CRRC CORPORATION LIMITED2024 ACTION PLAN FOR “ENHANCING QUALITY, INCREASING
EFFICIENCY AND EMPHASIZING RETURNS”
CRRC Corporation Limited (hereinafter referred to as “CRRC” or the “Company”) hasactively responded to the Shanghai Stock Exchange’s initiative on the “Enhancing Quality,Increasing Efficiency and Emphasizing Returns” campaign among Shanghai-listed companiesby formulating 2024 Action Plan for “Enhancing Quality, Increasing Efficiency andEmphasizing Returns” (hereafter referred to as the “Action Plan”), so as to earnestly fulfil itsresponsibilities of “Improving the Quality of the Company while Enhancing the Returns andthe Sense of Gain for the Investors”. The details are as follows:
I. CREATING AN INDUSTRIAL PATTERN OF “TWO TRACKS AND TWO CLUSTERS”INDUSTRIAL PATTERN TO ENHANCE THE OPERATIONAL QUALITYAs the world’s leading and diverse rolling stock supplier with advanced technology, theCompany has consecutively ranked first in the world in terms of sales volume of rollingstock equipment for years. The Company has actively implemented the strategy ofbuilding a transportation power, and fully, accurately and comprehensively implementedthe new development concept based on the new development stages. We served andintegrated into the construction of a new development layout, actively adapted to the newenvironment and changes, seized market opportunities to accelerate the structural reform,transformation and upgrading. We made great efforts to achieve new breakthroughs inbusiness layout, market expansion, scientific and technological innovation, reform andinnovation, management improvement, integration of industry and finance and the Partybuilding “golden card”. The position in the rail transit equipment industry has beenfurther consolidated.In 2024, the Company has focused on its principal responsibilities and major businesses,striving to create an industrial pattern of “Two Tracks and Two Clusters” for the railtransit equipment business and clean energy equipment business. This will establish asystem of graded layout, positive interaction, and cluster development, expediting theenhancement of system solution capabilities and solidifying the industrial foundation forhigh-quality development.The Company will accelerate market expansion to lay a solid foundation for excellence.The Company will continue to meticulously cultivate the railway equipment market,deepen the application of the “head-to-head” marketing model, strengthencommunication and coordination with key customers, and actively promote theimplementation of order procurement. Focusing on the trends of digitalization,intelligence, and green development, the Company will expedite the establishment of amodern logistics equipment system for railways, speed up the transformation of legacyinternal combustion locomotives to new energy, and vigorously advance key projectssuch as CR450. The Company will enhance and strengthen the maintenance business,
fully leveraging professional, scale, and resource advantages to rapidly expand themaintenance market scale. The Company will consolidate and expand the urban railtransit market, organizing research and application of products and technologies such asurban rail maintenance and refurbishment, medium- and low-capacity rail transit systems,and standard subway train 2.0. The Company will make every effort to tap into emergingstrategic industries, promote the deployment of bases in an orderly manner, and acquirewind and solar resources. The Company will deepen cooperation with key regionalgovernments and major power generators. The Company will strengthen the strategicpresence in the international market, consistently promoting the internationaldevelopment of the “Two Tracks and Two Clusters”, serving the national strategy,enhancing top-level design, and coordinating resource allocation in an integrated mannerto achieve comprehensive and systemic “going out” across the whole industry chain withhigh standards, high added value, and high quality. The Company will accelerate thepromotion of “Product+” and “System+” business models, bolster the “growth pole” ofthe DLS business, and create demonstration projects.The Company will optimize business layout to enhance its support for excellence, andincrease investment in emerging strategic industries. Adhering to a strategy-driven andfunction-oriented approach, the Company will strategically position itself in new areasand new tracks ahead of time, focusing on technological innovation in clean energyequipment and manufacturing capabilities to carry out effective investments, therebypromoting layout optimization and structural adjustments through investment. TheCompany will reinforce the deep integration of technological innovation and industrialinnovation, using the industrial