2024 marks a crucial year for Baota Industrial in its reform and development, as well as a pivotal year for the company to forge ahead towards its first jubilee. The beginning of the year determines the overall situation, and a strong start is crucial for the company to achieve its annual goals.

As spring returns to the land, bringing renewed vitality and changes, Baota Industrial, guided by the blueprint outlined at the second party congress of the group company, has consciously integrated itself into the strategic plan of strengthening and optimizing the equipment manufacturing industry. We have focused on the three-year development plan, targeted the annual objectives, and pressed ahead with determination and enthusiasm, sounding the "call to action" for the new year and painting a "new picture" for the spring season.

We have been proactive in seizing market opportunities. By implementing the high-level exchange mechanism, our key leaders have led visits to multiple regions, engaging in discussions and exchanges with key customers and potential clients to deepen our cooperation consensus. We have successfully secured orders and expanded our market share, taking the initiative in the vibrant market. We have also strengthened coordination and successfully obtained the China Council for the Promotion of International Trade's enterprise credit certification and export brand certification, marking a crucial step in expanding our international cooperation. By seizing opportunities and winning orders, we have successfully bid for the "2024 First Batch of Freight Train Rolling Bearing Joint Procurement Project" of the China Railway Corporation, with a contract amount of over 50.64 million yuan, setting a good precedent for the company to achieve its annual targets.

We have targeted our efforts to deepen innovation and build advantages. With the motto of "innovation leads to the future," we have held a grand swearing-in ceremony for the development and trial production of key new products. The nine key new products launched cover both our traditional strengths in the field of petroleum and metallurgical high-end bearings, as well as emerging areas such as shield machine bearings and marine electrical equipment. Their successful development will have a profound impact on optimizing our product structure and adjusting our market layout in the future. We have also conducted technical exchange activities with Henan University of Science and Technology, known as the "Huangpu Military Academy of China's bearing industry," to explore cooperation opportunities in project development, resource sharing, and talent cultivation, aiming to cultivate new technologies, products, and advantages to empower the company's specialized, innovative, and unique development.

We have taken practical actions to accelerate production and seize the schedule. We have optimized organizational scheduling, focusing on production and order fulfillment. With no break during holidays, we have used our hard work to repay the good times of spring, creating an orderly and bustling scene on the site. We have deeply promoted lean production projects for railway products, conducted regular improvement activities to eliminate seven major wastes, and further embedded the concept of fine management in each sub-factory, significantly improving production quality and efficiency. By allocating resources effectively, we have promoted collaborative processing of parts and components required for production, effectively improving the production efficiency and balance of each production unit, creating favorable conditions for achieving a successful start to the year.

We have taken a holistic approach to project construction and embarked on a new chapter. Firmly grasping the key principle that "projects are the solid support," we have persisted in producing, building, and relocating simultaneously, comprehensively advancing the upgrading and transformation project for high-end precision bearing industrialization, striving to create a "growth pole" for the company's high-quality development. As the saying goes, a year's plan starts with spring. Currently, the project has completed the approval for planning changes, as well as the approval for the construction of new large-scale factories, forge and heat treatment workshops, and warehouses. The relocation and renovation projects for the railway workshop rollers and the medium and large workshops have been successfully completed, and the "spring chapter" of new construction and relocation is being fully written across the company.

We have continuously improved and strictly controlled quality to enhance our brand. With the mindset that "quality is the lifeline of the enterprise," we have further strengthened our quality management system and intensified quality process control based on the achievements of the "Quality Service Improvement Year" activities implemented over the past three years. We have established a daily quality analysis mechanism, regularly conducted training on business skills and professional ethics for quality inspection personnel, and launched a "100-day action" to improve quality, targetedly promoting further enhancements and breakthroughs in product quality. We strive to create quality products with craftsmanship, using the market's "good reputation" to enhance the color of the "NXZ" brand and continuously improve its competitiveness.

Solidifying the Foundation and Improving the System with Tangible Measures. We have firmly established the mindset of living frugally and integrated lean management concepts into all business operations and processes of production and management. We have improved our internal control management system, vigorously carried out the special activity of cost reduction and efficiency enhancement, formulated a task list of 108 items for cost reduction and efficiency enhancement covering seven major business sectors, implemented responsibilities item by item, and further released management vitality, stimulated endogenous power, and comprehensively improved the company's management level. We have formulated pilot plans for information construction and digital workshops, and promoted the integration and upgrading projects of ERP and MES as well as the implementation of PLM renovation projects in a planned and step-by-step manner. The construction of high-end, intelligent, and standardized enterprises is moving forward with firm steps and facing the wind bravely.