicalIndustry"The"WorkPlanforStableGrowthinthePetrochemicalandChemicalIndustry"jointlyissuedbytheMinistryofIndustryandInformationTechnologyandothersixdepartmentsin2023pointedoutthatweshouldvigorouslyimplementthegoalsandtasksofthe"GuidingOpinionsonPromotingHigh-qualityDevelopmentofthePetrochemicalandChemicalIndustryinthe14thFive-YearPlan".ThePlanproposedthatweshouldsupportkeyenterprisestocreateanoriginaltechnologysourcefortheindustry,whichismainlybasedontheneedsofstrategicemergingindustriesandthetransformationandupgradingneedsoftraditionalindustries,toenrichthesupplyofnewchemicalmaterialsandspecialtychemicals,andincreasethesupplyofkeygenerictechnologyinnovationsolutions,soastoeffectivelyplayaleadingroleinsupportinganddemonstratingtheindustrialchain.

③"GuidingOpinionsonPromotingtheHigh-QualityDevelopmentofthePetrochemicalandChemicalIndustryDuringthe'14thFive-YearPlan'"

InOctober2021,theNationalDevelopmentandReformCommission,theMinistryofIndustryandInformationTechnology,andotherdepartmentsjointlyissuedthe"OpinionsonStrictEnergyEfficiencyConstraintstoPromoteEnergyConservationandCarbonReductioninKeySectors"andthe"ActionPlanforEnergyConservationandCarbonReductionDrivenbyStrictEnergyEfficiencyConstraintsinthePetrochemicalandChemicalIndustry(2021-2025years)".Theplanaimstopromotegreenandlow-carbontransformationintherefining,ethylene,andsyntheticammoniaindustriesandensurethetimelyachievementofcarbonpeaktargets.

④"ActionPlanforEnergyConservationandCarbonReductionDrivenbyStrictEnergyEfficiencyConstraintsinthePetrochemicalandChemicalIndustry(2021-2025years)"

InOctober2021,theNationalDevelopmentandReformCommission,theMinistryofIndustryandInformationTechnology,andotherdepartmentsjointlyissuedthe"OpinionsonStrictEnergyEfficiencyConstraintstoPromoteEnergyConservationandCarbonReductioninKeySectors"andthe"ActionPlanforEnergyConservationandCarbonReductionDrivenbyStrictEnergyEfficiencyConstraintsinthePetrochemicalandChemicalIndustry(2021-2025years)".Theplanaimstopromotegreenandlow-carbontransformationintherefining,ethylene,andsyntheticammoniaindustriesandensurethetimelyachievementofcarbonpeaktargets.

The"ActionPlan"clearlyputsforwardtheactiongoalsofachievingacapacityratioexceeding30%atbenchmarklevelsfortherefining,ethylene,syntheticammonia,andcalciumcarbideindustriesby2025throughtheimplementationofenergyconservationandcarbonreductionmeasures.Itaimstosignificantlyimprovetheoverallenergyefficiencylevel,reducecarbonemissionsintensity,andsignificantlyenhancethecapabilitiesforgreenandlow-carbondevelopment.Keytasksoutlinedintheplanincludeformulatingageneralimplementationplanfortechnologicaltransformationinkeypetrochemicalindustries,guidingtheorderlyphasingoutofinefficientproductioncapacity,promotingenergy-savingandlow-carbontechnologiesandequipment,anddrivingcollaborativeandclustereddevelopmentintheindustry.Thisincludesselectingadvancedandapplicableenergy-savingtechnologiesfortherefining,ethylene,andsyntheticammoniaindustries,aswellasguidingtechnologicaltransformationinenterpriseswithlowenergyefficiency.Theplanalsopromotestheeliminationofrefiningunitswithacapacityof2milliontons/yearandbelow,ethyleneunitswitha

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capacityof300,000tons/yearandbelow,andimposesstrictrestrictionsontheconstructionofcertaintypesofunitswithlimitedcapacities.Additionally,theplanencouragesthepromotionoflow-carbondeepprocessingofheavyandpoor-qualityresidualoil,one-stepmethodforethyleneproductionfromsynthesisgas,andcrudeoildirectcrackingtoproduceethylene.Itemphasizestheintegrationofrefiningandpetrochemicalindustries,coalconversionandelectricityheatingintegration,andthedevelopmentofmultipleco-production.Theaimistoestablishinterconnectedindustrialchainswhereenterprisesareconnectedfromupstreamtodownstream,withmutualsupplyanddemandandinterconnectivityofproductionfacilities.Thiswillimprovethelevelofcomprehensiveresourceutilization,reduceenergyconsumptioninlogisticsandtransportation,andpromotetherecognitionofchemicalindustrialparks.

(2).Basicinformationonthemainindustrialsegmentandindustrialstatusofthecompany

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①InthepetroleumrefiningandchemicalsectorThecompanyhasestablishedaprocessingcapacityof20milliontonsofcrudeoiland5milliontonsofrawcoalintheupstreamandmidstreambusinesssectors,withamainannualoutputof5.2milliontonsofPX,1.8milliontonsoffiber-gradeethyleneglycol,1.8milliontonsofpurebenzene,850,000tonsofpolypropylene,720,000tonsofstyrene,400,000tonsofhigh-densitypolyethylene,850,000tonsofaceticacid,140,000tonsofbutadiene,720,000tonsofmethanolandotherdomesticallyscarceandhigh-value-addedchemicalproducts,aswellasasmallamountofdieselandaviationkerosene.Assmallerrefinerieswithhigherproductioncostsandoutdatedfacilitiesaregraduallyphasedout,theconcentrationoftherefiningandchemicalindustryandthecompetitivenessoflarge-scalenewlybuiltrefinerieswillgreatlyimprove.Thecompanyhasprominentadvantagesinpolicysupport,processtechnology,andindustrialsynergy.Comparedtootherrefineries,ithascharacteristicsofhighqualityandlowcost,makingithighlycompetitiveinthemarket.

②InthePTAsectorPTAservesasthedirectupstreamrawmaterialforpolyesterproduction,andChinaistheworld'slargestproducerandconsumerofPTA.ThecompanycurrentlyhasbuiltandputintooperationaPTAproductioncapacityof16.6milliontons/year.Ithasthemostadvancedtechnologyandthemostsignificantcostadvantages.

③InthepolyesternewmaterialssectorOneofthecompany'sprimaryoperationsistheresearch,production,andsalesofrelatedproducts.Thecompanyoffersadiverserangeofdownstreampolyesterandadvancedchemicalmaterialswithcomprehensiveproductspecificationstargetingmid-to-highendmarkets,includingcivilianpolyesterfilamentyarn,industrialpolyesterfilamentyarn,BOPETfilms,PBTengineeringplastics,andPBS/PBATbiodegradablematerials,whicharewidelyusedintextile,pharmaceutical,automotive,renewableenergy&environmentalprotection,electronics&electrical,photovoltaicandopticalequipmentindustriesforlarge-scale,differentiatedandhigh-value-addedindustrialmanufacturingandconsumerapplications.AsoneofChina'slargestandmosttechnologicallyadvancedmanufacturersofpolyesteryarns,thecompanyranksamongthetop5domesticproducersofcivilianfilamentyarnandisthegloballeaderinindustrialfilamentyarnproductioncapacity.

ThesubsidiarycompanyKanghuiNewMaterial,focusesoncreatingworld-leadinghigh-end,differentiated,greenandenvironmentallyfriendlyfunctionalfilmmaterials,high-performanceengineeringplasticsandbiodegradablematerials.Intermsoffunctionalfilmmaterials,KanghuiNewMaterialhasbrokenthroughforeigntechnicalbarriersinthefieldsofhigh-endMLCCreleasebasefilm,polarizerreleaseprotectionbasefilm,OCAreleasebasefilm,environmentalprotectionRPETbasefilm,compositecurrentcollectorbasefilm,lithiumbatteryprocessprotectionfilm,photosensitivedryfilmbasefilm,ultra-thincapacitorfilm,etc.,andhascontinuedtosolvethe"chokepoint"probleminthefieldofnewmaterials.Ithasthecorecompetitivenessandindustrialdevelopmentstrengthoftheindustry.

KanghuiNewMaterialhasestablisheditselfasChina'slargestPBTproducerwithanannualcapacityof660,000tonsofhigh-performanceengineeringplastics,widelyusedinautomotive,electronics,industrialmachinery,textile,opticalcable,polymeralloyandblendingindustries.In

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biodegradablematerials,itoperatesChina'slargestsingle-linePBATproductionfacility(33,000tons/year)usingproprietarytechnology,supplyingrawmaterialsforeco-friendlyapplicationsincludingPBS/PBAT-basedfood-gradeshoppingbags,tableware,strawsandagriculturalfilms.Thecompanyalsopossesses611,000tons/yearBOPETfilmproductioncapacity,withadditionalcapacitiesunderconstructionincluding727,000tons/yearfunctionalpolyesterfilmsand1.94billionm?/yearlithiumbatteryseparatorfilms.

2.Productsandproduction

(1).Mainbusinessmodel

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Thecompany'smainbusinessmodelinvolvestheprocurementofcrudeoilandrelatedadditives,primarilyproducingPXproductsandfinishedoil,aswellasotherchemicals.ThePXproductsaremainlyusedasrawmaterialsforthecompany'sPTAplant,withaportionofthePTAproductsbeingusedinternallybythecompany'spolyesterfactory,andtherestbeingsoldtodownstreamcustomersinthefiberindustryfortheproductionofpolyesterfibersandotherproducts.Variouspolyesterproductsaresoldtodownstreamweavingfactoriesfortheproductionoftextiles,industrialyarnissoldtoconstructionandautomotivecomponentmanufacturers,polyesterchipsaresoldtospinningcompanies,BOPETfilmsaresoldtodownstreamprinting,packaging,andelectronicscompanies,andPBTresinsaresoldtodownstreamautomotive,electronics,andmachinerycompanies.Thespecificoperatingmodesareasfollows:

①Petroleumrefiningsector

Petroleumproducts,alsoknownasoilproducts,areprocessedfromcrudeoilthroughvariousrefiningprocessessuchasatmosphericdistillation,hydrogenationcracking,andreforming.Theseprocessesproducevariousfueloils(gasoline,kerosene,diesel,etc.),lubricants,coke,paraffinwax,asphalt,basicorganicmaterials(ethylene,propylene,butene,benzene,toluene,xylene,acetylene,naphthalene),aswellasvarioussyntheticorganicmaterialsderivedfromthebasicorganicmaterials.

②PTAsector

PTA(PurifiedTerephthalicAcid)isanimportantbulkorganicmaterialwidelyusedinvarioussectorsofthenationaleconomy,includingchemicalfibers,lightindustry,electronics,andconstruction.Inthedomesticmarket,themaindownstreamproductsofPTAarepolyesterfibers,whichareprimarilyusedinclothing,hometextiles,andindustrialtextiles.Themainbusinessprocessinvolvespurchasingpara-xylene(PX)andproducingPTAthroughoxidationreactions,crystallization,drying,hydrogenation,andfurthercrystallizationprocesses,followedbysellingtheproducttodownstreamcustomers.

TheprofitmodelinthePTAindustryisbasedonproducingandsellingPTAproductstogenerateprofits.Sincethefixedinvestmentfortheproductsissignificant,improvingprofitabilityreliesmainlyonreducingthefixedcostperunit.Companiesachievethisbycapitalizingoneconomiesofscale,adoptingadvancedprocessingtechnologiesandequipment,establishingefficientpublicinfrastructure,enhancingproductionsafetyandproductqualitystability,andultimatelyloweringproductioncoststoincreaseprofitability.

