恒逸石化：2025 Annual Report

Hengyi Petrochemical 2025 Annual Report

Stock c0de: 000703.SZ

2025 Annual Report

Section I Important notes, contents and definitions

The Board of Directors, the Supervisory Committee and the Directors and senior management of the Company warrant that the contents of the annual report are true, accurate and complete, and that there are no false records, misleading statements or material omissions, and that they will severally and jointly accept legal responsibility for such contents.

Qiu Yibo, Chairman of the Company, Zheng Xingang, the person in charge of accounting work, and Gong Yanhong, the head of the accounting agency (accounting supervisor), declared to ensure the annual financial statement report is true, accurate and complete.

All directors have attended the Board meeting at which this report was considered.

The forward-looking statements contained in this report regarding future plans, development strategies, industry discussions, and outlook do not constitute substantive commitments from the Company to investors. Investors are hereby advised to exercise caution regarding investment risks. Investors are advised to refer to “Section III: Management Discussion and Analysis”, specifically "XI. Prospects for the Future Development of the Company (IV)Risks and Countermeasures Faced by the Company."

The Company is required to comply with the disclosure requirements in respect of the chemical industry as set out in the "No. 3 Self-Regulatory Guidelines for Listed Companies of the Shenzhen Stock Exchange - Disclosure of Industry Information".

The Company's profit distribution plan reviewed and approved by the Board: on the basis of the share capital entitled to profit distribution registered on the date of registration of shareholdings for the implementation of the equity distribution, a cash dividend of RMB 0.50 (tax included) per 10 shares will be distributed to all shareholders. There will be no equity dividend (tax included) or conversion of equity reserve into share capital of the Company.

This annual report is prepared in Chinese and English respectively. In case of any discrepancy between the two versions, the Chinese version shall prevail.

Content

Section I Important notes, contents and definitions ..

Section II Company Profile and Key Financial Indicators . 10

Section III Management Discussion and Analysis .. 19

Section IV Corporate governance .. ..103

Section V Important Matters ... ...162

Section VI Changes in Shares and Shareholders ... .. 219

Section VII Bonds . .236

Section VIII Financial Report . ..246

List of Documents for Reference

1.Accounting statements signed and stamped by the legal representative, person in charge of accounting activities and the head of the accounting agency;

2.The original audit report stamped by the accounting firm and signed and stamped by the certified public accountant;

3.All original documents and original announcements of the Company publicly disclosed on the website designated by CSRC during the current period.

Definitions

Section II Company Profile and Key Financial Indicators

I. Company profile

II. Contact person and contact information

III. Information disclosure and place of preparation

IV. Registration changes

V. Other relevant information

1. Accounting firm engaged by the company

2.Accounting firm engaged by the company

3.The financial adivisor engaged by the company to perform continuous supervision duties during the reporting period

□Applicable Not applicable

VI. Main accounting data and financial indicators 1.Whether the company is required to retrospectively adjust or restate prior years’ accounting data

□Yes No

1.Difference in the net profit and net asset in the financial statements which are presented concurrently in accordance with International Financial Reporting Standards and Chinese Accounting Standards There was no difference in the net profit and net asset in the financial statements which are presented concurrently in accordance with International Financial Reporting Standards and Chinese Accounting Standards.

2.The lower of the net profit before and after deducting non-recurring gains and losses of the company in the last three financial years is negative, and the audit report of the last year shows that the company’s liability to continue as a going concern is uncertain.

□Yes No

3.The lower of the net profit before and after deducting non-recurring gains and losses is negative.

□Yes No

VII. Difference in accounting data under Chinese Accounting Standards and Overseas Accounting Standards

1.Difference in the net profit and net asset in the financial statements which are presented concurrently in accordance with International Financial Reporting

Standards and Chinese Accounting Standards

There was no difference in the net profit and net asset in the financial statements which are presented concurrently in accordance with International Financial Reporting Standards and Chinese Accounting Standards.

2.Difference in the net profit and net asset in the financial statements which are presented concurrently in accordance with accounting standards and Chinese

Accounting Standards

There was no difference in the net profit and net asset in the financial statements which are presented concurrently in accordance with international accounting standards and Chinese Accounting Standards.

VIII. Quarterly main financial indicators

Unit: RMB

The above financial indicators, or the sum thereof, show no material differences from the relevant financial indicators disclosed in the company’s quarterly or semi-annual reports.

IX. Non-recurring profit and loss items and amounts

Unit: RMB

1.Other profits and losses satisfying the definition of non-recurring profits and losses:

Other items that meet the definition of non-recurring gains and losses primarily include the portion of non-recurring gains and losses attributable to the investee in the investment income recognized under the equity method for significant associates and joint ventures, amounting to RMB 6,782,488.27.

2.Definition of non-recurring profit and loss items listed in "Interpretative Announcement for Information Disclosure of Companies Issuing Public Securities No. 1 - Non-recurring Profit and Loss" as recurring profit and loss items

There are no instances where the Company defines items of non-recurring gains and losses listed in "Interpretative Announcement No. 1 on Information Disclosure by Companies Issuing Public Securities - Non-recurring Gains and Losses" as items of recurring gains and losses.

Section III Management Discussion and Analysis

I.Major business activities of the company during the reporting period The Company is required to comply with the disclosure requirements in respect of the chemical industry as set out in the "No. 3 Self-Regulatory Guidelines for Listed Companies of the Shenzhen Stock Exchange - Disclosure of Industry Information".

Hengyi Petrochemical (Stock Code: 000703.SZ), as a globally leading vertically integrated leader in the full "refining-chemicals-fiber" industry chain, has established a closed-loop, integrated industrial chain spanning from crude oil processing to chemical fiber products. This is achieved by leveraging the Brunei Refinery Project Phase I in Southeast Asia as an upstream strategic pivot and domestic PTA-PET and CPL-PA6 plants as industrial cornerstones. Through efficient domestic and international coordination and vertical integration across upstream, midstream, and downstream segments, the company has formed a unique "polyester + nylon" dual-drive model in China, characterized by a balanced, columnar industrial layout where all business segments advance in tandem. The company has fully commenced the construction of the Brunei Refinery Project Phase II to further enhance its market share overseas and strengthen its integrated industrial chain and global competitive advantages.

Simultaneously, the company actively researches and adopts new chemical technologies, strategically invests in coal chemical and waste textile recycling projects, vigorously advances the Hengyi Turpan 2.4 million tons/year high-quality coal-to-ethylene glycol project for fiber production, and strives to build an integrated "coal–ethylene glycol–polyester" industrial chain. It is accelerating the deployment of the first 300,000 tons/year circular new materials industrial demonstration project, taking new strides in green, low-carbon, and circular development.

The implementation of these major strategic projects will enhance the diversification of the company’s raw material sources and reinforce its industrial competitive moat. It will drive the company’s transition from "sole reliance on crude oil" to "complementary utilization of oil, coal, and textiles," establishing a development path from "a drop of oil, a lump of coal, and a piece of clothing" to "two types of fibers". This will create a new synergistic landscape integrating petrochemicals, coal chemicals, and high-end green circular new materials projects, positioning Hengyi Petrochemical as a globally leading technology-driven chemical enterprise.

(I)Overview of the Chemical and Chemical Fiber Business

The company thoroughly implements the strategic development principle of "vertical extension and horizontal synergy," continuously optimizes its industrial layout, and enriches its product portfolio. It has now established a comprehensive product system covering refined oil products (gasoline, diesel, jet fuel), basic petrochemical raw materials (PX, PTA, BZ, CPL, LPG), and new chemical fiber materials (POY, FDY, DTY, PSF, PET, PA6). This system deeply serves fundamental industries of the national economy and essential demand sectors, such as energy, textiles and apparel, packaging, electronics, and building materials.

