Wuxi Autowell Technology Co., Ltd.Action Plan for Improving Quality, Efficiency, and Shareholder
Returns in 2024We at Wuxi Autowell Technology Co., Ltd.(hereinafter referred to as “the Company”) arekeenly aware that to improve quality, deliver more returns to investors, and enhance theirsense of gain is integral to the development of a listed company and is also a responsibilityit has to investors. In 2024, the Company will uphold the “investor-centered” developmentconcept and take solid measures to improve quality, increase investor returns and sense ofgain, boost the confidence of capital market participants, protect the interests of allshareholders, keep the stock price stable, and strengthen our corporate image on the capitalmarket. With full confidence in our prospects and corporate value, we developed the ActionPlan for Improving Quality, Efficiency, and Shareholder Returns, which was reviewed andapproved at the 50th meeting of the Third Board of Directors on March 25, 2024. Below arethe main measures to be taken.I. Emphasize investor returns and distribute cash dividends to share benefits withshareholdersAs of December 31, 2023, the Company had distributed total cash dividends of RMB502million and implemented two share repurchase programs with a combined amount ofRMB219 million. The total amount of cash dividends and share repurchases is RMB721million, accounting for 57.40 percent of the Company’s total net profit attributable toshareholders of the listed company.In view of investors’ expectation for returns and its long-term development, the Companyplans to distribute a cash dividend of RMB20 for every 10 shares, or a total of approximatelyRMB448 million (including tax) for 2023, an increase of 82.23 percent over 2022. Thecompany’s profit distribution plan for 2023 is to be submitted to the general meeting ofshareholders for review.In 2024, the Company will continue to deliver shareholder returns proportionate to ourbusiness development and performance, and explore new ways to give back to shareholders,thus enhancing their sense of gain. Pursuant to applicable laws and regulations and the profitdistribution policy set forth in the Articles of Association, the Company will continue todistribute cash dividends and consider increasing the frequency of payouts as conditionspermit. Mr. Ge Zhiyong, the Company’s actual controller, Chairman, and General Managerand Mr. Li Wen, the Company’s actual controller, Director, and Deputy General Managerjointly propose the following: The cash dividend payout ratio in 2024 is planned to be 35 to40 percent of the net profit attributable to shareholders of the listed company, and thisproposal will be reviewed at the Board of Directors meeting. Mr. Ge Zhiyong and Mr. Li
Wen undertake to vote “yes” when the matter is reviewed at relevant meetings. The aboveproposal shall take effect only after being approved at the Board of Directors meeting andthe general meeting of shareholders.The Company will develop a stock price stabilization plan for 2024, taking into account thesituation of the capital market. If necessary, appropriate and timely measures will be taken toboost market confidence and maintain the stock price stability. The Company will work withinvestors to build a bright future of value sharing and win-win cooperation, so as to share thefruits of growth with investors and help grow their assets.
II. Increase R&D investment and foster new productive forces to promote high-qualitydevelopmentThe Company is committed to providing quality equipment and services for global customers.Through independent R&D, the Company’s product portfolio now serves the four majorsectors of the PV industry chain: Ingot, Wafer, Cell, and Module; the ESS CellModule/PACK Automatic Assembly Line in the fields of lithium-ion battery and energystorage; and Packaging & Testing sectors in the semiconductor industry. In 2023, theCompany successfully developed new pieces of equipment suitable for N-type cell, includingthe 0BB PV Cell Soldering Stringer, the XBC PV Cell Soldering Stringer, the N-type low-oxygen monocrystal growth furnace, and laser enhanced metallization machine. As 12-inchwafers have become the mainstream in the fast-growing semiconductor industry, thecompany developed the Fully Automatic 12-inch Twin Spindle Dicing Saw andMultifunction Die Bonder, for which validation has been completed at the customer end. TheCompany received the first order for monocrystal growth furnaces from a famous overseassemiconductor company, marking a breakthrough in the export of such furnaces. These newproducts precisely testify to the Company’s high efficiency of technology application andforward-looking R&D layout.In 2024, the Company will attach great importance to technology upgrade and iteration ofPV equipment, lithium-ion battery/energy storage equipment, and semiconductor equipment,increase R&D investment in high-end equipment, and continuously strengthen thecompetitiveness of our products and the leading position of our technology. To this end, wewill focus on the following areas of work.