③Polyestersector

TheprimarybusinessprocessinvolvestheprocurementofpetrochemicalproductssuchasPTA,MEG,andotheradditives,followedbypolymerizationreactionsusingappropriateproductionequipment.Subsequently,thepolyesterfilamentsareproducedthroughspinninganddrawingprocesses,andtheproductsaresoldtodownstreamweavingcompaniesfortheproductionofcivilandindustrialtextiles.

Theprofitmodelinthepolyesterfilamentindustryisbasedonproducingandsellingpolyesterfilamentstogenerateprofits.Duetothesignificantfixedcostsassociatedwiththeproducts,improvingprofitabilitydependsonthreemainfactors:reducingthefixedcostperunit,increasingtherateofnewproductdevelopment,andaddingdifferentiatedproducts.Companiesachievethisbyfocusingonincreasingtherateofnewproductdevelopment,pursuingdifferentiationinproductlines,enhancingproductvalue,andultimatelyimprovingoverallprofitability.

④Polyesterfilmsector

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ThemainbusinessprocessinvolvestheprocurementofpetrochemicalproductssuchasPTA,MEG,andotheradditives.Unlikethepolyesterindustry,theequipmentandprocessroutesdiffer.Inthepolyesterindustry,equipmentisusedtoextrudethefilmintopolyesterfilaments,whileinthepolyesterfilmindustry,equipmentisusedtoextrudethefilmdirectly.Consequently,thedownstreamcustomerbaseisdifferent.Theprofitmodelinthepolyesterfilmindustryisbasedonproducingandsellingpolyesterfilmstogenerateprofits.Duetothesignificantfixedinvestmentrequired,improvingprofitabilitydependsmainlyontwofactors:reducingthefixedcostperunitanddevelopingnewproducts.Forcompanies,relyingonthecutting-edgeequipmenttechnology,self-ownedsynthesistechnologyandindependentresearchanddevelopmentcapabilitiesaccumulatedintheindustryformorethantenyears,theyovercomevarioustechnicaldifficulties,breakthroughforeigntechnicalbarriersinthefieldsofmediumandhigh-endMLCCreleasebasefilm,polarizerreleaseprotectionbasefilm,OCAreleasebasefilm,environmentalprotectionRPETbasefilm,compositecurrentcollectorbasefilm,lithiumbatteryprocessprotectionfilm,photosensitivedryfilmbasefilm,ultra-thincapacitivefilmandPBS-basedbiodegradablematerials,andactivelyextendandexpandthemediumandhigh-endmaterialbusinessinvariousapplicationscenarios.

⑤Engineeringplasticssector

TheprimarybusinessprocessinvolvestheprocurementofpetrochemicalproductssuchasPTA,BDO,andotheradditives.Theproductionprocessincludespolymerization,extrusion,pulverization,andgranulation,ultimatelyproducingengineeringplastics.Theproductsarethensoldtodownstreamcustomers.

Theprofitmodelintheengineeringplasticsindustryisbasedonproducingandsellingplasticpelletstogenerateprofits.Duetothesignificantfixedinvestmentassociatedwiththeproducts,improvingprofitabilityreliesmainlyontwofactors:reducingthefixedcostperunitanddevelopingnewproducts.Forcompanies,thefutureprimarilyinvolvescapitalizingoneconomiesofscaletoseizemarketshare,increasingproductaddedvalue,andimprovingoverallprofitability.Maincircumstancesofadjustmentstothebusinessmodelduringthereportingperiod

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(2).Mainproducts

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Product

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PolyesterFilamentYarn(PFY)

(3).R&Dandinnovation

√适用□不适用Asoftheendof2024,thecompanyholdsatotalof1,676patents,including345newlyapprovedpatentsduringthereportingperiod.Forspecificdetails,pleaserefertotherelevantcontentinthe"04Innovation-DrivenandDigitallyIntelligentEscort"chapterofthe"2024SustainableDevelopmentReport"disclosedbythecompanyontheShanghaiStockExchangewebsite(www.sse.com.cn)onApril17,2025.

(4).Productiontechnologyandprocess

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Duringthereportingperiod,therewerenosignificantchangesinthecompany'smainproductsandtheirproductionprocesses.Forspecificdetailsregardingtheproductionprocessesofthecompany'smainproductsinthepolyesterfibersector,pleaserefertoSection4,"DiscussionandAnalysisofOperatingConditions,"subsection"II.(IV)AnalysisofOperationalInformationintheChemicalIndustry,"andthesection"ProductionProcessesandFlow"(page33)inthecompany's"2016AnnualReport."Regardingtheproductionprocessesofthecompany'srefiningandethyleneengineering,aswellasthePBATproject,pleaserefertoSection4,"DiscussionandAnalysisofOperatingConditions,"subsection"II.(IV)AnalysisofOperationalInformationintheChemicalIndustry,"andthesection"ProductionProcessesandFlow"(page34)inthecompany's"2020AnnualReport."

(5).Productioncapacityandconstructionwork

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Unit:hundred-million-yuanCurrency:RMB

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Note:1.Thedesignedcapacityoftheplantsandtheprojectslistedabovereferstowhathasbeenputintoproduction,excludingthoseunderconstruction.

2.Thedateoftheinvestedamountofproductioncapacityunderconstructionisasoftheendof2024.Increaseanddecreaseofproductioncapacity

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1.HengliChemicalFiber'sintelligentproductionprojectwithanannualoutputof400,000tonsofhigh-performancespecialindustrialyarnhasbeenputintoproduction.

2.Hengli(Huizhou)IndustrialParkhasfullyputintooperationofthe5milliontons/yearPTA.Adjustmentofproductlineandproductioncapacitystructureoptimization

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3.Rawmaterialprocurement

(1).Basicsituationofmainrawmaterials

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Unit:10,000tons

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TheimpactofmajorprocurementpricechangesontheCompany’soperatingcosts:theprocurementpricesoftherawmaterialexertingpositiveimpactontheCompany’soperatingcosts.

(2).Basicsituationofmainenergy

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ThepriceofmajorenergysourcesisdirectlyproportionaltotheCompany'soperatingcosts.Thepricesofmajorenergiesareaffectedbynationalpolicies,thesupplyanddemandstructureoftheregionalmarkets,andthestabilityofsupply.

(3).RiskresponsemeasuresforrawmaterialpricefluctuationsThemainsituationofholdingderivativesandotherfinancialproducts

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(4).Basicsituationofadoptingothermethodssuchasstagedreserves

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4.ProductSales

(1).Basicsituationofthecompany'smainoperationsbysegment

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Unit:ten-thousand-yuanCurrency:RMB

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Businesssegment

(2).Basicsituationofthecompany'smainoperationsbysaleschannel

□适用√不适用Notetoaccountingpolicies

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5.Environmentalprotectionandsafetysituation

(1).Basicsituationofmajorproductionsafetyaccidentsduringthecompany'sreportingperiod

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(2).Majorenvironmentalviolations

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1.Majorequityinvestment

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2.Majornon-equityinvestments

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3.Financialassetsmeasuredatfairvalue

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□适用√不适用PrivateEquityFundInvestment

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DerivativesInvestment

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(1).Derivativesinvestmentforhedgingpurposesduringthereportingperiod

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Unit:ten-thousand-yuanCurrency:RMB

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etc.)

(2).Derivativesinvestmentsforspeculativepurposesduringthereportingperiod

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4.Specificprogressofmajorassetreorganizationandintegrationduringthereportingperiod

□适用√不适用(VI)Saleofmajorassetsandequityinterests

□适用√不适用(VII)Analysisofmajorholdingandparticipatingcompanies

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Unit:hundred-million-yuanCurrency:RMB

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Companyname

Note:JiangsuHengliChemicalFiberCo.,Ltd.includesitssubsidiariesJiangsuHengkeAdvancedMaterialsCo.Ltd.,NantongTeng'anLogisticsCo.,Ltd.,JiangsuXuandaPolymerMaterialCo.,Ltd.,JiangsuDeliChemicalFiberCo.,Ltd.,HengliFuturesCo.,Ltd.,HengliHengxinIndustryandTrade(Shanghai)Co.,Ltd.,SuzhouSushengThermalPowerCo.,Ltd.,SuzhouBinglinTradingCo.,Ltd.,SichuanHengliNewMaterialCo.,Ltd.,HengliNewMaterials(Suqian)Co.,Ltd.,SuzhouHengliChemicalNewMaterialCo.,Ltd.

HengliPetrochemical(Dalian)Co.,Ltd.includingitssubsidiaries-HengliShipping(Dalian)Co.,Ltd.,HengliPetrochemicalCo.,Ltd.,ShenzhenGanghuiTradingCo.,Ltd,SuzhouHengliJiuliSalesCo.,Ltd.,andSuzhouHengliHuirunImportandExportCo.,Ltd..

HengliPetrochemical(Dalian)RefiningandChemicalCo.,Ltd.includesitssubsidiaries-HengliPetrochemicalInternationalPte.Ltd.,HengliShippingInternationalPte.Ltd.,HengliEnergy(Hainan)Co.,Ltd.,HengliOilandChemical(Hainan)Co.,Ltd.,SuzhouHengliChemicalImportandExportCo.,Ltd.,ShenzhenShengangTradingCo.,Ltd.,ShanghaiJinmintaiTradingCo.,Ltd.,HengliRefiningandChemicalProductSales(Dalian)Co.,Ltd.,HengliAviationOilCo.,Ltd.,HengliOilandChemical(Suzhou)Co.,Ltd.,HengliEnergy(Jiangsu)Co.,Ltd.,SuzhouHengliChemicalPolymerCo.,Ltd.,SuzhouHengliEnergyChemicalImportandExportCo.,Ltd,NantongHengliImportandExportCo.,Ltd.,andHengli(Zhoushan)EnergyChemicalCo.,Ltd..

HengliPetrochemical(Dalian)ChemicalCo.,Ltd.includesitssubsidiariesHengliPetrochemical(Dalian)NewMaterialsTechnologyCo.,Ltd.,HengliPetrochemicalPublicEngineering(Dalian)Co.,Ltd.,andDalianHengzhongSpecialMaterialsCo.,Ltd.(VIII)Structuredentitiescontrolledbythecompany

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OnDecember31,2024,structuredentitiesrelatedtothecompanybutnotincludedinthescopeofthefinancialstatementsaremainlyengagedinassetmanagementbusiness,operatingclientassets,andprovidingclientswithinvestmentmanagementservicesforsecurities,futuresandotherfinancial

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products.ThetotalassetsofthistypeofstructuredentityonDecember31,2024are454,8889millionyuan.VI.DiscussionsandanalysisoftheCompany’sfuturedevelopment(I)Industriallandscapeandtrend

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1.Petrochemicalindustry

(1)Theindustryisacceleratingitstransformationtowardsgreenandlow-carbondevelopment,promotingthedual-trackdevelopmentofdigitalandgreentransformationUnderthe"dualcarbon"goal,thepetrochemicalindustrycontinuestodeepengreendevelopmentthroughcleanproductiontechnologytransformation,intensiveresourceutilizationandcirculareconomymodels.TheindustryisacceleratingthedemonstrationandapplicationofCCUStechnology,whileexploringinnovativepathssuchasdirectconversionofcarbondioxidefromhydrogenproductiontailgasandcatalyticcrackingfluegas,carbondioxidedryreforming,andcarbondioxidehydrogenationtoproduceoilproducts.Theseinitiativeshavesignificantlyreducedthecarbonemissionintensityacrosstheentireindustrialchain.