Figure 1 The current capacity of main production

As of the disclosure date of this report, the company has established an annual refining and petrochemical design capacity of 8 million tons (Phase I of Brunei Refinery Project), a participating and controlling PTA capacity of 21.5 million tons/year, a participating and controlling polymerization capacity of 14.68 million tons/year, a participating and controlling CPL capacity of 1 million tons/year, a PA6 capacity of 600,000 tons/year, and a PIA design capacity of 300,000 tons/year.

Leveraging the vertical integration advantages of the “oil refining – aromatics – chemical fibers” chain, the company achieves value creation across the full spectrum from crude oil processing to chemical fiber products, continuously strengthening its core competitiveness.

Can be directly used for weavingto produce garments,decorative fabrics,etc.,widelyapplied intheapparel,industrial,andother fields.

Directly used for weaving,widely applied in the apparel and industrial sectors,aswell asin garment fabricsand linings.

Directly used for weaving,widely applied in apparel, industrial fields, garment fabricsand linings.

Widely used in indirect spinning to produce textile raw materials such asfilament and staple fiber,and can also be used in casting to produce plasticsandotherproducts.

Mainly used in spinning,non-woven fabrics,filling and other fields. Amongthem,non-woven fabricscan serveasimportant rawmaterials for products such as masks,disinfecting wipes,and disposable protective supplies.

Mainlyused for beverage packaging,food containers,daily chemical packaging,pharmaceutical packaging,and industrial sheets.

White cylindrical pelletsmade from caprolactam are widely used as basic raw materials for producing textile fibers,engineering plastics, food packaging films,and other fields.

(II)Overview of the Chemical+ business

Amidst global economic fluctuations and industry transformations, the Company has maintained strategic focus, deepening its core businesses (symbolized by "a drop of oil and two strands of fiber"), while relying on its "Chemical+" business to navigate steadily through complex changes and comprehensively enhance its overall resilience against risks and economic cycles.

1. Deepening Synergy Across the Industrial Chain to Multiply Operational Efficiency

Through a trinity strategy of "synergized management, logistics development, and technology enablement", the Company has comprehensively improved industrial chain synergy efficiency and risk resistance.

The Company has established an end-to-end distribution and service system "from feedstock to product". Leveraging the Hengyi Micro Mall online platform—which integrates functions such as price inquiries, quick ordering, market information, and financial services—and the HTMS intelligent logistics management system, the Company has driven continuous growth in online transaction volume and significantly enhanced its synergistic management capabilities.

The Company has built a full-channel control network covering warehousing, transportation, and distribution. By establishing its own logistics and transportation network and appropriately introducing third-party logistics platforms, it has substantially reduced transportation costs in the process of feedstock supply security and product distribution, greatly improving logistics support capabilities.

The Company has vigorously promoted the development of digital factories. Relying on big data analytics to achieve flexible customization in production, it has created an intelligent service system of "demand forecasting—intelligent production scheduling—dynamic dispatching". This has significantly shortened response cycles, with " mathrm A I + " technologies providing efficient empowerment for the enterprise.

2. Strategic Equity Investment in a High-Quality Bank for Long-Term Steady Returns

Zhejiang Chouzhou Commercial Bank Co., Ltd. was officially established in 2004. It is one of the 12 national joint-stock commercial banks approved by the former China Banking Regulatory Commission. The Bank was listed on the Main Board of The Stock Exchange of Hong Kong Limited on March 30, 2016, and subsequently listed on the Shanghai Stock Exchange on November 26, 2019, becoming an " mathrm A + mathrm H " listed bank. It has now developed into a high-quality commercial bank with a solid foundation, sound profitability, rapid growth, and effective risk control.

(III) Business Model

During the reporting period, the Company added the Phase I caprolactam-polyamide integration and supporting project (hereinafter referred to as "Guangxi Phase I Project") into production and operation. Its main products are CPL and PA6. The procurement models for CPL and PA6 products are basically the same as those for the Company's existing products. The production and sales models are as follows:

1. Production Model

Guangxi New Materials typically sets monthly production targets based on the annual production and operation plan and makes dynamic adjustments according to market demand and plant conditions.

2.Sales Model

CPL and PA6 products are primarily sold in the domestic market, covering over twenty provinces and regions across China. They are directly sold to customers by the Company's sales department. The CPL produced by the Guangxi Phase I Project is mainly for self-use, while the PA6 is sold externally. The main customers for PA6 products are apparel fabric manufacturers, bag and luggage fabric manufacturers, and home decoration fabric manufacturers. These customers are largely concentrated in provinces such as Guangdong, Fujian, Jiangsu, and Zhejiang. The Company generally adopts a direct sales approach, entering into sales contracts directly with customers. The settlement model typically involves payment before delivery or simultaneous exchange of payment and goods.

During the reporting period, there were no significant changes to the business model for the Company's existing products. For detailed information on the company’s business model, please refer to the section "II.Major business activities of the company during the reporting period" under "Section III. Management Discussion and Analysis" in the company’s 2024 Annual Report, specifically subsection"(II) Business model".

(IV)Process Flow Diagram of Main Products

1. CPL Production Process

The production of CPL primarily uses benzene and coal as raw materials. It employs currently advanced processes: the synthetic ammonia process to produce liquid ammonia, the hydration method to produce cyclohexanone, and the fluidized bed process to produce hydrogen peroxide. Subsequently, the cyclohexanone oxime is produced via the ammoximation process. Through solvent rearrangement and neutralization crystallization steps, crude CPL is generated, which is then refined and purified to obtain the final CPL product.

2.PA6 Production Process

CPL and additives are continuously fed into the polymerization reactor at specified ratios. They undergo pre-polymerization and post-polymerization reactions respectively, with the conversion rate of CPL reaching approximately 90% by controlling appropriate reaction temperatures. The polymer from the bottom of the post-polymerization reactor is continuously conveyed by a gear pump to a melt filter and then to a pelletizer for pelletizing. The resulting pellets undergo extraction, drying, and cooling before being sent to the packaging process.

Apart from CPL and PA6, no major changes have been made to the process flow diagrams of the company's existing primary products. For detailed information on the company’s business model, please refer to the section "II.Major businesses in which the Company was engaged during the reporting period" under "Section III.

Management Discussion and Analysis" in the company’s 2024 Annual Report, specifically subsection"(III) Process flow diagram of main products ."

(V) Key Business Operations During the Reporting Period

In the face of a complex and ever-changing international macro-environment and industry cyclical fluctuations, the Company's Board of Directors and management team resolutely implemented the development philosophy of "innovation-led technology, high-tech foundation, quality and efficiency improvement as the core". Leveraging the synergistic advantages of its integrated upstream-downstream industrial chain, the Company operated prudently by adapting to the circumstances, continuously consolidating its competitive edge in its core chemical business.

During the Reporting Period, the Company achieved operating revenue of RMB 113.527 billion and net profit attributable to shareholders of the listed company of RMB 258 million. As of the end of the Reporting Period, the Company's total assets amounted to RMB 109.629 billion, and net assets attributable to shareholders of the listed company amounted to RMB 24.387 billion.