chain to roll out the innovation chain, and foster theindustrial chain with the innovation chain to build new industries, new business forms,and new models, expanding new space for development and cultivating new drivers forgrowth. The Company will actively liaise with central SOEs responsible for key sectors,working jointly with research institutes and universities to conduct technology foresightand development trend assessments, and scientifically coordinating various elements andforces to form a development synergy. The Company will continuously optimizeresource integration and allocation, continuously strengthen strategic, investment, andreform research, and strive to enhance its comprehensive judgment and strategicplanning capabilities. The Company will more proactively plan medium- and long-termdevelopment strategies in advance, driving higher quality construction of the industrialpattern of “Two Tracks and Two Clusters”, optimizing business layout, and adjustingstructures to accelerate the development of a world-class CRRC.II. ENHANCING TECHNOLOGICAL INNOVATION AND ACCELERATING THE
DEVELOPMENT OF NEW QUALITY PRODUCTIVE FORCESCRRC has insisted on self-reliance in science and technology, vigorously implementedthe innovation-driven development strategy, deepened the reform of the science andinnovation system, accelerated the construction of sources of original technologies,continued to advance proprietary innovation capabilities to achieve a major leap fromfalling behind and catching up to taking the lead. In 2023, the Company continued to
promote the national “Advanced Rail Transit Key Projects”, the “Key TechnologyProjects under CRRC’s 14th Five-Year Plan”, “Wind Power Projects” and other scienceand technology projects. The Company launched CRRC’s 2023 project for cultivation oforiginal technology for a term of 10 years, with 29 projects established. The Companyhas promoted the implementation and acceptance of 8 collaborative innovation teams inthe frontier areas of magnetic levitation, new materials, new energy, light weighting andhealth management. In 2023, the Company also launched new products for railtransportation, such as locomotives, freight wagons and urban rail vehicles, new productsfor new industry, such as complete machines run on clean energy, as well as 480 researchand development projects for key systems and components, of which, 61 projects werenewly established wind power projects, all being part of the Company’s relentless effortsto achieve breakthroughs in crucial key technologies and launch the work oftransformation and application of the achievements. Various projects were progressingsmoothly, which strongly supports the sustainable and healthy development of theCompany.In 2024, the Company has continued to prioritize technological innovation among all theother tasks, adhered to the innovation-driven development strategy, focused ondeveloping new quality productive forces, and empowered high-quality developmentthrough high-level technological self-reliance and self-strengthening. Focusing on thedevelopment of new quality productive forces, the Company will reinforce the deepintegration of technological innovation and industrial innovation to build new industries,new business forms, and new models, expanding new space for development andcultivating new drivers for growth. The Company will focus on improving the innovationsystem, maintain a high level of technological investment, coordinating innovationresources, and concentrating efforts on technical research and project breakthroughs. TheCompany will optimize the ecosystem for technological innovation, adhere to marketorientation, leverage “thirst-quenching” policies, and continuously improve theefficiency of technological outputs. We will strive to enhance our innovative capacity,focus on the construction of source of original technologies, and increase the investmentin original technology and research on the disruptive, frontier, common and basictechnologies. The Company will strengthen collaboration with upstream and downstreamof the industrial chain, enhance the coordination of scientific research projects, anddeepen the modern industrial chain synergy actions for CRRC’s rail transit equipmentand clean energy equipment. We will focus on translating innovation results into practice,accelerate the application of technological innovation achievements, and follow theproduct research and development path of “exploring for a generation, pre-researchingfor a generation, researching and manufacturing for a generation and equipping for ageneration”, grasping the trend of digitalization, green development, intelligence,modularization and platformization, accelerating the application of the results of keyprojects, and creating typical products.