Acceleratethein-depthintegrationofnewgenerationinformationtechnologiessuchas5G,bigdata,andartificialintelligencewiththepetrochemicalandchemicalindustry;Continuouslyenhancetheabilitytoobtainchemicalprocessdata;Enrichdatainenterpriseproductionmanagement,processcontrol,productflow,andotheraspects;Connectproductionandoperationinformationdata"islands";Buildanalysismodelsforproductionandoperation,marketandsupplychain;Strengthenintegratedcontroloftheentireprocess;Boosttheadoptionrateofdigitaltwininnovationapplications;Acceleratedigitaltransformation;Achieveorganizationalstructureoptimization,dynamicandaccurateservices,assistinmanagementdecision-makingandothermanagementmodelinnovations;Improveintrinsicsafety;Andenhanceenterprisemanagementcapabilities.

(2)Themarketforhigh-endchemicalnewmaterialsisvast

Thelocalizationwindowforhigh-endchemicalmaterialshasopened,acceleratingthepaceofimportsubstitution.Focusingcloselyonthedemandforchemicalmaterialsinstrategicemergingindustriessuchasnewenergyvehicles,next-generationinformationtechnology,semiconductor,aerospace,railtransit,energyconservationandenvironmentalprotection,andbighealth,wewillacceleratethetransformationandupgradingofadvancedandapplicabletechnologies,increaseeffortstoextend,supplement,andstrengthenthesupplychain,andimprovethelevelofproductrefinement,specialization,andserialization.Withthedevelopmentofdownstreamindustries,thefuturemarketdevelopmentspaceforchemicalnewmaterialsisvast.

2.PTAindustry

mycountryisthelargestproducerandconsumerofPTA,andglobalproductioncapacityisconcentratedinChina.Underthecompetitivelandscapeofintegratedindustrialchain,productioncapacityishighlyconcentrated,andtheheadeffectisstrengthened.LeadingenterprisesinthePTAindustryhavestrongmarketcompetitivenessintermsofsingle-unitscale,stableproductionoperation,materialconsumption,energyconsumptionandproductquality.Thedifferenceincostandefficiencyandprocessiterationpromoteenergyefficiencyleaps,andtheindustryenergyefficiencybenchmarkcontinuestomoveupward,acceleratingtheeliminationofbackwardproductioncapacityinthePTAindustry.Inthefuture,theindustryconcentrationwillbefurtherimproved.

ChinaisthelargestproducerandconsumerofPTA,withglobalcapacityincreasinglyconcentratedhere.Underthecompetitivelandscapeoftheintegratedindustrialchain,productioncapacityishighlyconcentrated,withapronounced"winner-takes-all"effectamongindustryleaders.LeadingcompaniesinthePTAindustrydemonstrateformidablemarketcompetitivenessacrossmultipledimensions-thescaleofasinglesetoffacility,stableproductionandoperation,materialconsumption,energyconsumption,andproductquality.Thecompoundingadvantagesofcost-efficiencydifferentialsandproductiontechniqueiterationhavedrivenquantumleapsinenergyefficiencyperformance,continuouslyresettingindustrybenchmarks.Thisdynamicisacceleratingthephase-outofbackwardproductioncapacityandwillfurtherelevatemarketconcentrationinthecomingyears.

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3.PolyesterfiberThechemicalfiberindustryisthecoresupportforthestabledevelopmentandcontinuousinnovationofthetextileindustrychain,aninternationallycompetitiveadvantageindustry,animportantcomponentofthenewmaterialsindustry,andplaysanimportantroleintheconstructionofamodernindustrialsystem.Thechemicalfiberindustryisacceleratingitsdevelopmenttowardshigh-end,intelligent,green,andbrandedproducts:

Improvetheaddedvalueofconventionalfibers,enhancetheproductionandapplicationlevelofhigh-performancefibers,acceleratethedevelopmentofbiobasedchemicalfibersanddegradablefibermaterials,develophigh-qualitydifferentiatedproducts,andstrengthenthedevelopmentofapplicationtechnologies.

Strengthentheresearchandapplicationofintelligentequipment,andpromotetheresearchandapplicationofequipmentsuchaslarge-scaleintegration,lowenergyintelligentlogistics,automatictubedropping,andautomaticpackaging.Acceleratetheresearchandapplicationofautomaticheadformingdevicesandonlinequalitymonitoringsystemsforpolyestertexturingequipment,andimprovetheintelligencelevelofspinningandwindingequipmentforpolyester,spandex,andnylon.Promotetheapplicationofemergingdigitaltechnologiesandenhancethedigitalizationlevelofvariouslinksintheindustrialchain,suchasresearchanddevelopmentdesign,productionandmanufacturing,warehousingandlogistics.BuildanindustrialInternetplatformintegratedwithmasterdata,real-timedata,applications,identityresolution,managementinformationsystemandbusinessintelligence,promoteupstreamanddownstreamenterprisesintheindustrialchaintorealizeresourcedatasharingthroughtheindustrialInternetplatform,strengthensupplyanddemanddocking,andpromotecollaborativedevelopmentandcollaborativeapplicationofthewholeindustrychain.

Optimizeenergystructure,strengthencleanproductiontechnologytransformationandpromotekeyenergy-savingandemissionreductiontechnologies,andpromoteenergy-savingandlow-carbondevelopment.Improvethelevelofrecycling,promotekeytechnologicalbreakthroughsandindustrialdevelopmentinthehigh-valueutilizationofwastetextiles,acceleratetheoptimizationoftheindustrialstructureandenterpriseupgradingofrecycledchemicalfibers.

Takingtechnologyasthecoreanddemandoriented,increasingthesupplyofhigh-qualityproducts,cultivatingwell-knownfiberbrands,enhancingconsumerawarenessofChinesefibersandcorporatebrands,andpromotingtheinternationalizationofChinesefibersandcorporatebrands.(II)Developmentstrategy

√适用□不适用

Generaldevelopmentstrategy:wearecommittedtoprovidingqualityfiberandcreatingabetterlifeforthesociety.Undertheprincipleof“doingtherightthingsattherighttime”,weadheretothedevelopmentphilosophyof“innovation,coordination,green,andsharing”,theoperationconceptof“winningglobalmarketswithsurpassingquality,persistence,andwill”,andthemanagementidealof“people-centered,scientific,institutionalized,andprofessional”,fosteracompanyspiritof“solidarity,integrity,steadiness,andinnovation”,increasetheindustrialinnovationcapacity,improveindustrialstructures,anddrivetheCompanyintohigh-end,intelligent,green,integrated,andinternationaldevelopment.

1.TheCompanywilltakesolidstepsin“improvingtheupstreamandenhancingthedownstream”.Inthefirstplace,theCompanywillcontinuetostrengthentheupstreamindustrialplatformtosupportthedevelopmentof“refining+ethylene+coalification”underpinningthe“bigchemicals”,andimplement“makingupandenhancingtheindustrialchains”and“R&Dandinnovations”,reservingspaceandpavingwaysforthenewdownstreammaterialbusinessesinthefuture.Ontopofthat,theCompanywillredoubleitseffortsinthedownstreambusinesses,consolidatetraditionalmarketstrengths,benchmarkthebreakthroughsinmajornewmaterialsasthedevelopmentandupgradingof“newconsumption”and“key&coretechnologies”,nurturenewleadingmaterialbusinessgrowthpointsinscale,andmakestridestowardaworldleadingpetrochemicalnewmaterialcompanythatcoversthewholeindustrialchain.

2.TheCompanywilltakeunswervingstepsinadoptingintegrateddevelopmentstrategyacrosstheboard.TheCompanywillfocusondiversifyingthespecsoftheproducts,expandingcapacity,

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differentiatingtheproductsthroughR&D,technologyandinnovationupgrading,andstrivetorealizetheindustrialdevelopmentgoalof“industrialgrowthinbases,scaleproduction,meticulousproducts,professionaltechnology,andsoundmanagement”.(III)Operationalplan

√适用□不适用

Thecompanywillfocusontheoverallplan,makingpreciseeffortsindeepeningmarketsynergyandindustriallayout,strengtheninginnovation-drivenqualityandefficiency,andconsolidatingmanagementfoundationsandriskprevention.Withunityofpurpose,firmobjectives,andrelentlessprogress,wewillfullyachievetheannualoperationalgoalsandensurehigh-qualityprofitgrowthforthecompany.Thekeytasksfortheyearwillrevolvearoundthefollowingaspects:

1.Deepenmarketcollaborationandindustriallayouttoensurehigh-qualityandefficientcompanyoperations.

Guidedbytheprincipleof"productionbasedonsalesandsalesdrivenbyproduction,"weupholdacustomer-centric,market-focusedphilosophy.Indomesticmarkets,weareexpandingsaleschannelswhileimprovingproductandservicequalitytodelivergreatervalue.Internationalmarketdevelopmentremainsapriority,withcoordinatedglobal-localstrategiescreatingnewgrowthopportunities.AtourChangxingIslandIndustrialPark,weoptimizecross-divisionalcollaborationthroughdynamicoperationaladjustmentstomaximizeannualprofitability.Thepolyesterbusinessunitfocusesoncapturinghigh-valuemarketsegmentsthroughcoordinatedproduction-salesplanning,costoptimizationandtechnologicalupgrades.

2.Strengtheninnovation-drivendevelopmentandqualityefficiency,andcultivatethecoredrivingforceofnewqualityproductivity.

Ourinnovationstrategyisfirmlymarket-oriented,withR&Deffortsconcentratingonhigh-marginproductdevelopmentandcommercialization.Productionandsalesstrategiesarecontinuouslyadjustedaccordingtotechnologicaltrendstoenhanceproductvalueandmarketposition.Digitaltransformationinitiativesleverageexistingplatformstodevelopinnovativetechnologiesthatstreamlineproductionprocessesandimprovemanagementefficiency.Throughleanmanagementandtechnologicalinnovation,wemaintaintheoptimalbalancebetweenqualityandcost,ensuringbothproductconsistencyandcompetitivepricing.Thisenablesrapidresponsetomarketchangeswhilemaximizingcustomervalue.

3.Strengthenmanagementfoundationandriskcontrol,andbuildasolidsystemforhigh-qualitydevelopment.

The"sixmajormanagementsystems"arebuilttosupporttheimplementationofthestrategy.Thesafetyandenvironmentalprotectionsystemestablishescomprehensivesafeguardsforgreenmanufacturing,whilethefinancialsystemensuresrigorouscapitalcontrolandregulatorycompliance.Ourtalentdevelopmentsystemfocusesonleadershippipelinebuildingandperformance-drivenculture.Qualitymanagementachievesfull-processstandardization,supportedbydigitalsystemsdrivingenterprise-widetransformation.Thecultureandbrandsystemenhancesemployeeengagementandglobalbrandbuilding.Wehaveestablishedaunifiedlegal-compliance-riskmanagementframeworkwithenhanceddigitalmonitoringcapabilitiestostrengthenoverallriskpreventionandcontroleffectiveness.(IV)Potentialrisks

√适用□不适用

1.Riskofmacroeconomicfluctuations

Theproductsinvolvedinthecompany'sbusinessfieldarecloselyrelatedtothenationaleconomyandpeople'slivelihood,andthereisahighdegreeoflinkagebetweenindustrydevelopmentandtheprosperityofthenationaleconomy.ThechangesinthemacroenvironmentofChina'snationaleconomy,exportpolicies,andconsumerdemandtoacertainextentaffectindustryoperatingrates,productprices,profitability,andsoon.Thecompanycloselymonitorsthemacroeconomicsituation

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andmarketdynamics,makestimelypredictions,adjustsbusinessstrategies,andminimizestheriskscausedbymacroeconomicfluctuations.