1. "Technology Hengyi" Deeply Advanced, Integration of Production and Research Leading Technological Transformation

In recent years, the Company has continued to increase R&D investment in core and key technological innovations focusing on "one drop of oil, two strands of fiber". It has also conducted scientific research in its new business areas such as coal chemical, recycled materials, and bio-based materials. Focusing on green and environmental protection, functionality, import substitution, and high value-added products and technologies covering multiple fields including materials, chemical products, and recycling technologies, the Company deeply integrates innovation resources with the industrial ecosystem. It uses industrial demand to drive scientific research breakthroughs and leverages technological advancements to feed back into industrial upgrading. The pace of transformation from "Industrial Hengyi" to "Technology

Hengyi" has accelerated significantly, with technological innovation empowering the industry and showing increasing effectiveness.

The Company's market share in core functional materials remains at the forefront of the industry. The Company strategically deploys functional fibers and non-fiber materials, with many products utilizing domestically pioneered technological routes, showing broad market prospects. Products independently developed by the Company, such as catalysts, matting agents, spin finishes, and masterbatches, have achieved large-scale application. Projects related to the Company's green and environmentally friendly bio-based materials, monomers, and high-performance products are progressing in an orderly manner. Concurrently, the Company's waste textile recycling and reuse project is advancing vigorously.

During the Reporting Period, the Company continuously generated innovative achievements. The project "Development of New Titanium-Based Catalysts and Complete Technology for Preparation of Antimony-Free Eco-Friendly Polyester Materials", led by Hengyi Research Institute, won the first prize of the 2024 Zhejiang Provincial Science and Technology Progress Award. The Company's R&D expenditure reached RMB 889 million, a year-on-year increase of 16.45% . The number of R&D personnel was 1,421, of which 21.46% held master's or doctoral degrees. The Company actively commits to R&D innovation and promotes the cultivation of patent-intensive products. During the Reporting Period, it submitted a total of 187 invention patent applications. Its waste textile recycling technology was included in the 2025 High-Value Patent Cultivation List. Projects related to dyeable permanent anti-static polyester fibers were included in the Zhejiang Provincial 2026 Science and Technology Plan Projects. By the end of 2025, the Company held 617 valid authorized patents, including 499 R&D patents and 118 intelligent manufacturing patents. Furthermore, the Company leveraged its leading enterprise demonstration role and actively participated in industry standard setting. In 2025, it participated in formulating and revising a total of 20 standards, comprising 12 national standards, 3 industry standards, and 5 association standards.

2. Major Strategic Projects Fully Implemented with Results, Industrial Layout Upgraded Significantly

During the Reporting Period, Phase I of the Company's Guangxi project entered the trial production stage. This project is a large-scale CPL and polyamide PA6 integrated production base key for the Company in recent years, with an annual capacity of 600,000 tons of CPL and 600,000 tons of PA6. Upon completion, the Company's CPL and PA6 capacity achieved leapfrog growth, establishing it as a leading enterprise in this field.

The project broke through multiple technical bottlenecks, achieving large-scale industrialized application of several patented technologies and intellectual properties independently developed by the Company. The entire production process employs internationally advanced unit operations and technical combinations, with full-process integration of production factors and energy resources. Consequently, energy and material consumption indicators are significantly reduced, giving the project significant advantages in competitiveness and unit cost compared to peers. The project's products can be used in various fields such as civil fibers, engineering plastics, and films. This project will comprehensively strengthen the Company's integrated "Benzene-CPL-PA6" whole industrial chain layout, significantly enhance its resource integration capability and core competitiveness in the nylon market, and inject strong new momentum for improving long-term profitability and achieving high-quality sustainable development.

3.Refining-Chemical-Polyester Projects Operating Efficiently, Strong Momentum for High-Quality Development

During the Reporting Period, centering on the core principle of "ensuring safety, stabilizing production, strengthening management, optimizing operations, and increasing efficiency", the Company achieved safe, stable, and high-load operation of its refining-chemical-polyester facilities throughout the year. In 2025, the output of Phase I of the Brunei Refining Project was 8.2291 million tons. Among the main products, diesel output was 3.4287 million tons, PX output was 1.5150 million tons, and benzene output was 574,100 tons.

The turbulent geopolitical situation further highlighted the advantages of Phase I of the Brunei Refinery Project, making them increasingly evident. The main sources of crude oil for this project are local Brunei Darussalam and countries like Malaysia, ensuring diversified procurement channels. The procurement price is settled based on the Brent crude oil benchmark. Brunei Darussalam bears a strategic supply guarantee obligation to the Company. Crude oil supply and freight costs have not been affected by geopolitical factors, ensuring the long-term full-load operation of Phase I of the Brunei Refinery Project. The finished products are primarily sold to Southeast Asia and Australia.

4. Lean Management Enhancing Quality and Efficiency, Digital Intelligence Transformation Deepening with Results

During the Reporting Period, the Company continued to promote technological innovation in processes. It persistently advanced technical renovation projects such as reducing reflux ratios in process columns and optimizing energy efficiency in air compression systems, achieving notable results in energy conservation and consumption reduction. Simultaneously, the Company actively promoted localization substitution and technological innovation of key auxiliary materials. The localization ratio of spin finishes for filaments continuously increased. Titanium-based catalysts were successfully applied on a large scale, and the annual output of titanium-containing polyester products repeatedly reached new highs. This technology is also of great significance for green manufacturing and ecological environmental protection.

Furthermore, the Company continued to deepen the central tenet of "enhancing intelligence and efficiency", driving the continuous achievement of new results in digitalization. The Company's core business systems achieved comprehensive integration and upgrade, breaking down key data barriers and building an efficient and collaborative integrated operation platform. This platform supports the end-to-end digital operation of core business processes such as sales and logistics. The Company advanced intelligent manufacturing, effectively ensuring production continuity and product quality consistency. Thanks to the outstanding results of digitalization construction and the deep integration of digital intelligence technology with business management, the Company's operational efficiency continuously improved.

5. Deeply Practicing Green Development Philosophy, Empowering Sustainable Industrial Development

The Company consistently practices the concept of green circular development, actively building a green management system covering the entire lifecycle of "source reduction, process energy saving, end-of-pipe recycling, and value enhancement". By adopting advanced melt direct spinning technology, waste heat recovery systems, and high-efficiency energy-saving equipment, the Company continuously reduces energy consumption per unit of output. It actively develops differentiated and functional green fiber products and expands the application of polyester materials in high-end textiles and industrial materials, using technological innovation to drive the dual enhancement of product added value and green competitiveness. During the Reporting Period, Haining New Materials successfully entered the list of national-level green factories assessed by the Ministry of Industry and Information Technology, marking a new stage for the Company in green manufacturing and sustainable development and establishing it as a benchmark enterprise for green transformation and upgrading in the industry.

Concurrently, the Company actively deploys clean energy projects such as photovoltaic power generation, biogas power generation, esterification power generation, waste heat recovery and reuse, and process column energy saving. In 2025, the Company added photovoltaic installed capacity of 133 MW. By the end of 2025, the Company's cumulative photovoltaic installed capacity reached 25 9 ~ mathrm M W , with an annual power generation of 165.71 million kWh. Through energy storage systems, the Company achieved peak shaving and valley filling in electricity consumption, with a cumulative deployed energy storage capacity of 11 3 ~ mathrm M W and an annual charging capacity of 29.72 million kWh.