1. Improve our capacity for technological innovation and application of advances intechnology
As a high-end equipment manufacturer, the Company continues to invest heavily in R&Damid our rapid business growth. In 2023, the Company spent RMB327,307,700 on R&D, anincrease of 38.3 percent over 2022. Over the years, we have made enormous R&D
investments to build laboratories for technologies and materials including general purpose
technology (GT), computer-aided engineering (CAE) simulation, materials analysis andtesting (MAT), and artificial intelligence (AI), continuously pushing the boundaries of
technology R&D. The Company and its subsidiaries have secured a rich harvest in thedevelopment of new products and technologies and application of advances in coretechnologies.
In 2024, the Company will continue to increase R&D investment and give full play to therole of existing laboratories to strengthen collaboration between industries, universities, andresearch institutes. We will continue to steer plenty resources toward new productdevelopment, improve our overall R&D strength and layout, and beef up our corecompetitiveness.In 2024, the Company will further improve our R&D system and the incentive mechanismfor the R&D team. R&D personnel are the pillar to R&D and innovation. The Company willadopt various ways such as equity incentives, competitive compensation, and innovativebusiness co-investment to reward R&D personnel with outstanding contributions in R&D,industrialization of R&D outcomes, and other aspects, so as to share benefits with the R&Dteam and inspire them to reach their full potential for innovation and keep them motivatedfor work. In this way, we hope to achieve a win-win outcome for the Company’sdevelopment and employee gains.
2. Step up efforts to expand into global markets, strengthen overseas capacity buildingand R&D cooperation, and provide quality products and services for global customersIn 2023, the Company sold to over 40 countries and regions, providing quality products andservices for more than 600 production bases around the world. Among them, the ultra-high-speed tandem welding equipment, one of our core products, is a key production apparatusfor PV modules. The Company sells the equipment to more than 40 countries and commandsa market share of over 60%, becoming a competitive producer and a major exporter of PVequipment.As our products grow in influence in overseas markets, the Company is moving faster toexpand our global presence. In 2023, the Board of Directors approved a proposal on
strengthening our overseas capacity. By establishing a wholly-owned subsidiary in Japan andbringing in Japanese technical teams, the Company has continuously expanded the scope oftechnology R&D, from automation technology to vacuum coating technology and fromsemiconductor packaging and testing to wafers and silicon wafer grinding and polishing. TheCompany’s R&D resources have been further enriched through technical cooperation invarious forms.
In 2024, upholding the customer-centered concept, the Company will actively servecustomers at home and abroad, follow up on the progress of customers’ overseas facilities,and strengthen overseas marketing efforts and services, thus enhancing the globalcompetitiveness of our products, especially in the fields of PV and lithium-ion batteryequipment. At the same time, we will accelerate the construction of overseas productionbases and service centers to provide quality and efficient products and services for globalcustomers.
In 2024, we will further promote overseas R&D and technical cooperation, with a focus onstrengthening technical cooperation in PV, lithium-ion battery, energy storage, andsemiconductor packaging equipment and introducing overseas technical teams. Throughtechnical cooperation, we will enhance the synergy along the equipment manufacturingindustry chain, and apply our technology to a broader range of product categories and
increase our market share in the equipment manufacturing segment.III. Accelerate the implementation of proceeds investment projects to achieve expectedbenefits, with a focus on the core business of high-end equipment manufacturingIn May 2020, the Company was listed on the Shanghai Stock Exchange Science andTechnology Innovation Board, raising a total of RMB574 million. In August 2022, theCompany issued shares to pre-determined investors, raising RMB530 million. In August2023, the Company issued convertible corporate bonds worth RMB1.14 billion to non-specific targets. The company’s proceeds investment projects are focused on its core business.Among them, the production base financed with funds raised in the Company’s IPO was putinto operation in October 2021. This production base has improved the Company’s deliverycapacity and product quality, while reducing the operating costs. The Company’s productioncapacity (by equipment value) has increased from less than RMB1 billion to RMB5 billion.The R&D center came into operation in June 2022, greatly improving the Company’s R&Dstrengthen and efficiency, as well as application of R&D outcomes. The two projects haveboth yielded expected benefits.The ongoing proceeds investment projects for high-end intelligent equipment R&D andindustrialization (such as LPCVD/boron mine expansion and semiconductor packaging andtesting equipment) have received 21.04 percent of the planned investment, including 80percent of the