III. STRENGTHENING INVESTOR COMMUNICATION TO ENHANCE MARKET
RECOGNITIONThe Company strictly adheres to the principles of “Truthfulness, Accuracy, Completeness,Timeliness and Fairness” in the disclosure of information to ensure that all shareholdershave fair and equal access to information and to safeguard the interests of allshareholders, in particular the interests of small and medium-sized shareholders. TheCompany sticks to proactive investor relations management and actively managemulti-dimensional interactions with investors, analysts, media, regulatory authorities andthe public. With innovative models, the Company has diversified the promotion channelsand deepened the roadshows and reverse roadshows to enhance mutual understandingand trust, and convey the Company’s value. The Company’s information disclosure andinvestor relations management have been widely recognized by the capital market,regulatory authorities and professional organizations: the Company has been awardedGrade A in the evaluation of information disclosure of listed companies on the ShanghaiStock Exchange for eight consecutive years, and its information disclosure case studyhas been selected as one of the best practice cases of corporate governance in 2023 bythe China Association for Public Companies. The Company won “Top 100 ListedCompanies on Main Board” Award at the 17th China Listed Company Value Evaluation,the “Tianma Award” at the 14th Investor Relations of Listed Companies in China,“Excellent Practice Case” Award of Annual Results Brief Session from the ChinaAssociation for Public Companies, and the Gold Award in 2022 Vision Awards AnnualReport Competition held by League of American Communications Professionals LLC,etc.In 2024, the Company will proactively strengthen multi-dimensional, multi-level andmulti-form investor communication and value management to enable the capital marketto fully recognize the Company’s intrinsic value. First, the Company will strengthen thevalue promotion to continuously enhance recognition in the capital market. TheCompany will hold regular performance briefings, actively organize exclusivepresentations for investors and analysts on the annual results, hold regular investorteleconferences by arranging for the participation in person of the Company’s directors,supervisors, and senior management so as to truly and accurately interpret the Company'soperating results, share business achievements and overall strategy, exchange keyinformation on development opportunities and business planning, and respond truthfullyto investors’ questions and concerns. The Company will conduct high-qualityperformance roadshows, visit domestic and international investment institutions, andengage in one-on-one communication with key investors. The Company will organizereverse roadshows in an innovative way to further convey the Company’s value andstrengthen recognition in the capital market. Second, the Company will refine dailymanagement to solidify the foundation of investor relations. The Company will organizethe compilation and publication of daily media monitoring information, weekly capitalmarket reports and public relations event analyses to provide timely and accurateinformation support to our directors, supervisors and senior management. The Companywill continue to update investor profiles, establish the capital market analyst database,
and convey the Company’s operation and management philosophy and strategic plansthrough visiting long-term shareholders and participating in brokers’ strategy conferences,so as to enhance investors’ trust and understanding on the Company. The Company willprioritize daily communication with investors, arrange for dedicated personnelresponsible for answering investors’ phone calls, receiving investors’ e-mails, payingattention to investors’ questions on the E-interaction platform, and responding patientlyto questions raised by investors. The Company will participate in investment educationactivities to remind investors to make rational investments. The Company’s investorrelations management efforts are devoted to innovating models to diversify promotionchannels and enriching communication methods with investors and analysts, enablinginvestors to understand the Company’s development approach and operational status,thereby enhancing their confidence in and recognition of the Company, and fosteringpositive interactions between the Company and investors.IV. EMPHASIZING INVESTOR RETURNS AND SHARING OPERATIONAL ACHIEVEMENTSSince its establishment, CRRC has implemented annual cash dividends, distributing acumulative total of over RMB 30 billion (tax inclusive) in cash dividends from 2015 todate. The average annual cash dividend distribution ratio exceeded 40%, higher than theaverage level of the A-share capital market. Since 2019, the Company has increased thecash dividend to all shareholders per 10 shares from RMB 1.5 (tax inclusive) to RMB 2(tax inclusive), with the annual total cash dividend amount rising from RMB 4.305billion (tax inclusive) to RMB 5.74 billion (tax inclusive), the proportion of which to thenet profit attributable to ordinary shareholders of the listed company in the consolidatedfinancial statements increased from 36% to 49%. On 18 June 2024, the Company’s 2023annual general meeting reviewed and approved the “Resolution in relation to the 2023Profit Distribution Plan of CRRC Corporation Limited”, with a proposed cash dividendof RMB 2 (tax inclusive) per 10 shares to all shareholders, totalling RMB 5.74 billion(tax inclusive), with the remaining undistributed profits carried forward to the next yearfor distribution. The Company will adhere to the Articles of Association and relevantprovisions of the “CRRC Corporation Limited Medium and Long-Term Shareholders’Return Plan”, emphasizing investor returns and sharing operational achievements withshareholders.The Company will consistently uphold the philosophy of better protecting shareholderrights and creating greater value for shareholders. Emphasis is placed on marketcapitalization management and the value of market capitalization has been recognized.Since its establishment, CRRC has gradually improved the quarterly meeting system andevaluation system for market capitalization management, listens to third-party opinions,and promptly improves and plans subsequent investor relations efforts. During the periodfrom 30 October 2023 to 29 April 2024, CRRC GROUP Co., Ltd., the controllingshareholder, cumulatively increased its shareholding in the Company’s A shares by29,188,800 shares through the trading system of the Shanghai Stock Exchange by way ofcentralized bidding, representing approximately 0.1% of the total number of issuedshares of the Company, thereby demonstrating to the capital market its recognition of the