6. Steadily Increasing Shareholder Returns, Sharing Development Achievements with Investors

The company has always placed great emphasis on investor returns and market value growth. It completed the 2024 dividend distribution, with a total cash dividend payout of 165 million yuan, accounting for 70.54% of the company’s net profit attributable to listed company shareholders in 2024. The controlling shareholder and concerted actors implemented two share increase plans, cumulatively increasing their holdings by 345 million shares with a total investment of 2.794 billion yuan. On July 9, 2025, the company completed the cancellation of 63.7038 million repurchased shares, representing 1.74% of the total share capital before cancellation. The company has carried out six phases of share repurchase plans. As of March 31, 2026, the cumulative funds used for repurchases amounted to 4.17 billion yuan. Currently, the sixth phase of the share repurchase plan is underway, with 959.7659 million yuan already disbursed.

(VI)Other business information

1.Purchase model of major materials

Unit: RMB/ Tons

2.Reasons for the significant change in the prices of raw materials compared with the previous period

In 2025, due to recurring geopolitical conflicts and fluctuations in global crude oil inventories, international crude oil prices exhibited a trend of starting high and then declining, with a unilateral downward movement. Year-on-year, crude oil prices dropped by 15% . Prices of products across the entire industrial chain fluctuated in line with crude oil prices. Among them, MEG experienced a price increase followed by a decline, remaining weak throughout the year, largely influenced by sluggish downstream demand. Overall, MEG prices decreased year-on-year (according to CCF data, the average annual domestic spot price of MEG in 2025 fell by 5.18% year-on-year). PX also saw an overall year-on-year decline in prices, driven by a significant drop in crude oil costs in 2025 and oversupply pressure (according to CCF data, the average annual CFR China PX price in 2025 fell by 13.27% year-on-year).

3.The purchase price of energy accounts for more than 30% of the total production cost

□Applicable ☑Not applicable

4.Reasons for significant changes in major energy types

Not applicable

5.Main production technologies

Apart from CPL and PA6, no major changes have been made to the production technology of the company's existing primary products. For detailed information on the production technology status of the Company’s key products, please refer to Section III. Management Discussion and Analysis, II.Major businesses activities of the company during the reporting period, and “(4) Highlights of company’s operations during the reporting period: Major production technologies” in the Company’s Annual Report 2024.

6.The capacity of major products

Please refer to “(1) Overview of the Chemical and Chemical Fiber Business” under “II. Major business activities of the company during the reporting period” in this section.

7.The product categories in main chemical parks

8. Environmental Impact Assessment (EIA) Approvals Applied for or Newly

Obtained During the Reporting Period:

9.During the reporting period, the listed company experienced incidents of abnormal production suspension □Applicable ☑Not applicable

10.Status of Relevant Approvals, Licenses, Certifications, and Validity Periods

11.Engaged in petroleum processing and petroleum trading

☑Yes □ No

12.Engaged in fertilizer industry

□Yes ☑No

13.Engaged in pesticide industry

□Yes ☑No

14.Engaged in chlor-alkali and soda ash industry □Yes ☑No

II. Main business of the Company and the industry in which the Company is engaged during the Reporting Period

(I) Status of the Company’s industry

The Company is required to comply with the disclosure requirements in respect of the chemical industry as set out in the "No. 3 Self-Regulatory Guidelines for Listed Companies of the Shenzhen Stock Exchange - Disclosure of Industry Information".

1. Refining and Chemical Industry

The company's Brunei Refinery Project and chemical project is located in Brunei Darussalam, and its finished products are primarily sold to Southeast Asia, Australia, and other regions.

From the demand perspective: According to data from the Asian Development Bank, the economic growth rate in the ASEAN region is projected to be 4.5% in 2025, with the forecast for 2026 revised upward to 4.4% , significantly higher than the global average. This sustained positive economic development trend has effectively driven the growth in demand for refining and chemical products. According to an IEA report, oil demand in Southeast Asia is expected to increase by approximately 49 million tons per year by 2030, accounting for an estimated 39% of the global growth in oil demand. As a major destination for the global shift in manufacturing, Southeast Asia continues to see rising industrial energy demand and steady growth in transportation fuel consumption. It has become one of the world's most strategically promising markets for oil demand growth.

From the supply perspective: The Southeast Asian refined oil market faces a significant supply gap, making it the world's largest net import market for refined oil products. According to Platts data, with the ongoing global rationalization of refinery capacity and the continued contraction in global refined oil supply, the supply-demand gap for refined oil in Southeast Asia is expected to widen further in 2026. Concurrently, some refineries in Southeast Asia are adversely affected by factors such as early-stage construction, outdated technology, and poor management. Several refineries frequently reduce production due to issues like raw material shortages and equipment failures, further exacerbating the tight supply situation. Coupled with increasingly stringent global environmental policies, the willingness of global refining and chemical enterprises to expand capacity remains low, while the costs for upgrading and retrofitting existing capacity have also risen substantially. Overseas refining and chemical companies are adopting a more cautious approach to capital expenditure plans. Future growth in refinery capacity will be severely constrained, which will create strategic opportunities for refining and chemical enterprises possessing technological advantages.

From the perspective of the price spreads of the main finished products—diesel and PX—from the Phase I refining and chemical project in Brunei, during the period from 2024 to 2025, PX fluctuated in the range of 300–500 USD/ton, while the diesel crack spread in the Singapore market fluctuated between 15–25 USD/barrel. Since 2026, the refinery profitability in Southeast Asia has improved significantly, and the supply-demand dynamics of the refined oil and chemical product markets have continued to improve. The crack spreads for refined oil products in the Singapore market have widened, with the diesel crack spread once exceeding 150 USD/barrel. The profitability of aromatic products such as PX has also improved. It is expected that the product spreads will remain at high levels within the year, and the per-ton product profit is expected to increase compared to the same period last year, becoming a core driver of the company's current and future performance growth. The operational and technological advantages of the Brunei refining and chemical project are becoming increasingly prominent.

2. PTA Industry

PTA is one of the important bulk organic raw materials, widely used in various sectors of the national economy, including chemical fibers, light industry, electronics, and construction. In China, 95% of domestic PTA demand comes from the polyester industry. As China continuously increases its independent PTA production capacity, it has now become the world's largest producer and consumer of PTA, dominating the global PTA market.

On the supply side, the industry was still in a phase of concentrated capacity commissioning in 2025. According to CCF data, the annual newly added PTA capacity reached 8.7 million tons, while 2.625 million tons of capacity were permanently shut down, resulting in a net capacity growth rate of approximately 7.1% . This led to a decline in the industry's average operating rate to 76.8% , and product profitability came under pressure under the phase of loose supply-demand balance. This round of PTA industry capacity expansion cycle has ended. After 2026, the pace of new capacity commissioning will slow significantly. Considering the permanently shut-down capacity, the effective PTA capacity in 2026 is expected to see negative growth, with a projected capacity growth rate of -1.7% . Furthermore, due to geopolitical reasons, since March 2026, raw material supply has been continuously tight, global PTA operating rates have declined significantly, and some backward capacity

3. PET Industry

PET products include POY, FDY, DTY, PSF, CHIPS, PET Bottle Chip, among others. Among these, POY, FDY, DTY, PSF, and CHIPS are mainly used in apparel, home textiles, and industrial textiles, and these products are closely related to the national economy and people's livelihoods.