2.RiskofrawmaterialpricefluctuationsTheproductionandoperationofthecompanyaregreatlyaffectedbythepricechangesofupstreamrawmaterials,especiallycrudeoilandcoal.Ifthecompany'sinventoryandprocurementmanagement,aswellasdownstreamproductmarketpriceadjustments,cannoteffectivelyreduceordigesttheimpactofrawmaterialpricefluctuations,itmayhaveadverseeffectsonthecompany'sbusinessproductionandperformance.Thecompanywillcontinuetomonitormarketchangesinrawmaterials,conductdynamicanalysisandjudgment,chooseappropriateprocurementopportunities,controlthefluctuationofrawmaterialprocurementprices,andeffectivelycontrolprocurementcosts;Strengthenmarketingmanagementandreducetheadverseeffectsofrawmaterialfluctuationsonthecompany.

3.ExchangerateriskIftheRMBcontinuestofluctuatesubstantially,greatuncertaintieswouldbeposedtotheCompany’sexchangegainsorlosses,exportproductpricesdenominatedinforeigncurrencies,rawmaterialpricesandotheroperationalfactors.TheCompanywillleverageforwardforeignexchangecontractsandothermethodstoestablishandimprovetheexchangeratehedgingmechanismandreducetheamountofforeigncurrencyreceiptsandpaymentsinordertoreducetheimpactofexchangeratechangesontheCompany’sprofitability.

4.EnvironmentalandsafetyrisksRealizinghighstandardsofsafetyproductionandenvironmentalprotectionoperationisthelifeline,benefitline,andsceniclineofenterprises.Environmentalprotectionandsafetyissuesremainthetoppriorityofenterpriseriskmanagement.Thecompanyhasalwaysadheredtothepolicyof"safetyfirst,preventionoriented,andcomprehensivegovernance",strengthenedessentialsafetymanagement,fullyimplementedthemainresponsibilityofenterprisesafety,deepenedsafetystandardizationandHSEsystemmanagement,andcontinuouslyimprovedtheabilityofsafetyproductiontechnologyinnovationandriskcontrol.Standardizeaccidentemergencymanagementwork,establishanemergencymanagementsystem,preventandreducetheriskofemergencies,andimprovetheabilitytorespondtoemergencies.Withtheenhancementofenvironmentalawarenessandthetighteningofgovernmentenvironmentalprotectionrequirements,thecompanyactivelyintegratesgreenandlow-carbonproductionintoenterprisedevelopment,increasesenvironmentalinvestment,andmeetstherequirementsofpotentiallyincreasinglystrictenvironmentallaws,regulations,andrulesinthefuture.(V)Others

□适用√不适用VII.Explanationofthecircumstancesandreasonswhythecompanydidnotdisclosein

accordancewiththeguidelinesduetospecialreasonssuchasnon-applicabilityoftheguidelinesorstatesecrets,commercialsecrets,etc.

□适用√不适用

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Chapter4orporateGovernance

I.Descriptionofcorporategovernance

√适用□不适用

InstrictaccordancewiththerequirementsoftheCompanyLaw,theSecuritiesLaw,theCodeofCorporateGovernanceforListedCompanies,theRulesGoverningtheListingofStocksonShanghaiStockExchangeandotherlaws,regulationsandregulatorydocuments,theCompanycontinuouslyimprovedthecorporategovernancestructure,establishedandimprovedasoundsystemofinternalmanagementincludingGeneralShareholdersMeetings,theBoardofDirectorsandtheSupervisoryCommitteetoregulateitsoperations.TheCompanyhasformedacorporategovernancestructurewithclearrightsandresponsibilities,effectivechecksandbalances,scientificdecision-makingandcoordinatedoperationsamongorgansofauthority,decision-makingorgans,supervisoryorgansandtheseniormanagementteams.Thestructureensurestheeffectiveimplementationofthedecision-makingpowerofthegeneralshareholders’meetingandtheBoardofDirectorsandthesupervisorypowerofthesupervisorycommitteeaswellasefficientandcompliantoperationsandmanagementoftheseniormanagementteam.Thecompany'sboardofdirectorshasfourspecialcommitteesforstrategyandsustainabledevelopment,audit,nomination,andcompensationandevaluation,whichprovideconsultationandsuggestionsformajordecisionsoftheboardofdirectorstoensureprofessionalandefficientdecision-making.Thecompanycontinuestopayattentiontonewchangesinregulatorylawsandregulations,effectivelyimplementsnewregulatorypoliciesandrequirements,continuouslystrengthensriskpreventionandcontrol,solidlypromotesinternalcontrolmanagement,carriesouthigh-qualityinformationdisclosure,followstheprinciplesoftruthfulness,accuracy,completeness,timeliness,andfairness,reducesthescopeofinsiders,andensuresthatallshareholdershavefairaccesstoinformation.Activelycarryoutinvestorrelationsmanagementwork,treatallinvestorsfairlywithanhonestandopenattitude.PromotetheconstructionofESGsystem,strivetofulfillsocialresponsibilities,effectivelysafeguardthelegitimaterightsandinterestsofthecompanyandallshareholders,andensurethecompany'ssustainedandstabledevelopment.Whetherthereisanymajordifferencebetweencorporategovernanceandlaws,administrativeregulations,andtheprovisionsoftheChinaSecuritiesRegulatoryCommissiononthegovernanceoflistedcompanies;ifthereisamajordifference,thereasonshouldbeexplained

□适用√不适用II.Thespecificmeasurestakenbythecompany'scontrollingshareholdersandactual

controllerstoensuretheindependenceofthecompany'sassets,personnel,

finances,institutions,andoperations,aswellasthesolutionsadoptedtoaddress

factorsaffectingthecompany'sindependence,workprogress,andsubsequent

workplans

□适用√不适用Thesituationofthecontrollingshareholders,actualcontrollers,andtheiraffiliatedentitiesengaginginsimilarorrelatedbusinessesasthecompany,aswellastheimpactofsignificantchangesinindustrycompetitionorcompetition,themeasurestakentoaddressthem,theprogressofthesolutions,andthesubsequentresolutionplans

□适用√不适用III.NotesonGeneralShareholdersMeetings

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theresolutionispublished

Preferredshareholderswhosevotingrightshavebeenrestoredrequesttoconveneanextraordinarygeneralmeeting

□适用√不适用Notetothegeneralmeetingofshareholders

√适用□不适用

Duringthereportingperiod,thecompanyheldatotalofthreeshareholdermeetings,includingoneannualshareholdermeetingandtwoextraordinaryshareholdermeetings.Theconveningandproceduresoftheshareholdermeetingscompliedwiththeprovisionsoflaws,administrativeregulations,the"RulesofShareholders'GeneralMeetingsofListedCompanies,"andthecompany'sarticlesofassociation.Theattendeesandtheconvenerofthemeetingswerequalifiedandvalid.Thevotingproceduresandresultsoftheshareholdermeetingswerelegalandeffective.

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IV.Informationaboutdirectors,supervisorsandseniorexecutives(I)Changesinshareholdingandremunerationofcurrentandresigneddirectors,supervisorsandseniorexecutiveswithinthereportingperiod

√适用□不适用

Unit:share

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Note:Anydiscrepanciesbetweenthetotalsandthesumofindividuallineitemsinthetablesareduetoroundingdifferences.

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Otherinformation

√适用□不适用

1.Thetotalpre-taxremunerationreceivedbydirectors,supervisors,andseniormanagementduringthereportingperiodonlyincludestheirremunerationduringtheirtenure.

2.TheshareholdingchangesofLiXiaomingduringthereportingperiodoccurredbeforehebecamethegeneralmanageranddirector,andhehasnotboughtorsoldthecompany'ssharessincetakingofficeasthethegeneralmanageranddirector.

3.DuetotheresignationofformerDirectorandGeneralManagerWangZhiqing,theCompanyheldthe24thMeetingofthe9thBoardofDirectorsonJanuary27,2025,duringwhichrelevantproposalswerereviewedandapproved,agreeingtoappointLiXiaomingasGeneralManageroftheCompanyandHuangXudongasDeputyGeneralManager.Subsequently,theCompanyconvenedthe25thMeetingofthe9thBoardofDirectorsonMarch11,2025,andtheFirstExtraordinaryShareholders'Meetingof2025onMarch26,2025,duringwhichrelevantproposalswerereviewedandapproved,agreeingtoelectLiXiaomingasaNon-IndependentDirectorofthe9thBoardofDirectorsoftheCompany.Fordetails,pleaserefertothe"AnnouncementoftheResolutionofthe24thMeetingofthe9thBoardofDirectorsofHengliPetrochemical"(AnnouncementNo.:2025-006),"AnnouncementoftheResolutionofthe25thMeetingofthe9thBoardofDirectorsofHengliPetrochemical"(AnnouncementNo.:2025-009),and"AnnouncementoftheResolutionoftheFirstExtraordinaryShareholders'Meetingof2025ofHengliPetrochemical"(AnnouncementNo.:2025-011)publishedbytheCompanyondesignatedinformationdisclosuremediaonJanuary28,2025,March12,2025,andMarch27,2025,respectively.

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(II)Positionsofcurrentandresigneddirectors,supervisorsandseniorexecutivesduringthereportingperiod

1.Employmentinshareholders'entities

√适用□不适用

2.Employmentinotherentities

√适用□不适用

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Staffname

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Staffname

(III)Remunerationofdirectors,supervisorsandseniormanagement

√适用□不适用

(IV)ChangesinDirectors,SupervisorsandSeniorManagementoftheCompany

√适用□不适用

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LiXiaoming

(V)Explanationofpunishmentsreceivedbysecuritiesregulatoryagenciesinthepastthreeyears

□适用√不适用(VI)Others

□适用√不适用V.Relevantinformationonboardmeetingsheldduringthereportingperiod

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Meetingsession

VI.Performanceofdutiesbydirectors(I)ParticipationofDirectorsintheBoardofDirectorsandGeneralMeetingsofShareholders

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meetingsthisyear

Explanationforfailingtoattendtwoboardmeetingsinpersoninarow

□适用√不适用

(II)Situationwheredirectorsraiseobjectionstorelevantmattersofthecompany

□适用√不适用(III)Others

□适用√不适用VII.Specialcommitteesundertheboardofdirectors

√适用□不适用(I)MembershipofspecialcommitteesundertheBoardofDirectors

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(II)Duringthereportingperiod,theAuditCommitteeheld6meetings

(III)Duringthereportingperiod,theRemunerationandAppraisalCommitteeheld1meeting

(IV)Duringthereportingperiod,theStrategyandInvestmentCommitteeheld2meetings

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Date

(V)Specificcircumstancesofobjections

□适用√不适用VIII.ExplanationoftheBoardofSupervisors’discoveryofrisksinthecompany

□适用√不适用TheSupervisoryCommitteehadnoobjectiontothesupervisorymattersduringthereportingperiod.IX.Employeesoftheparentcompanyandmajorsubsidiariesattheendofthereportingperiod(I)Employees

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(II)RemunerationPolicy

√适用□不适用

Thecompanyhasestablishedalegal,standardized,andeffectivesalaryandjobgradingsystem,takingintoaccounttheinternalandexternallabormarketconditions,regionalandindustrydifferences,andthevalueofemployeepositions.Theprinciplesguidingthesystemare"competitivenessexternally,fairnessinternally,andprotectionofemployeedevelopmentspace."Thegradingandsalarydeterminationarebasedonfactorssuchasresponsibilities,capabilities,andperformancecontributions.Eachsubsidiarycompanyrefinesandimplementsspecificcompensationplans,promotionchannels,andassessmentindicatorsthataresuitableforitsowndevelopment,basedonitsbusinessscope,industry,andregionalfactors.Thecompany'scompensationandbenefitsprimarilyincludebasicsalary,position-basedsalary,seniority-basedsalary,pieceworkwages,bonuses,overtimepay,nightshiftallowances,managementallowances,skillallowances,etc.Thecompanyalsoprovidessocialinsuranceandhousingfundcontributionsforemployees,offersfreeentrymedicalexaminations,freeworkmeals,holidayallowances,birthdaycakes,etc.Annualsalaryincreasesaredeterminedbasedonmarketbenchmarksandthecompany'ssalaryrange,whileannualbonusesaredistributedbasedoncompanyperformanceandindividualachievements.Thefair,reasonable,andcompetitivecompensationsystemaimstoattractandretainoutstandingtalents,provideemployeeswithasenseofbelongingandidentity,motivatetheirsenseofresponsibilityandenthusiasm,andpromotethemutualenhancementofcompanyandemployeevalue.(III)Trainingplan