value of the Company and its confidence in its sustainable and stable development in thefuture. In 2024, the Company will continue to proactively engage in regular marketcapitalization management, coordinate investor relations management for its listedsubsidiaries, strengthen internal management coordination and investor relationscommunication with its listed subsidiaries, mobilize internal resources, form synergy,innovate work methods, and enhance management capabilities to further improve thequality and effectiveness of market capitalization management.V. OPTIMIZING CORPORATE GOVERNANCE AND ADHERING TO STANDARDIZEDOPERATIONSFocusing on the development of a modern enterprise system with Chinese characteristics,the Company has improved its corporate governance system, forming a basic system thatincludes the Articles of Association, Rules of Procedure for Board of Directors,Information Disclosure Management Measures, and Investor Relations ManagementMeasures, supplemented by specialized systems such as the Terms of Reference ofSpecial Committees of the Board of Directors, Information Disclosure ImplementationRules, and Market Capitalization Management Measures, thereby establishing acorporate governance mechanism that is legally defined, transparent, coordinated, andeffectively balanced. The Company precisely manages the operations of the threecorporate governance bodies, adhering to the positioning of the general meeting ofshareholders, the board of directors, and the board of supervisors as the power,decision-making, and supervisory bodies, respectively. The Company refines thegovernance bodies’ authority and responsibility, details the list of authority andresponsibility, promotes the reciprocity of authority and responsibility, and ensureseffective performance of duties; The Company accurately controls the quality ofproposals, establishes a proposal quality control procedure, and for important proposals,the Company establishes a joint mechanism with relevant departments at headquarters tointervene in advance and provide advice and recommendations on decision-makingprocedures and information disclosure compliance. The board of directors of theCompany has repeatedly been honored with awards such as the Excellent Board ofDirectors and Special Contribution Award for Board Development in the capital market.In 2024, the Company will continue to adhere to its compliance-oriented and efficientand standardized operations, and will continue to improve its corporate governancestandards and effectively protect the interests of investors. The Company will firmlyrefrain from touching the regulatory red line and comply with the relevant requirementsof the Central Committee of the Communist Party of China, the State Council, theState-owned Assets Supervision and Administration Commission of the State Council(hereinafter referred to as the “SASAC”) and the listing rules in the place of listing,focusing on matters such as related party transactions, major investment and financingprojects, external guarantees and other matters. The Company will strictly adhere to thebottom line of compliance, follow rules and exercise the functions and roles of eachgovernance body, especially the board of directors, in accordance with the rules, powersand responsibilities. The Company will further improve its mechanism and system,
continuously refine its corporate governance system, especially in aspects such as boardbuilding, information disclosure and market capitalization management, and strengthenthe institutional support to ensure that compliance is integrated into the process andmechanism, and that the system is adequately safeguarded and functioning. TheCompany will continue to optimize the relationship among the governance bodies, andpersistently improve the corporate governance mechanism that is legally defined,transparent, coordinated, and effectively balanced. The Company will comprehensivelyrefine the management of the meeting process, focusing on the communication withexternal directors, and optimizing the efficiency of the operation of the board ofdirectors.VI. STRENGTHENING THE RESPONSIBILITY OF THE “KEY MINORITIES”The Company maintains close communication with its actual controller, the controllingshareholders, shareholders holding more than 5%, directors and supervisors of theCompany and others in order to convey regulatory requirements in a timely manner. TheCompany organizes the participation of its directors, supervisors, and senior managementin trainings hosted by the SASAC, securities regulatory authorities, and listed companyassociations to study and understand important policy documents and meeting spirits ofthe Central Committee of the Communist Party of China and the State Council, graspnew regulatory requirements and corporate governance demands, and continuouslyimprove policy comprehension, strategic insight, risk identification, and scientificdecision-making abilities.In 2024, the Company will continue to enhance the sense of the responsibility among the“Key Minorities” and work together to promote their diligence. The Company willorganize its directors, supervisors, and senior management to participate in workmeetings, training courses, and other activities organized by regulatory authorities andprofessional associations in strict accordance with regulatory requirements and actualneeds, enhancing the “Key Minorities’” understanding of capital market laws andregulations, and professional business knowledge, and continuously improvingself-discipline awareness to promote high-quality development of the listed company.
The Company will continue to evaluate the specific measures of the Action Plan and fulfil itsinformation disclosure obligations in a timely manner. Investors should be aware that theforward-looking statements included in the Action Plan in relation to future plans anddevelopment strategies, among others, do not constitute any substantive commitment toinvestors by the Company, and investors shall pay attention to the investment risks.