(1) Steady downstream demand, improving industry prosperity

In 2025, PET market demand grew both domestically and internationally, with the domestic market remaining stable and overseas demand showing strong growth. In terms of domestic demand, according to data from the National Bureau of Statistics,

China's total retail sales of consumer goods exceeded 50 trillion RMB, a year-on-year increase of 3.7% , among which the category of clothing, footwear, hats, and knitwear increased by 3.2% year-on-year, providing basic support for the PET industry chain. In terms of overseas demand, according to the quick statistics from the General Administration of Customs, against the backdrop of complex and changing international trade patterns, the cumulative export volume of textiles and apparel in 2025 reached 50.128 million tons, an increase of 9.5% . The export market for PET products grew strongly in 2025, with China's total PET industry export volume reaching 14.61 million tons, an increase of 1.74 million tons year-on-year, representing a growth rate of 13% . Among these, the export growth rates of PSF and CHIPS exceeded 20% .

(2) Divergent capacity growth rates, leading companies' advantages highlighted According to CCF data, by the end of 2025, the total capacity of direct-spun polyester filament yarn reached 44.86 million tons, with a net capacity of 2.1 million tons during the year, representing steady growth. For polyester bottle chip, total capacity reached 21.47 million tons by the end of 2025, with approximately 1.55 million tons of new capacity commissioned in 2025. The capacity commissioning cycle is basically coming to an end, while demand continues to grow rapidly, which is expected to gradually absorb existing capacity and enter a new high-prosperity cycle.

Since March 2026, the supply of raw materials for PET products has been constrained, and product spreads have widened significantly. As backward capacity is further phased out, equipment supply requirements continue to rise, and under the influence of carbon peak and carbon neutrality policies, the industry entry barriers will further increase. The market concentration of the PET industry will continue to improve, driving up the prosperity of the industry chain in the coming years. The per-ton profit of PTA and PET products is expected to improve and achieve overall profitability. As a leading company in the industry, leveraging its integration advantages, technological R&D advantages, and scale advantages, the company continues to consolidate its market leadership, forming significant competitive advantages in differentiated product development, intelligent production, and full industry chain collaboration, providing solid support for the company's medium- to long-term performance growth.

4. CPL and PA6 Industry

CPL is a petrochemical product produced from raw materials such as BZ, which is then polymerized into PA6, forming the "BZ—CPL—PA6" industry chain. Nylon (polyamide) is an important synthetic fiber variety with characteristics such as good wear resistance and high strength. Its downstream application areas cover civil fibers, engineering plastics, films, and other directions.

Currently, the CPL industry has completed its phased capacity deployment. According to CCF data, new CPL capacity in 2025 was 670,000 tons, with a growth rate exceeding 10% . In 2026, the pace of capacity expansion has significantly slowed, with only a small amount of capacity added through technical upgrades. The average capacity growth rate over the next three years is expected to decline to around 5% . As the degree of industry chain integration deepens, requirements in terms of capital scale, environmental standards, and management levels continue to rise, correspondingly raising industry entry barriers. At the same time, downstream demand is steadily expanding, and new capacity is expected to be gradually absorbed, leading to an improvement in the industry's supply-demand balance.

New PA6 capacity is being released in an orderly manner. According to CCF data, new PA6 capacity in 2025 was 885,000 tons, and it is estimated that new capacity in 2026 will be 440,000 tons. From the demand side, PA6 products have excellent comprehensive performance and broad future development prospects. In the field of civil fibers, demand for end products such as sun-protective clothing and outdoor sports equipment is growing steadily, providing stable demand support for upstream

PA6. In the field of engineering plastics, the application of PA6 in areas such as the lightweighting of new energy vehicles is growing rapidly, the quality of industry development continues to improve, and downstream application space continues to expand, with positive long-term development prospects. In 2025, PA6 exports reached 742,000 tons, a year-on-year increase of 28.6% . Considering the withdrawal of old overseas facilities, exports are expected to maintain strong growth in the future.

(II) The Company's Industry Position

1. Refining and Petrochemical (Refining) Segment

As the only private enterprise in China's large-scale refining sector to achieve the scaled operation of an overseas refinery, the company's Brunei Refinery Phase I project (with an 8 million tons/year refining capacity) is the largest single overseas investment project by a Chinese private enterprise. The Hengyi Brunei Refinery Phase I project introduced the world's largest single-train aromatics unit at the time and the world's sixth flexible coking unit. These units feature lower unit production costs, are cleaner and more environmentally friendly, and possess significant late-mover advantages. According to Platts data, as of December 31, 2025, the total refining capacity in Southeast Asia was approximately 276 million tons. The designed capacity of the Brunei Refinery Phase I project is 8 million tons, accounting for about 3% of the total refining capacity in Southeast Asia. Given the limited global new refining capacity additions in the future and the substantial product oil gap in Southeast Asia, the supply-demand balance is expected to remain tight, which is likely to significantly benefit the Brunei Refinery project.

In the future, upon completion of the Brunei Refinery Phase II project, the total capacity of the Brunei refinery will reach 20 million tons/year. This will create deep industrial synergy with the Phase I project, further highlighting the advantages of integrated refining-petrochemical operations under the overall trend of transformation and upgrading in the petrochemical industry. It will also facilitate capacity aggregation and resource optimization, further enhancing the sophistication of the

Brunei refinery project and strengthening the company's sustainable profitability and risk resistance capabilities. Moreover, it will help increase the company's overseas market share and reinforce its integrated industrial chain and scale advantages.

2. PTA Segment

According to CCF data, as of December 31, 2025, China's PTA capacity stood at 92.09 million tons. As a leading enterprise in the PTA industry, the company has strategically deployed three locations along the coastline from north to south: Dalian (Liaoning), Ningbo (Zhejiang), and Yangpu (Hainan). It operates four PTA bases with a total participating and controlling PTA capacity of 21.5 million tons.

Additionally, according to CCF data, as of December 31, 2025, the national PIA capacity was 550,000 tons, of which the company's PIA capacity accounts for 300,000 tons. PIA is primarily used in the production of polyester bottle-grade chips and alkyd resins, as well as in coatings, polyester fiber dyeing modifiers, and pharmaceuticals. The PIA products produced by the company are mainly used to support its own production of polyester bottle-grade chips.

3. PET Segment

According to CCF data, the majority of polyester production capacity is concentrated in the Asia-Pacific region, and China is the world's leading producer and exporter of textiles. As of December 31, 2025, the total national PET capacity was 89.72 million tons, including 44.86 million tons of direct-spun polyester filament yarn capacity, 10.04 million tons of polyester staple fiber capacity, and 21.47 million tons of polyester bottle-grade chip capacity.

The company has a total participating and controlling polymerization capacity of 14.68 million tons, including 5.3 million tons of polyester bottle-grade chip (including RPET) capacity and 9.38 million tons of polyester fiber capacity (including polyester filament yarn, polyester staple fiber, and polyester chips). Its production scale ranks among the top in the industry. In recent years, the company has continuously optimized its product structure, focusing on promoting differentiated filament yarn products. In 2025, the proportion of differentiated fibers such as colored yarn, fully dull yarn, and cationic dyeable yarn has increased to 35% , with the differentiation rate reaching a leading level in the industry. The company is accelerating the layout of bio-degradable fibers and the large-scale application of high-value-added differentiated products like "Yitaikang". It has formed multiple core patented technologies in areas such as super-simulated cotton polyester fibers and transparent nylon materials. The company is also committed to the research and development of waste textile recycling technologies, driving the chemical fiber industry toward a low-carbon circular direction and continuously leading technological progress in the industry.