science and technology reserve fund. Construction of a platform-based smartfactory for high-end intelligent equipment has started as scheduled. Another two projects areunder construction, including a laboratory for advanced solar cell metallization equipmentand the R&D and industrialization project of advanced optical inspection equipment forsemiconductor packaging.In 2024, the Company will speed up the implementation of ongoing proceeds investmentprojects. The science and technology reserve fund project will be all finished. For theLPCVD/boron mine expansion project, the design, manufacturing, and verification ofLPCVD equipment and TOPCon process development will be completed, and new progresswill be made in the safety and reliability of mass production. The Company plans to completeprototype testing and validation at the customer end in the second half of 2024, and finish noless than 70% of the entire project by then. The flip chip bonder project is scheduled to enterthe detailed design stage in May 2024, and the wire bonder (Au & Cu) project in November2024. No less than 50 percent of the two projects will be completed. The platform-basedsmart factory project will proceed as planned, with no less than 50% of the funds being raised.During the implementation of the proceeds investment projects, the Company will use theraised funds appropriately in strict accordance with the pertinent regulations on themanagement of raised funds, and ensure that the projects go smoothly as planned. Effortswill be made to enable the projects to deliver expected benefits as soon as possible, so as toenhance the Company’s overall profitability.IV. Strengthen receivables and inventory management and improve asset security andturnover ratio
Accounts receivable and inventory are the Company’s important current assets. Since it wentpublic, the Company has seen rapid growth in operating income, with a considerable amountof accounts receivable outstanding. At the end of 2023, the accounts receivable outstandingwas about RMB1,823,593,000, an increase of RMB850,574,800 over the previous year, andthe growth rate was slightly higher than that of the operating income.The Company’s products are production equipment, whose accounting is under the item“inventory - goods delivered” before acceptance by customers. Goods shipped account for arelatively large part in the Company’s inventory. At the end of 2023, the inventoryoutstanding amounted to approximately RMB7,765,541,100, an increase ofRMB3,814,637,100 over the previous year, of which the value of goods delivered wasRMB6,266,820,300, an increase of RMB3,411,893,100 over the previous year. The growthrate of goods delivered was slightly higher than that of inventory.In 2024, the Company will keep a close watch on the collection of receivables, increaseefforts to collect receivables, and take timely and appropriate measures based on the creditrisk of customers. For small and medium customers with relatively weak anti-risk ability, wewill require a higher proportion of payments before goods are delivered. For customers withcredit risk, we will put more energy into the collection of receivables and take correspondingaction such as litigation and property preservation to guarantee the payment.In 2024, the Company will further improve the efficiency of equipment installation andcommissioning, shorten the ramp-up period, assign dedicated personnel for equipmentacceptance after the acceptance criteria are met within the specified period of time, andincrease the acceptance ratio of equipment, thus raising the inventory turnover ratio.V. Optimize the corporate governance structure, see that the “key few” fulfil theirresponsibility, and push forward high-quality developmentThe Company has formed a corporate governance structure according to the listing rules ofthe SSE Science and Technology Innovation Board, which consists of the shareholders’general committee, the Board of Directors, the Board of Supervisors, and the management.It has put in place a mechanism of coordination and checks and balances among the organ ofauthority, decision-making organ, supervisory organ, and the management, with well-definedrights and responsibilities and compliant operations. The internal control system has beencontinuously improved to exercise controls over the rights and obligations of themanagement and prevent them from abusing its role to infringe on the rights and interests ofthe Company and minority investors.As of December 31, 2023, Mr. Ge Zhiyong and Mr. Li Wen, the actual controllers of theCompany, together held 100,854,332 shares, accounting for 44.86 percent of the total sharecapital of the Company. Mr. Ge Zhiyong serves as General Manager of the Company andMr. Li Wen as Deputy General Manager. The interests of the Company’s core managementare in alignment with those of shareholders.In 2024, the Company will further improve its governance structure and see to it thatshareholders can fully exercise their rights and the Board of Directors and special committees,the Board of Supervisors, independent directors, and the management can work in due