√适用□不适用

Fordetails,pleaserefertotherelevantcontentinthe"05People-orientedandGivingBacktoSociety"chapterofthe"2024SustainableDevelopmentReport"disclosedbytheCompanyontheShanghaiStockExchangewebsite(www.sse.com.cn)onApril17,2025.(IV)Laboroutsourcing

□适用√不适用X.Profitdistributionorcapitalreserveconversionplan(I)Formulation,implementationoradjustmentofcashdividendpolicy

√适用□不适用

Duringthereportingperiod,therewasnoadjustmenttothecompany'scashdividendpolicy.Thecompanystrictlyfollowstherelevantprovisionsofthe"ArticlesofAssociation"and"ShareholderReturnPlanfortheNextFiveYears(2020-2024)".(II)Specialnotesoncashdividendpolicy

√适用□不适用

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(III)Ifthecompanyhasmadeprofitsduringthereportingperiodandtheparentcompanyhas

distributableprofits,butnoproposedcashdividenddistributionplanhasbeenputforward,thecompanyshouldprovidedetaileddisclosureofthereasonsaswellasthepurposeandutilizationplanoftheundistributedprofits

□适用√不适用(IV)Profitdistributionandconversionofcapitalreserveintosharecapitalduringthereporting

period

√适用□不适用

Unit:ten-thousand-yuanCurrency:RMB

(V)Cashdividendsinthelastthreefiscalyears

√适用□不适用

Unit:ten-thousand-yuanCurrency:RMB

Note:In2022,theCompanyrepurchasedsharesthroughcentralizedbiddingforanamountofRMB2,000,239,525.27.Pursuanttotherelevantprovisionsof"ShanghaiStockExchangeSelf-DisciplineSupervisionGuidelinesforListedCompanyNo.7-ShareRepurchase"(revisedinMarch2025),this

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repurchaseamountistreatedascashdividendsandincludedinthecalculationofthecashdividenddistributionratioforthatyear.XI.Thestatusandimpactofthecompany'sequityincentiveplan,employeestockownershipplanorotheremployeeincentives(I)Relevantincentiveshavebeendisclosedintemporaryannouncementsandthereisnoprogress

orchangeinsubsequentimplementation

√适用□不适用

(II)Incentivesnotdisclosedinthetemporaryannouncementorwithfollow-upprogressEquityincentivesituation

□适用√不适用Othernotes:

□适用√不适用EmployeeStockOwnershipPlanStatus

□适用√不适用Otherincentives

□适用√不适用(III)Shareincentivesgrantedtodirectorsandseniorexecutivesduringthereportingperiod

□适用√不适用(IV)Theestablishmentandimplementationoftheevaluationmechanismforseniormanagement

personnelandtheincentivemechanismduringthereportingperiod

√适用□不适用

TheCompanyhasestablishedaRemunerationandAssessmentCommitteeandformulatedthe"ImplementationRulesfortheBoardRemunerationandAssessmentCommittee"tostandardizetheproceduresfordeterminingexecutivecompensation.Thecommitteedevelopsremunerationplansorproposalsbasedonthekeyscopeofresponsibilities,importanceofseniormanagementpositions,remunerationlevelsforcomparablerolesatpeercompanies.Additionally,thecommitteereviewstheperformanceofseniormanagement,conductsannualperformanceappraisals.Allexecutive

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remunerationproposalsputforwardbytheRemunerationandAssessmentCommitteearesubjecttoBoardapproval.Thecompanycontinuouslyimprovesitslong-termincentivepoliciesbasedonactualcircumstances,aimingtomotivateseniormanagementtofulfilltheirresponsibilitiesdiligentlyandresponsibly.XII.Internalcontrolsystemconstructionandimplementationduringthereportingperiod

√适用□不适用

Duringthereportingperiod,thecompanystrictlyadheredtovariouslawsandregulations,suchasthe"CompanyLaw","BasicNormsforEnterpriseInternalControl,","ListingRulesoftheShanghaiStockExchange",and"Self-regulatoryGuidelinesforListedCompaniesoftheShanghaiStockExchange-StandardOperations".Thecompanyalsofollowedinternalcontrolsystemstandardstooperateandmanageriskseffectively.Thecompanyestablishedarobustinternalcontrolmanagementsystem,takingintoaccountindustrycharacteristicsandactualbusinessoperations.Theinternalcontrolsystemwascontinuouslyoptimizedandimprovedtoensurethelawfulandcompliantoperationandmanagementofthecompany,assetsecurity,andtheaccuracyandintegrityoffinancialreportingandrelatedinformation.Thesemeasuresaimedtoenhanceoperationalefficiency,actualresults,andprotecttheinterestsofthecompanyandallshareholders.Explanationonmajordeficienciesininternalcontrolduringthereportingperiod

□适用√不适用XIII.Managementandcontrolofsubsidiariesduringthereportingperiod

√适用□不适用

Incompliancewiththerequirementsofthe"CompanyLaw,"thecompanyhasestablishedandcontinuouslyimprovedamoderncorporatesystem.Throughtheshareholders'meeting,theboardofdirectors,andthesupervisoryboard,effectivemanagementofsubsidiarycompanieshasbeenimplemented.Thecompanyhasdevelopedacomprehensivemanagementsystemthatcoversitsmajorbusinessareas,achievinginstitutionalizationofmanagementpractices.Themanagementsystemhasalsobeendisseminatedtothesubsidiarycompanies,whichhaveformulatedtheirownmanagementsystemsbasedonit.XIV.Relevantinformationontheinternalcontrolauditreport

√适用□不适用

Accordingtothe"BasicNormsforEnterpriseInternalControl"anditssupportingguidelines,aswellasotherinternalcontrolregulatoryrequirements,thecompany,inconjunctionwithitsinternalcontrolsystemandevaluationmethods,conductedanassessmentoftheeffectivenessofinternalcontrolsasofthebenchmarkdatefortheinternalcontrolevaluationreport.Thecompanypreparedthe"2024AnnualInternalControlEvaluationReport"inaccordancewiththeformat,content,andrequirementsspecifiedbytheChinaSecuritiesRegulatoryCommission(CSRC)andtheShanghaiStockExchange(SSE).

Thecompanyengagedanexternalauditingfirm,ZhongHuiCertifiedPublicAccountantsLLP(SpecialGeneralPartnership),toperformaninternalcontrolaudit.Theauditfirmissuedastandardunqualifiedopinionintheinternalcontrolauditreport.Whethertodisclosetheinternalcontrolauditreport:YesTypeofinternalcontrolauditreportopinion:Standardunqualifiedopinion

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XV.Therectificationofproblemsintheself-examinationofthespecialactionoflistedcompanygovernanceDuringthereportingperiod,therewerenosignificantdifferencesbetweenthecompany'scorporategovernancestatusandtherelevantregulationsoftheChinaSecuritiesRegulatoryCommission(CSRC)regardingthegovernanceoflistedcompanies.Thecompanywillcontinuetoenhanceitscorporategovernancelevelandimproveitsgovernanceframeworkinaccordancewithlegalregulationsandregulatoryrequirements.Thisongoingeffortaimstocontinuouslyenhancethequalityofthelistedcompany.XVI.Others

□适用√不适用

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Chapter5EnvironmentalandSocialResponsibility

I.Environmentalinformation

(I)Explanationontheenvironmentalprotectionstatusofcompaniesandtheirmajorsubsidiaries

thatbelongtothekeypollutantdischargeunitsannouncedbytheenvironmentalprotectiondepartment

√适用□不适用

1.SewageInformation

√适用□不适用

TheCompanypaysgreatheedtoenvironmentalprotection,andstrictlyactsupontheEnvironmentalProtectionLawofthePeople’sRepublicofChina,theLawofthePeople’sRepublicofChinaonPromotingCleanProduction,andtheLawofthePeople’sRepublicofChinaonthePreventionandControlofEnvironmentalPollutionbySolidWastesandotherrelevantlawsandregulations.ThekeypollutantdischargingcompaniesandtheirsubsidiariesmainlyincludeHengliRefiningandChemical,HengliChemical,HengliPetrochemical(Dalian),HengliPetrochemical(Dalian)NewMaterial,KanghuiNewMaterials,KanghuiDalianNewMaterials,HengliChemicalFiber,DeliChemicalFiber,HengkeNewMaterials,JiangsuXuanda,SuShengThermalPower,andHengliPetrochemical(Huizhou).Duringthereportingperiod,eachpollutantdischargingsubsidiarycarriedoutself-monitoringoftheirenvironmentalimpactandengagedprofessionalthirdpartiestotestvariouspollutantfactors.Thetestresultsshowedthattheemissionconcentrationsofvariouspollutantswereincompliancewithnationalandlocalpollutantdischargestandardsandotherrelevantstandards.Thetotaldischargeofpollutantsisundertherequiredlimitasoutlinedbyoperationpermits.(Duetotheswitchbetweenoldandnewpollutantdischargelicenses,thereweresomechangesintheapprovedtotalannualpollutantdischargeamountanddischargecalculationmethodsofsomekeypollutantdischargesubsidiaries.)

Thespecificsewagedischargeinformationisasfollows:

1.HengliPetrochemicalRefining

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rDischargeStandard

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2.HengliChemical

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dioxide

3.HengliPetrochemical(Dalian)

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Ammonianitrogen

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StandardforHazardousWasteIncineration

4.HengliPetrochemical(Dalian)NewMaterial

StandardforHazardousWasteIncineration

Type

ofpollutant

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emissio

ns

5.KanghuiNewMaterial

6.KanghuiDalianNewMaterial

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Wastewater

7.HengliChemicalFiber

1)Mainfactoryarea

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dioxide

2)DaxieVillageFactory

Chemicaloxygendemand

8.HengkeAdvancedMaterials

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GB/T31962-2015""SyntheticResinIndustryPollutantEmissionStandardGB31572-2015""TextiledyeingandfinishingindustrywaterpollutantdischargestandardGB4287-2012"PetrochemicalIndustryPollutantEmissionStandardGB31571-20

ComprehensiveWastewaterDischargeStandardGB8978-199

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GB31571-20

"ComprehensiveEmissionStandardsforAirPollutantsDB32/4041-2021"《EmissionStandardofOdorPollutantsGB14554-93》

9.JiangsuXuanda

GB31571-20

"ComprehensiveEmissionStandardsforAirPollutantsDB32/4041-2021"《EmissionStandardofOdorPollutantsGB14554-93》

Typeofpollutant

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PetrochemicalIndustryPollutantEmissionStandardGB31571-20

ComprehensiveWastewaterDischargeStandardGB8978-199

10.DeliChemicalFiber

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Typeofpollutant

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PollutantEmissionStandardDB32/4385-2022OdorpollutantemissionstandardGB14554-

SyntheticresinindustrypollutantemissionstandardGB31572-2015VolatileorganiccompoundunorganizedemissioncontrolstandardGB37822-2019

11.SushengThermalPower

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PlantsDB32/4148—2021

12.HengliPetrochemical(Huizhou)

PlantsDB32/4148—2021

Typeofpollutant

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PollutantEmissionStandard(GB31571-2015)

2.Constructionandoperationofpollutionpreventionandcontrolfacilities

√适用□不适用Duringthereportingperiod,theabovecompanieswhodischargedpollutantsallbuilttheirpollutantcontrolfacilitiesfollowingtherequirementsforenvironmentalimpactassessmentoftheconstructionproject.Currently,thefacilitiesareundernormaloperation.Thecompaniescarryoutdailymaintenanceofthefacilitiestoensuretheirefficientandstableoperationsofkeepingemissionswithinthestandards.