4. CPL and PA6 Segment

According to CCF data, as of December 31, 2025, China's CPL capacity was 8.23 million tons, and PA6 capacity was 6.318 million tons. The Guangxi Project Phase I has completed the entire process flow and entered the trial production stage. Upon its commissioning, the company's total participating and controlling CPL capacity will reach 1 million tons and PA6 capacity will reach 600,000 tons, making the company an important leading enterprise in the CPL and PA6 industries. Since the commencement of operations, the Guangxi Project Phase I has been running smoothly, with a 100% pass rate for the quality of its main products, and multiple indicators have reached industry-leading levels. The project effectively reduces production costs through measures such as thermal coupling integration and resource recycling, and its operational efficiency and cost control capabilities have been steadily improving.

III. Analysis of Core Competitiveness

(1) Deepening Core Business to Strengthen the Integrated Chain, Strategically Creating a New Landscape of "Oil, Coal, and Textile" Advancing Together

The company has been deeply engaged in the petrochemical field for many years and currently operates three core business segments: refining, PTA, and PET products. Relying on a "Headquarters + R&D + Base" trinity layout, the company's production bases span two countries (China and Brunei), eight provinces, and twelve cities, forming a market pattern "backed by the Yangtze River Delta, Pearl River Delta, and Bohai Rim, facing the South China Sea." This creates a highly integrated and deeply synergistic industrial cluster, supporting the company's stable operation and ability to navigate market cycles.

Currently, the company's Brunei Refining Phase II project is fully underway, the Hengyi Turpan 2.4 million tons/year high-quality coal-to-ethylene glycol (for fiber use) project is progressing steadily, and the Hubei Jingzhou 300,000 tons/year recycled new materials industrial demonstration project is being accelerated. Once these three major strategic projects under construction reach full production, the company will achieve diversification of raw material sources and integration of product raw materials, forming a unique industry landscape where "oil, coal, and textile" advance simultaneously. This will further enhance the company's profitability and risk resistance capabilities.

(2) Building a Full-Chain R&D Innovation System, Leading Industry Transformation and Upgrading with Green Technologies

Closely aligned with the strategic goal of enhancing the competitiveness of its main business, the company systematically constructs a "Technology Hengyi" innovation system. The company pioneered the independent development and application of polyester melt direct spinning technology, large-scale PTA technology, and green high-end caprolactam technology within the industry, leading industrial innovation and development. Multiple technologies have reached world-leading levels, injecting technological momentum into the company's high-quality development.

Hengyi Research Institute focuses on the fields of advanced materials and green chemicals, systematically building a full-chain innovation system of "basic research -technology development-engineering application." In recent years, the Institute has made the green recycling of the entire polyester lifecycle its core research direction, focusing on breaking through technical bottlenecks in the efficient recovery and high-value utilization of waste textiles. Through independent project establishment and R&D, the company manufactures safe, high-quality, and environmentally friendly green polyester products and their raw materials, reducing carbon emissions during textile production, promoting the utilization of waste resources, advancing green manufacturing, and contributing to the green lifecycle of textiles. To further strengthen innovation capabilities, the company concentrates on forward-looking and strategic frontier technology R&D. The company's industry-university-research cooperation with top domestic universities such as Zhejiang University and Donghua University continues to deepen. Leveraging jointly built platforms, it pools the multidisciplinary strengths of leading universities to support and serve Hengyi's industrial transformation, upgrading, and technological innovation. The operating mechanism of the "Hengyi Scholars Laboratory" is continuously optimized. Through expert guidance and collaborative R&D, the company achieves complementary R&D advantages and accelerates the transformation of results. Currently, the company has formed a complete "production, education, research, and application" integrated technological innovation mechanism. Relying on strong R&D capabilities and a complete innovation system, the company is driving the petrochemical and chemical fiber industry towards high-performance and high-value-added transformation and upgrading through key technological innovation, injecting continuous innovation momentum into the high-quality development of the entire industrial chain.

(3) Deepening Digital-Intelligent Integration to Empower Industrial Upgrading, Creating a Full-Process Highly Efficient Collaborative Operation System

The company has established a comprehensive information strategy, using digital and intelligent means to reshape traditional production methods and management models.

It continuously explores the application of frontier technologies such as artificial intelligence in core business scenarios, promoting the deep integration of new-generation information technology with the petrochemical and chemical fiber industry, achieving high-level collaboration across the entire industrial chain. As a pioneer in digital transformation within the industry, the company focuses on key areas such as production and manufacturing, marketing, logistics scheduling, cost control, safety production, and R&D collaboration, building a digital-intelligent operation system covering the entire industrial chain.

In the production management segment, the company implements centralized inventory management through the Warehouse 2.0 system, significantly improving on-site operational efficiency in finished product warehouses. By integrating procurement, logistics, and other resources, it achieves efficient linkage between various links, providing stable and reliable material support for production operations. In the production and manufacturing segment, the company has built the country's first full-process intelligent polyester factory and the first digital benchmark factory. The MES (Manufacturing Execution System) is widely applied, enhancing production flexibility, strengthening production collaboration, promoting standardized and traceable quality inspection, and achieving transparency in the production process. The company's self-developed single-spindle data flow system enables precise full-lifecycle traceability of every single spindle product, extending quality management down to the smallest production unit. In the marketing and sales segment, the company integrates systems such as the WeChat Mall, marketing closed-loop, shipping authorization, and shipping application, consolidating and upgrading them into a "Sales Management System." This realizes automation and intelligence in the sales process, providing customers with a more efficient and convenient service experience. The product full-lifecycle quality traceability system and the smart sales service system work in synergy, supported by the visualized "Hengyi Brain" decision-making platform, providing comprehensive support for the company's digital upgrade.

(4) Strengthening the Vertical Integration Advantage of the Full Industrial Chain, Leveraging Scale Layout to Build Comprehensive Competitive Barriers

As a leading enterprise in the chemical and chemical fiber industry, the company continues to deepen its vertical integration strategy for its two main businesses: the "Refining-PX-PTA-PET" chain and the "Refining-BZ-CPL- PA6" chain. Relying on its global industrial ecosystem layout and achieving efficient resource allocation through the synergy of all factors, the company significantly enhances the anti-cyclical capability and comprehensive profitability of the industrial chain. It builds a full-chain competitive barrier covering "raw material supply-production and manufacturing-market service," consolidating its benchmark position in the global chemical fiber industry.

The company's current production capacities across various segments are all among the top in the industry. At the same time, the company continues to consolidate and expand its scale advantages, optimize and upgrade its industrial model, and drive quantitative changes in the company's operating scale and qualitative changes in its business structure. By applying large-scale units and energy-saving and consumption-reducing technologies, the company ensures the operation of production units, maintains stable product quality, and improves production efficiency while significantly reducing unit investment costs and unit energy consumption. Scaled procurement and integrated centralized procurement for domestic and international projects significantly save procurement costs, comprehensively enhancing operational efficiency and providing strong support for the profitability of end products.

(5) Building an International and Professional Talent Pipeline, Driving the Company's Long-Term Development with Advanced Management Concepts

Adhering to a talent development strategy of "internationalization, specialization, professionalization, and rejuvenation," the company strives to build an open and shared talent innovation ecosystem. With an open-minded approach, it attracts, gathers, and utilizes talents, ensuring that talents are brought in, used well, and retained. This has created a management and operations team with rich industry experience, solid professional skills, and a reasonable age structure, injecting continuous vitality into the company's sustained innovative development.