negligence. The Company will provide necessary conditions for independent directors toperform their duties, including but not limited to independent office spaces and workingconditions, necessary information for independent directors to learn about the Company’ssituation, and necessary spaces and information for the meetings of independent directors.In 2024, the Company will further refine the executive compensation scheme, which consistsof basic compensation and performance-based compensation, with the latter higher than theformer. Performance-based compensation is highly linked to the Company’s operatingperformance, so executive compensation is contingent on the Company’s operatingconditions. We will further strengthen the benefit sharing mechanism between themanagement and shareholders and enhance the sense of responsibility and performance ofduties of the “key few” so as to promote the steady and long-term development of theCompany.In 2024, training for the "key few” will be strengthened to help improve their ability toperform their duties. The Company will organize the "key few" to participate in statutorytraining organized by regulatory authorities. The Company will organize the "key few" tostudy the training resources on the Shanghai Stock Exchange Academy and the trainingplatform of the China Association for Public Companies. The Company will urge all the "keyfew" to participate in training, and ensure that they attend at least four training sessions inthe year.VI. Improve disclosure quality and engage with investors in various waysSince it went public, the Company has attached great importance to information disclosureand fulfilled its information disclosure obligations in strict accordance with in the RulesGoverning the Listing of Stocks on the Science and Technology Innovation Board ofShanghai Stock Exchange and the Company’s Management System for Matters ConcerningInformation Disclosure. The Company releases periodic reports, major contracts, and holdingannouncements in a true, accurate, complete, and timely manner to keep investors informedof the Company’s important information. The Company received an “A” rating for itsdisclosure performance during the evaluation of information disclosure work of listedcompanies conducted by the Shanghai Stock Exchange from 2022 to 2023. The Companywon the 2022–2023 Tianma Award for Investor Relations of Chinese Listed Companies andthe Outstanding Board Secretary Award for Chinese Listed Companies.In 2023, the Company placed great emphasis on investor relations management. All seniorexecutives including the Chairman and General Manager participated in the six periodicreport briefings and communicated with investors. The Company invited investors to attendproduct launch events and visit production bases and product exhibitions, so that investorscould learn about the Company’s operating conditions by themselves. The Company presentsits operations, R&D, products, and other information to investors through its official website,WeChat Official Account, WeChat Channels, and other methods, so that investors can get abetter understanding of the Company.In 2024, the Company will continue to disclose information in strict accordance withapplicable laws and regulations. On this basis, we will further improve the readability and
effectiveness of the content disclosed and give a better interpretation on periodic reports inmore intuitive forms such as image, animated short, and video. We will strengthen themanagement of inside information and ensure that investors have equal access to information.At the same time, we will release the Environmental, Social and Governance (ESG) reportin Chinese and English to inform global investors of the Company’s financial and operatingconditions, maintain close relations with international investors, and demonstrate theCompany’s commitments to and efforts in fulfilling sustainability and social responsibility.
In 2024, we will hold at least four Investor Open House events to engage with investors faceto face. The company will hold no less than six online meetings with investors through suchplatforms as the SSE Roadshow Center and Comein Finance. All senior executives includingthe Chairman and General Manager will attend performance briefings and communicate withinvestors on the Company’s operating conditions and development plans. We will organizeno less than 50 investor communication events including conference calls or offline events.In addition, we will take the initiative to solicit opinions and suggestions from investorsregarding information disclosure, investor communication, and other matters on an ad hocbasis, give formal replies to investors’ feedback, and take measures to improve the qualityand transparency of information disclosure.VII. Other mattersWe will evaluate the specific measures set forth in the Action Plan Improving Quality,Efficiency, and Shareholder Returns on an ongoing basis, and fulfill our disclosureobligations in a timely manner. We will continue to focus on core businesses and strain toenhance our core competitiveness, profitability, and risk management capabilities. Bydelivering good performance and sound corporate governance, we will fulfill ourresponsibilities and obligations as a listed company and give back to investors. We will makegreat efforts to build up the Company’s image and help promote the steady and healthydevelopment of the capital market.This document contains forward-looking statements such as Company’s plans anddevelopment strategies that do not constitute any substantive commitment of the Companyto investors. Such statements involve risks and uncertainties, and investors are advised toexercise caution.