3.Environmentalimpactassessmentofconstructionprojectsandotherenvironmentalprotection

administrativelicensing

√适用□不适用

Duringthereportingperiod,thecompany'sconstructionandrenovationprojectshavebeenaccompaniedbythepreparationofenvironmentalimpactassessmentreportsbyrelevantconstructionunits.Thesereportshavereceivedapprovalfromthecorrespondingecologicalandenvironmentaldepartments,grantingpermissionforconstruction.Variouspollutionpreventionandcontrolfacilities(includingthoseforair,water,noise,andsolidwasteclassificationanddisposal)andenvironmentalmanagementduringtheconstructionperiodhavebeenimplementedinaccordancewiththeapprovedcontentoftheenvironmentalimpactassessmentreport.Thecompanystrictlyadherestothe"design,construction,andproductionsimultaneously"systemforenvironmentalprotection.

4.Emergencyplanforenvironmentalemergencies

√适用□不适用

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EnvironmentBranch

5.EnvironmentalSelf-MonitoringProgram

√适用□不适用

Thecompany'skeypollutant-emittingsubsidiariesunderitsjurisdictionhavedevelopedenvironmentalmonitoringplansinaccordancewithrelevantnationalself-monitoringstandardsandenvironmentalmanagementsystemrequirements.Theseplansaresubmittedtothelocalenvironmentalregulatoryauthoritiesforrecord-keepingwhileapplyingforpollutantdischargepermits.Thecompanyregularlyorganizesitsenvironmentalmonitoringstationtoconducttestsonvarious

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pollutantsemittedfromeachworkshop'sdischargeoutlets.Forprojectswherethecompanylackstestingcapabilities,itentruststhird-partyinstitutionswithenvironmentalmonitoringqualificationstoconductemissiontestingforspecificpollutants,suchaswastewaterandexhaustgases.Thecompanyassignsdedicatedpersonneltoinspectandaggregatedataonvariouspollutantindicators.Additionally,dataanalysisisperformedtoprovidetimelyfeedbacktorelevantdepartmentsasabasisforadjustingprocessparametersandensuringcompliancewithemissionstandards.Thissystematicapproachensuresthatthecompanyachievesstandardizedemissions.

6.Administrativepenaltiesduetoenvironmentalissuesduringthereportingperiod

□适用√不适用

7.Otherenvironmentalinformationthatshouldbedisclosed

□适用√不适用(II)Explanationonenvironmentalprotectionofcompaniesotherthankeypollutantdischarge

entities

√适用□不适用

1.Casesofreceivingadministrativepenaltiesduetoenvironmentalissues

□适用√不适用

2.Discloseotherenvironmentalinformationwithreferencetokeypollutantdischargeentities

□适用√不适用

3.Reasonsfornotdisclosingotherenvironmentalinformation

√适用□不适用

Thecompanyplacesgreatimportanceonenvironmentalprotectionandstrictlyimplementsthe"EnvironmentalProtectionLawofthePeople'sRepublicofChina."Itiscommittedtocomplyingwithnationalandlocalenvironmentallawsandregulations,industrytechnicalspecifications,andgovernmentmanagementprovisions.Thecompanyactivelycarriesoutdailyenvironmentalmanagementwork.Non-productionsubsidiariesunderthecompanyhaveminimalimpactontheenvironment,withtheirenergyconsumptionandemissionsmainlyconcentratedindailyoperationalandofficeactivities.Thecompany'ssubsidiariesactivelyassumecorporateenvironmentalresponsibilitiesandstrictlyadheretovariousenvironmentalpolicies.Theyeffectivelyimplementenvironmentalmeasurestoprotecttheenvironment.(III)Relevantinformationthatisconducivetoprotectingtheecology,preventingpollution,and

fulfillingenvironmentalresponsibilities

√适用□不适用

Fordetails,pleaserefertotherelevantcontentinthechapter"02EnergyConservationandEmissionsReduction,PermanentProtectionofGreen"ofthe“2024SustainableDevelopmentReport”disclosedbytheCompanyonthewebsiteoftheShanghaiStockExchange(www.sse.com.cn)onApril17,2025.(IV)Measuresandeffectstakentoreduceitscarbonemissionsduringthereportingperiod

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measures

Specificnote

√适用□不适用Fordetails,pleaserefertotherelevantcontentinthechapter"02EnergyConservationandEmissionsReduction,PermanentProtectionofGreen"ofthe“2024SustainableDevelopmentReport”disclosedbytheCompanyonthewebsiteoftheShanghaiStockExchange(www.sse.com.cn)onApril17,2025.II.Socialresponsibilityworksituation(I)Whethertodisclosesocialresponsibilityreport,sustainabledevelopmentreportorESGreportseparately

√适用□不适用

Thecompanyhaspreparedanddiscloseditsseparate2024SustainableDevelopmentReport.Forspecificdetails,pleaserefertothe"2024SustainableDevelopmentReport"disclosedbythecompanyonApril17,2025,ontheSSEwebsite(www.sse.com.cn).(II)Specificsituationofsocialresponsibilitywork

√适用□不适用

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Foundation;DeliChemicalFiberdonated30,000yuantotheJiangsuWomenandChildrenWelfareFoundation.

Specificnote

√适用□不适用

Fordetails,pleaserefertotherelevantcontentinthechapter"05People-orientedandGivingBacktoSociety"ofthe"2024SustainableDevelopmentReport"disclosedbytheCompanyontheShanghaiStockExchangewebsite(www.sse.com.cn)onApril17,2025.III.Consolidateandexpandtheachievementsofpovertyalleviationandruralrevitalization

√适用□不适用

Specificnote

√适用□不适用

Fordetails,pleaserefertotherelevantcontentinthechapter"05People-orientedandGivingBacktoSociety"ofthe"2024SustainableDevelopmentReport"disclosedbytheCompanyontheShanghaiStockExchangewebsite(www.sse.com.cn)onApril17,2025.

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2024AnnualReport

Chapter6ImportantEventsI.Fulfillmentofcommitments(I)Commitmentsmadebytheactualcontroller,shareholders,relatedparties,acquirers,andthe

Companyitself,aswellasrelevantparties,duringthereportingperiodorcontinuingintothereportingperiod

□适用√不适用(II)TheCompany'sassetsorprojectshaveprofitforecasts,andthereportingperiodisstillintheperiodofprofitforecastsTheCompanyshallexplainwhethertheassetsorprojectshavereachedtheoriginalprofitforecastsandthereasons

□已达到□未达到√不适用(III)Fulfillmentofperformancecommitmentanditsimpactongoodwillimpairmenttest

□适用√不适用II.Non-operatingfundsoccupiedbycontrollingshareholdersandotherrelatedparties

duringthereportingperiod

□适用√不适用III.Guaranteeinviolationofregulations

□适用√不适用IV.ExplanationoftheCompany'sboardofdirectorstotheaccountingfirm's

"non-standardopinionauditreport"

□适用√不适用V.Thecompany'sanalysisandexplanationonthereasonsandeffectsofchangesin

accountingpolicies,accountingestimates,orcorrectionsofmajoraccountingerrors(I)Thecompany'sanalysisandexplanationofthereasonsandeffectsofthecorrectionofmajor

accountingerrors

□适用√不适用(II)Thecompany'sanalysisandexplanationofthereasonsandeffectsofthecorrectionofmajor

accountingerrors

□适用√不适用(III)Communicationwiththeformeraccountingfirm

□适用√不适用

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(IV)Approvalproceduresandothernote

□适用√不适用VI.Appointmentanddismissalofaccountingfirms

Unit:ten-thousand-yuanCurrency:RMB

2024AnnualReportCurrentemployed

Name

Explanationontheappointmentanddismissalofaccountingfirms

□适用√不适用Explanationonthechangeofaccountingfirmduringtheauditperiod

□适用√不适用Explanationofthesituationwheretheauditfeehasdecreasedbymorethan20%(including20%)comparedtothepreviousyear

□适用√不适用VII.Situationsatriskofdelisting(I)Reasonsfordelistingriskwarning

□适用√不适用(II)Countermeasuresthecompanyintendstotake

□适用√不适用(III)Circumstancesandreasonsforfacingterminationoflisting

□适用√不适用VIII.Mattersrelatedtobankruptcyandreorganization

□适用√不适用IX.Majorlitigationandarbitrationmatters

□本年度公司有重大诉讼、仲裁事项√本年度公司无重大诉讼、仲裁事项

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2024AnnualReport

X.Listedcompaniesandtheirdirectors,supervisors,seniormanagers,controllingshareholders,andactualcontrollerssuspectedofviolatinglawsandregulations,punishmentsandrectifications

□适用√不适用XI.Explanationontheintegritystatusofthecompanyanditscontrollingshareholders

andactualcontrollersduringthereportingperiod

□适用√不适用XII.Significantrelated-partytransactions(I)Related-partytransactionsrelatedtodailyoperations

1.Mattersthathavebeendisclosedininterimannouncementsandhavenoprogressorchangeinsubsequentimplementation

√适用□不适用

2024AnnualReportMatter

2.Mattersthathavebeendisclosedininterimannouncements,buthaveprogressorchangesin

subsequentimplementation

□适用√不适用

3.Mattersnotdisclosedintheinterimannouncement

□适用√不适用(II)Related-partytransactionsinassetorequityacquisitionandsale

1.Mattersthathavebeendisclosedininterimannouncementsandhavenoprogressorchangein

subsequentimplementation

□适用√不适用

2.Mattersthathavebeendisclosedininterimannouncements,buthaveprogressorchangesinsubsequentimplementation

□适用√不适用

3.Mattersnotdisclosedintheinterimannouncement

□适用√不适用

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2024AnnualReport

4.Ifperformanceagreementisinvolved,theperformancerealizationwithintheReportingPeriodshallbedisclosed.