In terms of talent attraction, the company vigorously recruits high-level technical experts and composite management talents, continuously deepening strategic cooperation with domestic and foreign research institutions and universities. Collaborations with universities such as Zhejiang University and Donghua University supply professionally matched talents for the company's innovation and upgrading. Platforms like the "Hengyi Scholars Laboratory" achieve precise alignment between high-end talents and industrial needs. The company continuously improves its talent service guarantee mechanism, optimizes its compensation and benefits system, and creates a talent development environment that "attracts, retains, and effectively utilizes talents."

In terms of talent development, the company constructs an internal training model deeply integrating "production, education, research, and application." Through mentorship, job rotation, and professional training, it helps young employees grow quickly. The Brunei Refinery project steadily promotes the localization of the workforce, strongly supports the growth of local Bruneian youth, and achieves cross-cultural talent cooperation and win-win results.

In terms of talent incentives, the company adheres to the philosophy of "co-creation, sharing, and happy development." By implementing a restricted stock incentive plan and multiple phases of employee stock ownership plans, it builds a long-term mechanism where employees and the company share risks and benefits, effectively enhancing the sense of belonging and cohesion of employees. The company continuously improves promotion channels, optimizes the working environment, and enriches corporate culture, allowing employees to achieve growth through hard work.

Through the continuous optimization of the full-chain talent work system encompassing "attraction, development, utilization, and retention," the company is steadily consolidating the intellectual foundation for high-quality development. It shapes new development momentum and new advantages with a high-level talent team, providing solid talent assurance for building a world-class petrochemical and chemical fiber enterprise.

IV.Main Business Analysis

1.Overview

In 2025, the company achieved a total operating revenue of RMB 113.527 billion, with a net profit attributable to shareholders of the listed company of RMB 258 million. After deducting non-recurring gains and losses, the net profit attributable to shareholders of the listed company was RMB 141 million.

2.Revenue and costs

(1)Components of operating revenue

Unit: RMB

(2)Industries, products, regions, and sales models that account for more than

10% of the Company's operating income or profit

1)The Company shall comply with the disclosure requirements for petrochemical industry specified in Guidelines No. 3 for Self-Regulation of Listed Companies of

Shenzhen Stock Exchange - Industry Information Disclosure

Unit: RMB

2)In the event of an adjustment to the statistical caliber of the company's main business data during the reporting period, the company's main business data for the most recent year has been adjusted according to the caliber at the end of the reporting period.

Unit: RMB

Since both polyester yarn and chips fall under the category of polyester products, the revenue from the two types of products has been consolidated into the polyester product category.

3)The operating income or net profit generated by overseas business accounts for more than 10% of the audited operating income or net profit of the Company in the latest fiscal year

(3)Whether the Company's income from product sales is greater than its income

from labor services

Note: The PTA sales, production, and inventory data mentioned above only include the company's holding subsidiary, Zhejiang Yisheng, and do not include other equity-accounted companies.

Description of the reasons for the year-on-year change of more than 30% in relevant data

Compared to the same period last year, the company's supply and demand for PTA and PIA improved, and production and sales turned positive, leading to a decrease in inventory levels compared to the beginning of the period.

(4)Performance of the major sales contracts and major purchase contracts entered into by the Company as of the Reporting Date

□Applicable ☑Not applicable

(5)Components of operating cost--- category of industry and products

Unit: RMB

(6)Whether there was any change in the scope of consolidation during the reporting period

The total number of subsidiaries included in the scope of consolidation in fiscal year 2025 was 56, an increase of 2 subsidiaries and a decrease of 0 subsidiaries compared with the previous year. For details, please refer to "VII. Interests in Other Entities" in "Section VIII. Financial Reporting".

(7)Significant changes or adjustments in the Company's business, products or services during the reporting period

□Applicable ☑Not applicable

(8)Major customers and suppliers

1)Major customer of the company

2)Top 5 customers

3)Other information about major customers

□Applicable ☑Not applicable

4)Major suppliers of the company

5)Top 5 Suppliers

6)Other information about major suppliers

□Applicable ☑Not applicable

7) During the reporting period, the company's trade business revenue accounted

for more than 10% of its total operating revenue

□Applicable ☑Not applicable

3.Expense

Unit: RMB

4.R&D investment

1)Main R&D Projects

2)R&D personnel

3)R&D investment

Note: R&D investment equiv R&D expenses + Capitalized R&D investment during the period

4)Reasons for and effects of significant changes in the composition of R&D personnel

□Applicable ☑Not applicable

5)Reasons for the significant changes in the percentage of total R&D investment in operating income compared with the previous year

□Applicable ☑Not applicable

6)Reasons for the substantial changes in the capitalization rate of R&D

investment and Description of their reasonableness

□Applicable ☑Not applicable

5.Cash flows

Unit: RMB

(1)Description of the main factors influencing significant year-on-year changes in relevant data

1)The net cash flow from operating activities decreased, primarily due to a year-on-year increase in inventories of raw materials and finished goods during the reporting period.

2)The net cash flow from investing activities decreased, mainly because of increased payments for project engineering equipment during the reporting period.

3)The net cash flow from financing activities decreased, largely as a result of reduced borrowings during the reporting period.

4)The net decrease in cash and cash equivalents was primarily attributable to the combined impact of changes in cash flows from operating, investing, and financing activities during the reporting period.

(2)Description of the reasons for the significant difference between the net cash flows generated by the Company's operating activities and the net profit of the year during the reporting period

For details, please refer to the supplementary information in the cash flow statement in the Company's annual audit report.

V.Analysis of non-main business

Unit: RMB

VI.Analysis of assets and liabilities

1.Significant changes in asset composition

Unit: RMB

2.High proportion of foreign assets

3.Assets and liabilities measured at fair value

Unit: RMB

4. Other changes

During the reporting period, there were no significant changes in the measurement attributes of the company's major assets.

5.Restricted asset rights as of the end of the reporting period

Unit: RMB

VII. Analysis of investment status

1.General situation

2.Significant equity investments acquired during the reporting period

□Applicable ☑Not applicable

3.Significant non-equity investments in progress during the reporting period

Unit: RMB

4.Investment in financial assets

(1) Investment in securities

The Company did not make no investment in securities in the reporting period.

(2) Investment in derivatives

1) Investments in derivatives for hedging purposes during the reporting period

Unit: RMB 10,000

During the reporting period, the company carried out hedging investment for the purpose of reasonably avoiding the risk of price and exchange rate fluctuations of raw materials and finished products, reducing the impact of price and exchange rate fluctuations of raw materials and finished products on the normal operation of the company, and ensuring the stable operation and sustainable profitability of the company. The commodities involved in the hedging transactions included raw materials, finished products, and foreign exchange related to the company's production and operation.

3)Investments in derivatives for speculative purposes during the reporting period

There were no investments in derivatives for speculative purposes during the reporting period.

VIII.Sales of major assets and equity

1.Sales of major assets

The company did not sell any significant assets during the reporting period.

2.Sales of major equity

□Applicable ☑Not applicable

IX. Analysis of major subsidiaries and JV companies

1. Major subsidiaries and JV companies with an impact of 10% or more on the net profit of the Company

Unit: RMB

2.Acquisition and disposal of subsidiaries during the reporting period

3.Description of major subsidiaries and JV companies

(1)Hengyi Brunei

The Company holds 70% of the shares of Hengyi Industries Sdn. Bhd. through Hong Kong Tianyi International Holding Co., Ltd. Hengyi Brunei has a registered capital of USD 1.0548 billion, and the scope of business covers: Petroleum refining and petrochemical.