□适用√不适用(III)Significantrelated-partytransactionsinvolvingjointforeigninvestment

1.Mattersthathavebeendisclosedininterimannouncementsandhavenoprogressorchangein

subsequentimplementation

□适用√不适用

2.Mattersthathavebeendisclosedintheinterimannouncement,buthaveprogressorchangesinsubsequentimplementation

□适用√不适用

3.Mattersnotdisclosedintheinterimannouncement

□适用√不适用(IV)Creditor'srightsandliabilitieswithrelatedparties

1.Mattersthathavebeendisclosedininterimannouncementsandhavenoprogressorchangesin

subsequentimplementation

□适用√不适用

2.Mattersthathavebeendisclosedininterimannouncements,buthaveprogressorchangesin

subsequentimplementation

□适用√不适用

3.Mattersnotdisclosedintheinterimannouncement

□适用√不适用(V)Financialbusinessbetweenthecompanyanditsaffiliatedfinancialcompanies,andbetweenthe

company'sholdingfinancialcompanyanditsaffiliatedparties

□适用√不适用

1.Depositbusiness

□适用√不适用

2.Loanbusiness

□适用√不适用

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3.Creditbusinessorotherfinancialbusiness

□适用√不适用

4.Othernotes

□适用√不适用(VI)Others

□适用√不适用XIII.Significantcontractsandtheirperformance(I)Trusteeship,contractingandleasingmatters

1.Trusteeship

□适用√不适用

2.Contracting

□适用√不适用

3.Leasing

□适用√不适用

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(II)Guarantee

√适用□不适用

Unit:hundred-million-yuanCurrency:RMB

2024AnnualReportThecompany'sexternalguarantees(excludingguaranteesforsubsidiaries)

Totalamountofguaranteesincurredduringthereportingperiod(excludingguaranteestosubsidiaries)

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2024AnnualReport

2024AnnualReportguaranteedobjectswhoseasset-liabilityratioexceeds70%(D)

(III)Entrustingotherstomanagecashassets

1.Entrustedfinancialmanagement

(1).Overallsituationofentrustedfinancialmanagement

√适用□不适用

Unit:ten-thousand-yuanCurrency:RMB

Others

□适用√不适用

(2).Individualentrustedfinancialmanagement

√适用□不适用

Unit:ten-thousand-yuanCurrency:RMB

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Trust

ee

Others

□适用√不适用

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(3).Provisionforimpairmentofentrustedfinancialmanagement

□适用√不适用

2.EntrustedLoansituation

(1).Generalsituationofentrustedloans

□适用√不适用Others

□适用√不适用

(2).Individualentrustedloans

□适用√不适用Others

□适用√不适用

(3).Provisionforimpairmentofentrustedloans

□适用√不适用

3.Others

□适用√不适用(IV)Othermajorcontracts

□适用√不适用XIV.Progressdescriptionoftheuseofraisedfunds

□适用√不适用XV.Explanationsonothermajoreventsthathaveasignificantimpactoninvestors'valuejudgmentsandinvestmentdecisions

□适用√不适用

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Chapter7ShareholdingChangesandShareholderInformationI.Changesinsharecapital(I)ChangesinShares

1.ChangesinSharesDuringthereportingperiod,Thetotalnumberofsharesandsharecapitalstructureofthecompanyhavenotchanged.

2.Descriptionofchangesinshares

□适用√不适用

3.Theimpactofshareholdingchangesonfinancialindicatorssuchasearningspershareandnetassetspershareinthelastyearandthelatestperiod(ifany)

□适用√不适用

4.Othercontentthatthecompanydeemsnecessaryorrequiredbysecuritiesregulatorsto

disclose

□适用√不适用(II)Changesinrestrictedshares

□适用√不适用II.Securitiesissuanceandlisting(I)Securitiesissuanceasofthereportingperiod

√适用□不适用

Unit:shareCurrency:RMB

2024AnnualReport

Typesofstocksand

theirderivative

securities

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2024AnnualReportNotes)

Explanationonsecuritiesissuanceasofthereportingperiod(forbondswithdifferentinterestratesduringtheduration,pleaseexplainseparately):

√适用□不适用

OnApril9,2024,andApril30,2024,thecompanyconvenedthe19thmeetingofthe9thBoardofDirectorsandAnnualGeneralMeetingin2023.ThemeetingsreviewedandapprovedtheProposalonRegisteringandIssuingShort-TermFinancingBonds,agreeingthatthecompanywouldapplytotheChinaInterbankMarketDealersAssociationtoregisterandissueshort-termfinancingbondswithanamountnotexceedingRMB3billion(including3billionyuan).

OnJune24,2024,thecompanyreceivedtheAcceptanceofRegistrationNotice(ZhongShiXieZhu[2024]CP92)fromtheDealersAssociation,statingthattheDealersAssociationacceptedtheregistrationofthecompany'sshort-termfinancingbondswitharegisteredamountof3billionyuan.Theregisteredquotaisvalidforaperiodof2yearsfromthedateofthenotice.

OnJuly12,2024,thecompanyissuedthefirsttrancheofshort-termfinancingbonds(scienceandtechnologyinnovationbill)fortheyear2024inthenationalinterbankmarket.Thebondshaveamaturityof365days,withatotalissuanceamountof1billionyuanandanissuanceinterestrateof

2.20%.

OnAugust16,2024,thecompanyissuedthesecondtrancheofshort-termfinancingbonds(scienceandtechnologyinnovationbill)fortheyear2024inthenationalinterbankmarket.Thebondshaveamaturityof365days,withatotalissuanceamountof1billionyuanandanissuanceinterestrateof2.15%.

OnAugust22,2024andSeptember10,2024,thecompanyconvenedthe21stmeetingofthe9thBoardofDirectorsandthefirstextraordinarygeneralmeetingofshareholdersof2024respectively,duringwhichthe"ProposalonApplyingfortheRegistrationandIssuanceofMedium-TermNotes"wasreviewedandapproved.TheresolutionauthorizedtheCompanytoapplytotheNationalAssociationofFinancialMarketInstitutionalInvestors(NAFMII)fortheregistrationandissuanceofmedium-termnoteswithatotalfacevaluenotexceedingRMB3billion(inclusive).

OnNovember20,2024,thecompanyreceivedthe"NoticeofAcceptanceofRegistration"(NAFMIIRegistrationNotice,ReferenceNo.:[2024]MTN1155)issuedbyNationalAssociationofFinancialMarketInstitutionalInvestors,approvingtheregistrationoftheCompany'smedium-termnoteswithatotalregisteredamountofRMB3billionyuan.Theregistrationquotawillremainvalidfortwoyearsfromthedateindicatedonthenotice.

OnApril9,2025,thecompanyissuedthefirsttrancheofmedium-termnotefortheyear2025inthenationalinterbankmarket.Thebondshaveamaturityof3years,withatotalissuanceamountof

0.5billionyuanandanissuanceinterestrateof2.47%(II)Changesinthetotalnumberofsharesofthecompanyandthestructureofshareholders,aswell

aschangesinthestructureofthecompany'sassetsandliabilities

□适用√不适用

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(III)ExistingInternalStaffshares

□适用√不适用III.Shareholdersandactualcontrollers(I)Totalnumberofshareholders

2024AnnualReport

Totalnumberofordinaryshareholdersasoftheendofthereportingperiod(accounts)

Thetotalnumberofpreferenceshareholderswhosevotingrightshavebeenrestoredattheendofthepreviousmonthbeforetheannualreportdisclosuredate(accounts)

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(II)Tableofshareholdingsofthetoptenshareholdersandtoptentradableshareholders(orshareholdersnotsubjecttosalesrestrictions)asoftheendofthereportingperiod

Unit:share

2024AnnualReportShareholdingsofthetoptenshareholders(excludingshareslentthroughrefinancing)

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PrivateEquityFundInvestmentManagement(Guangdong)Co.,Ltd.-XuanyuanYuanbaoNo.17PrivateEquitySecuritiesInvestmentFund

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(Guangdong)Co.,Ltd.-XuanyuanYuanbaoNo.16PrivateEquitySecuritiesInvestmentFund

Shareholdersholdingmorethan5%oftheshares,thetoptenshareholdersandthetoptenshareholdersofunrestrictedtradablesharesparticipatingintherefinancingbusinessandlendingshares

√适用□不适用

Unit:share

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shareholdersofunrestrictedtradablesharesparticipatingintherefinancingbusinessandlending

shares

Thetoptenshareholdersandthetoptenshareholdersofunrestrictedtradableshareshavechangedcomparedtothepreviousperiodduetolending/repaymentofrefinancing

□适用√不适用Thenumberofsharesheldbythetoptenshareholderswithsalesrestrictionsandtheconditionsforsalesrestrictions

□适用√不适用(III)Strategicinvestorsorgenerallegalpersonsbecomethetop10shareholdersduetoallotmentofnewshares

□适用√不适用IV.Controllingshareholdersandactualcontrollers(I)Controllingshareholders

1.Legalperson

√适用□不适用

2024AnnualReport

2024AnnualReportrelevantdepartments).

2.Naturalperson

□适用√不适用

3.Specialnoteontheabsenceofacontrollingshareholderinthecompany

□适用√不适用4.Explanationonthechangeofcontrollingshareholdersduringthereportingperiod

□适用√不适用

2024AnnualReport

5.Blockdiagramofthepropertyrightsandcontrolrelationshipbetweenthecompanyandthe

controllingshareholder

√适用□不适用

(II)Actualcontroller

1.Legalperson

□适用√不适用

2.Naturalperson

√适用□不适用

2024AnnualReportName

3.Specialnotefortheabsenceofactualcontrollersinthecompany

□适用√不适用

4.Explanationonchangesinthecompany'scontrolduringthereportingperiod

□适用√不适用

2024AnnualReport

5.Blockdiagramofthepropertyrightsandcontrolrelationshipbetweenthecompanyandtheactualcontroller

√适用□不适用

Note:

1.WhencalculatingtheshareholdingratioofHengfengInvestment(Dalian)Co.,Ltd.,thenumberofsharesdirectlyheldthroughitsownaccount"HengfengInvestment(Dalian)Co.,Ltd."(accountingfor

0.46%ofthetotalsharecapital)andthenumberofsharesindirectlyheldthroughthecontractualprivateequityfundaccount"HainanHuayinTianxiaPrivateEquityFundManagementCo.,Ltd.-HuayinXuyangNo.1PrivateEquitySecuritiesInvestmentFund"(accountingfor0.58%ofthetotalsharecapital)areincluded.

2.TheCompany'sactualcontrollersareChenJianhuaandFanHongwei(amarriedcouple),whodirectlyandindirectly(includingthroughvotingrightsentrustment)holdatotalof5,310,675,080sharesintheCompanyviaHengliGroupCo.,Ltd.anditsconcertedparties,representinga75.45%shareholdingratio.

6.Theactualcontrollercontrolsthecompanythroughtrustorotherassetmanagementmethods

□适用√不适用(III)Otherinformationoncontrollingshareholdersandactualcontroller

□适用√不适用V.Thecumulativenumberofpledgedsharesbythecompany'scontrollingshareholder

orlargestshareholderandtheirconcertedactorsaccountsformorethan80%oftheirtotalholdingsinthecompany

□适用√不适用VI.Otherlegalpersonshareholdersholdingmorethan10%oftheshares

√适用□不适用

Unit:ten-thousand-yuanCurrency:RMB

2024AnnualReportLegalentityshareholdername

2024AnnualReport

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activities,

etc.

VII.Explanationonreductionofshareholdingrestriction

□适用√不适用VIII.Specificimplementationofsharerepurchaseduringthereportingperiod

□适用√不适用

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Chapter8InformationofPreferredShares

□适用√不适用

2024AnnualReport

Chapter9InformationofBondsI.Corporatebonds(includingenterprisebonds)andnon-financialcorporatedebt

financinginstruments

√适用□不适用(I)Corporatebonds(includingenterprisebonds)

□适用√不适用(II)Useofproceedsfromcorporatebondissuance

□公司债券在报告期内涉及募集资金使用或者整改

√本公司所有公司债券在报告期内均不涉及募集资金使用或者整改(III)Additionaldisclosurerequirementsforspecialbondtypes

□适用√不适用(IV)Significantmattersconcerningcorporatebondsduringthereportingperiod

□适用√不适用

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(V)Debtfinancinginstrumentsfornon-financialenterprisesintheinter-bankbondmarket

√适用□不适用

1.Non-financialcorporatedebtfinancinginstruments

Unit:hundred-million-yuanCurrency:RMB

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Bondname

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Thecompany'scountermeasuresagainsttheriskofdelistingandtradingbonds

□适用√不适用Overduebonds

□适用√不适用Bondinterestpaymentandrepaymentduringthereportingperiod

√适用□不适用

2024AnnualReportBondName

2.Thetriggeringandimplementationofcompanyorinvestoroptionclausesandinvestor

protectionclauses

□适用√不适用

3.Intermediariesprovidingservicesforbondissuanceanddurationbusiness

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Changestotheabove-mentionedintermediaries

□适用√不适用

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4.Useofraisedfundsattheendofthereportingperiod

√适用□不适用

unit:100millionyuanCurrency:RMB

2024AnnualReport

Bondname

Progressandoperationalbenefitsofraisingfundsforconstructionprojects

□适用√不适用Explanationonchangingtheuseoffundsraisedfromtheabovebondsduringthereportingperiod

□适用√不适用Othernotes:

□适用√不适用

5.Adjustmentstocreditratingresults

□适用√不适用Othernotes:

□适用√不适用

6.Theimplementationandchangesofguarantees,debtrepaymentplansandotherdebtrepaymentguaranteemeasuresduringthereportingperiodandtheirimpact

□适用√不适用

7.Explanationonotherconditionsofnon-financialcorporatedebtfinancinginstruments

□适用√不适用

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(VI)Thecompanyincurredaconsolidatednetlossduringthereportingperiodthatexceeded10%of

thenetassetsattheendofthepreviousyear

□适用√不适用(VII)Overdueinterest-bearingdebtsotherthanbondsattheendofthereportingperiod

□适用√不适用(VIII)Theimpactonbondinvestors'rightsduringthereportingperiodduetoviolationsoflaws,regulations,companybylaws,provisionsofinformationdisclosuremanagementsystems,aswellasdeviationsfromtheprovisionsorcommitmentsstatedinthebondprospectus

□适用√不适用(IX)AccountingDataandFinancialIndicatorsoftheCompanyinthePreviousTwoYearsbytheEnd

oftheReportingPeriod

√适用□不适用

Unit:hundred-million-yuanCurrency:RMB

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Keydicators

II.Convertiblecorporatebonds

□适用√不适用

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Chapter10FinancialReports

I.Auditor’sReport

√适用□不适用AllshareholdersofHengliPetrochemicalCo.,Ltd.:

I.AuditOpinionWehaveauditedthefinancialstatementsofHengliPetrochemicalCo.,Ltd.(hereinafter"theCompany"),whichcomprisetheconsolidatedandcompanybalancesheetsasat31December2024,andtheconsolidatedandcompanyincomestatements,consolidatedandcompanycashflowstatementsandconsolidatedandcompanystatementsofchangesinequityfortheyearthenended,andnotestothefinancialstatements.

Inouropinion,theaccompanyingfinancialstatementspresentfairly,inallmaterialrespects,theconsolidatedandcompanyfinancialpositionsasat31December2024,andtheirfinancialperformanceandtheircashflowsfortheyearthenendedinaccordancewiththerequirementsofAccountingStandardsforBusinessEnterprises.II.BasisforAuditOpinionWeconductedourauditinaccordancewithChinaStandardsonAuditing.OurresponsibilitiesunderthosestandardsarefurtherdescribedintheAuditor'sResponsibilitiesfortheAuditoftheFinancialStatementssectionofourreport.WeareindependentoftheCompanyandhavefulfilledourotherethicalresponsibilitiesinaccordancewiththeChinaCodeofEthicsforCertifiedPublicAccountants.Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion.

III.KeyAuditMatters

Keyauditmatteristhematterthat,inourprofessionaljudgment,wasofmostsignificanceinourauditofthefinancialstatementsfortheyearended31December2023.Thismatterwasaddressedinthecontextofourauditofthefinancialstatementsasawhole,andinformingouropinionthereon,andwedonotprovideaseparateopiniononthismatter.Wehavedeterminedthefollowingmatterstobekeyauditmattersthatneedtobecommunicatedintheauditreport.

Thekeyauditmattersweidentifiedduringourauditaresummarisedbelow:

2024AnnualReportKeyauditmatter

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2024AnnualReportKeyauditmatter

IV.OtherInformationManagementisresponsiblefortheotherinformation.TheotherinformationcomprisestheinformationincludedintheCompany’s2023annualreport,butdoesnotincludethefinancialstatementsandourauditor'sreportthereon.

Ouropiniononthefinancialstatementsdoesnotcovertheotherinformationandwedonotexpressanyformofassuranceconclusionthereon.Inconnectionwithourauditofthefinancialstatements,ourresponsibilityistoreadtheotherinformationand,indoingso,considerwhethertheotherinformationismateriallyinconsistentwith

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2024AnnualReport

thefinancialstatementsorourknowledgeobtainedintheauditorotherwiseappearstobemateriallymisstated.If,basedontheworkwehaveperformed,weconcludethatthereisamaterialmisstatementofthisotherinformation,wearerequiredtoreportthatfact.Wehavenothingtoreportinthisregard.V.ResponsibilitiesofManagementandThoseChargedwithGovernancefortheFinancialStatementsManagementoftheCompanyisresponsibleforthepreparationofthefinancialstatementstoachievefairpresentationinaccordancewithAccountingStandardsforBusinessEnterprises,andforthedesign,implementationandmaintenanceofsuchinternalcontrolasmanagementdetermineisnecessarytoenablethepreparationofthefinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Inpreparingthefinancialstatements,managementisresponsibleforassessingtheCompany'sabilitytocontinueasagoingconcern,disclosing,asapplicable,mattersrelatedtogoingconcernandusingthegoingconcernbasisofaccountingunlessmanagementeitherintendtoliquidatetheCompanyortoceaseoperations,orhavenorealisticalternativebuttodoso.ThosechargedwithgovernanceareresponsibleforoverseeingtheCompany'sfinancialreportingprocess.

VI.Auditor'sResponsibilitiesfortheAuditoftheFinancialStatements

Ourobjectivesaretoobtainreasonableassuranceaboutwhetherthefinancialstatementsasawholearefreefrommaterialmisstatements,whetherduetofraudorerror,andtoissueanauditreportthatincludesanauditopinion.Reasonableassuranceisahighlevelofassurance,butitdoesnotguaranteethatanauditconductedinaccordancewithauditingstandardswillalwaysdetectamaterialmisstatementwhenitexists.Misstatementsmayarisefromfraudorerrorandaregenerallyconsideredmaterialiftheycouldreasonablybeexpected,individuallyorintheaggregate,toinfluencetheeconomicdecisionsofuserstakenonthebasisofthefinancialstatements.

Intheprocessofperformingauditworkinaccordancewithauditingstandards,weexerciseprofessionaljudgmentandmaintainprofessionalskepticism.Atthesametime,wealsoperformthefollowingwork:

Ourobjectivesaretoobtainreasonableassuranceaboutwhetherthefinancialstatementsasawholearefreefrommaterialmisstatement,whetherduetofraudorerror,andtoissueanauditor'sreportthatincludesouropinion.Reasonableassuranceisahighlevelofassurance,butisnotaguaranteethatanauditconductedinaccordancewithauditingstandardswillalwaysdetectamaterialmisstatementwhenitexists.Misstatementscanarisefromfraudorerrorandareconsideredmaterialif,individuallyorintheaggregate,theycouldreasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisofthesefinancialstatements.

Aspartofanauditinaccordancewithauditingstandards,weexerciseprofessionaljudgmentandmaintainprofessionalskepticismthroughouttheaudit.Wealso:

(1)Identifyandassesstherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror,designandperformauditproceduresresponsivetothoserisks,andobtainauditevidencethatissufficientandappropriatetoprovideabasisforouropinion.Theriskofnotdetectingamaterialmisstatementresultingfromfraudishigherthanforoneresultingfromerror,asfraudmayinvolvecollusion,forgery,intentionalomissions,misrepresentations,ortheoverrideofinternalcontrol.

(2)Obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignauditproceduresthatareappropriateinthecircumstances.

(3)Evaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesandrelateddisclosuresmadebymanagement.

(4)Concludeontheappropriatenessofthemanagement’suseofthegoingconcernbasisofaccountingand,basedontheauditevidenceobtained,whetheramaterialuncertaintyexistsrelatedtoeventsorconditionsthatmaycastsignificantdoubtontheCompany'sabilitytocontinueasagoingconcern.Ifweconcludethatamaterialuncertaintyexists,theauditingstandardsrequireustodrawattentiontousersofthefinancialstatementsinourauditor'sreporttotherelateddisclosuresinthe

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financialstatementsor,ifsuchdisclosuresareinadequate,tomodifyouropinion.Ourconclusionsarebasedontheauditevidenceobtaineduptothedateofourauditor'sreport.However,futureeventsorconditionsmaycausetheCompanytoceasetocontinueasagoingconcern.

(5)Evaluatetheoverallpresentation,structureandcontentofthefinancialstatements,includingthedisclosures,andwhetherthefinancialstatementsrepresenttheunderlyingtransactionsandeventsinamannerthatachievesfairpresentation.

(6)ObtainsufficientappropriateauditevidenceregardingthefinancialinformationoftheentitiesorbusinessactivitieswithintheCompanytoexpressanopiniononthefinancialstatements.Weareresponsibleforthedirection,supervisionandperformanceofthegroupaudit.Weremainsolelyresponsibleforourauditopinion.

Wecommunicatewiththosechargedwithgovernanceregarding,amongothermatters,theplannedscopeandtimingoftheauditandsignificantauditfindings,includinganysignificantdeficienciesininternalcontrolthatweidentifyduringouraudit.

Wealsoprovidethosechargedwithgovernancewithastatementthatwehavecompliedwithrelevantethicalrequirementsregardingindependence,andtocommunicatewiththemallrelationshipsandothermattersthatmayreasonablybethoughttobearonourindependence,andwhereapplicable,relatedsafeguards.

Fromthematterscommunicatedwiththosechargedwithgovernance,wedeterminethosemattersthatwereofmostsignificanceintheauditofthefinancialstatementsofthecurrentperiodandarethereforethekeyauditmatters.Wedescribethesemattersinourauditor'sreportunlesslaworregulationprecludespublicdisclosureaboutthematterorwhen,inextremelyrarecircumstances,wedeterminethatamattershouldnotbecommunicatedinourreportbecausetheadverseconsequencesofdoingsowouldreasonablybeexpectedtooutweighthepublicinterestbenefitsofsuchcommunication.

ZhonghuiCertifiedPublicAccountants(SpecialGeneralPartnership)

ChineseCertifiedPublicAccountant:ChenXiaohua(ProjectPartner)

PublicAccountant:FangSai

ChinaHangzhouCertified

Reportdate:April15,2025

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II.FinancialStatements

ConsolidatedBalanceSheetAsatDecember31,2024Compiledby:HengliPetrochemicalCo.,Ltd.

Unit:YuanCurrency:RMB

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2024AnnualReportIncluding:Preferredshares

Legalrepresentative:FanHongweiPersoninchargeoffinancialfunction:LiuXuefenHeadofAccountingAgency(Preparedby):ZhengMinxia

Parentcompanybalancesheet

AsatDecember31,2024Compiledby:HengliPetrochemicalCo.,Ltd.

Unit:YuanCurrency:RMB

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2024AnnualReportDerivativefinancialassets

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Legalrepresentative:FanHongweiPersoninchargeoffinancialfunction:LiuXuefenHeadofAccountingAgency(Preparedby):ZhengMinxia

ConsolidatedIncomeStatementFortheyearended31December2024

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Unit:YuanCurrency:RMB

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2024AnnualReportIII.Operatingprofit(”-”forloss)

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-aftertaxattributabletominorityinterests

Inthecurrentperiod,ifamergerofenterprisesunderthesamecontroloccurs,thenetprofitrealizedbyacquireebeforethemergeris:0yuan,thenetprofitrealizedbyacquireeinthepreviousperiodis:

0yuan.Legalrepresentative:FanHongweiPersoninchargeoffinancialfunction:LiuXuefenHeadofAccountingAgency(Preparedby):ZhengMinxia

ParentcompanyincomestatementFortheyearended31December2024

Unit:YuanCurrency:RMB

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Gainfromdisposalofassets(”-”forloss)