(2)Zhejiang Yisheng

The company, through Zhejiang Hengyi Petrochemical Co., Ltd., holds a total of 70% of the shares in Zhejiang Yisheng Petrochemical Co., Ltd. Zhejiang Yisheng's registered capital is USD 514.4471 million. The company's business scope includes: General Projects :Production of chemical products (excluding licensed chemical products), manufacture of basic chemical raw materials (excluding the manufacture of hazardous chemicals and other licensed chemicals); manufacture of synthetic materials (excluding hazardous chemicals); manufacture of synthetic fibers; sale of chemical products (excluding licensed chemical products); sale of synthetic materials, sale of synthetic fibers; sale of new membrane materials; sale of petroleum products (excluding hazardous chemicals); general cargo warehousing services (excluding hazardous chemicals and other projects requiring license approval), technical services, technical development, technical consultation, technical exchange, technical transfer, technical promotion; technology import and export goods import and export, import and export agency services (except for projects that require approval according to law; business activities are conducted independently with a business license). Licensed Projects: operation of hazardous chemicals (for projects that require approval according to law, business activities can only be conducted after approval by relevant departments, with specific business projects subject to approval results).

(3)Hainan Yisheng

Through its subsidiary Ningbo Hengyi, the company indirectly holds 50% of the shares in Hainan Yisheng Petrochemical Co., Ltd. Hainan Yisheng has a registered capital of RMB 4.58 billion. The company's business scope includes:General Business Projects:Manufacture of basic chemical raw materials (excluding the manufacture of hazardous chemicals and other licensed chemicals); manufacture of engineering plastics and synthetic resins; sale of engineering plastics and synthetic resins; manufacture of synthetic materials (excluding hazardous chemicals); sale of synthetic materials; housing rental; manufacture of cellulose fiber raw materials and fibers; general cargo warehousing services (excluding hazardous chemicals and other projects requiring license approval)(Note: General business projects within the business scope are legally allowed to operate independently, and are disclosed to the public through the National Enterprise Credit Information Publicity System (Hainan).), Licensed Business Projects: Hazardous chemicals trading; Port operations; Technology import and export; Goods import and export (Licensed business activities shall be operated with valid permits).

(4)Yisheng investment

The Company holds 30% of the shares of Dalian Yisheng Investment Co., Ltd. through Zhejiang Hengyi Petrochemical Co., Ltd. The company's business scope includes: project investment, domestic general trade, import and export of goods, import and export of technologies, and trade intermediary services. (Excludes projects prohibited by laws and administrative regulations; for projects restricted by laws and administrative regulations, operations may only commence after obtaining the necessary permits.)The legal representative is Li Shuirong, and the registered capital is RMB 2.018 billion.

(5)Yisheng New Materials

The Company holds 49% of the shares of Zhejiang Yisheng New Materials Co., Ltd. through Zhejiang Hengyi Petrochemical Co., Ltd. The scope of business: import and export of technologies; import and export of goods; import and export of agency (Business activities subject to approval according to laws can be carried out only after approved by relevant departments. Specific business activities are subject to the approval results). General business: Sales of new membrane materials; sales of synthetic materials; sales of chemical products (excluding chemical products subject to license); sales of petroleum products (excluding hazardous chemicals); production of chemical products (excluding chemical products subject to license); manufacturing of synthetic materials (excluding hazardous chemicals); technical services, technical development, technical consultation, technical exchange, technology transfer, and technology promotion (except for business subject to approval according to laws, business activities shall be carried out independently and legally with the business license). The legal representative is Xu Baoyue, and the registered capital is RMB 3 billion.

(6)Hengyi Limited

The Company directly holds 100% of the shares (actually enjoys 100% of the rights) of Zhejiang Hengyi Petrochemical Co., Ltd. Hengyi Limited has a registered capital of RMB 3 billion. The scope of business: production, processing and sales of chemical fibres and chemical raw materials (excluding hazardous chemicals); import and export.

(7)Hengyi High-Tech

The Company holds 100% of the shares of Zhejiang Hengyi High-Tech Materials Co., Ltd. through Zhejiang Hengyi Petrochemical Co., Ltd. Hengyi High-Tech has a registered capital of RMB 2.75725 billion, and the scope of business covers: production, processing and sales of PET flakes, POY yarns, FDY yarns, and chemical fibre raw materials; export of the company’s own products and technologies and import of self-use products and technologies (except for those that are prohibited or restricted according to national laws and regulations); all other legal business not subject to approval.

(8)Shuangtu New Materials

The company holds 100% equity in Zhejiang Shuangtu New Materials Co., Ltd., which has a registered capital of RMB 600 million. Business Scope: general Items: production of chemical products (excluding chemical products requiring special permits); sales of chemical products (excluding chemical products requiring special permits); sales of synthetic fibers; manufacturing of synthetic fibers; sales of synthetic materials; manufacturing of synthetic materials (excluding hazardous chemicals). (Except for projects that require approval by law, the company may independently conduct business activities with its business license.). Permitted Items: Import and export of goods; import and export of technologies (Projects requiring approval by law may only be conducted after approval by relevant authorities, and specific business activities shall be subject to the approval results).

(9) Hong Kong Tianyi

The company indirectly holds 100% equity interest in Hong Kong Tianyi International Holdings Co., Ltd. through Zhejiang Hengyi Petrochemical Co., Ltd. Hong Kong Tianyi has a registered capital of USD 1.5095 billion, and its main business includes trade and investment.

(10)China Zheshang Bank

The Company holds a total of 972,490,068 shares of China Zheshang Bank Co., Ltd. through its subsidiary Zhejiang Hengyi Petrochemical Co., Ltd. and its indirect subsidiary Zhejiang Hengyi High-Tech Materials Co., Ltd., accounting for 3.54% of the total share capital of China Zheshang Bank. Scope of Business: financial business (For details, please refer to the approval of the China Banking and Insurance Regulatory Commission). Established in 2004, the company is one of the 12 national joint-stock commercial banks approved by the China Banking and Insurance Regulatory Commission. China Zheshang Bank was listed on the main board of the Hong Kong Stock Exchange on March 30, 2016 (stock code: 02016.HK) and on the Shanghai Stock Exchange on November 26, 2019 (stock code: 601916.SH).

(10)Suqian Yida

The company indirectly holds 100% equity interest in Suqian Yida New Materials Co., Ltd. through Zhejiang Hengyi Petrochemical Co., Ltd. Suqian Yida has a registered capital of RMB 2.15 billion. Its business scope includes: R&D of nano-materials; production, processing, and sales of polyester chips, polyester staple fiber, and polyester filament; sales of chemical fiber raw materials; warehouse management; as well as the export of the enterprise's self-produced products and technologies and the import of products and technologies for its own use (except for items prohibited or restricted by national laws and regulations). (Projects subject to approval according to law can only be carried out after approval by the relevant authorities).

X. Information on structured entities controlled by the company

□Applicable ☑Not applicable

XI. Prospects for the future development of the Company

(1) Strategic prospects for the development of the Company

The year 2026 marks a critical period for Hengyi Petrochemical to drive high-quality development through strategic resilience. The company will focus on cultivating new drivers of endogenous growth, advancing major strategic projects such as coal chemical projects and high-end green circular new materials projects in an orderly manner, building new raw materials, new production capacity, and new industrial chains, achieving diversification of raw material sources, and striving to write a new chapter of high-quality leapfrog development. The company will continue to deepen its core business, fully leverage the advantages of its global industrial layout and integrated operation of domestic and overseas assets, and further strengthen its unique dual "fiber" strategy of polyester + nylon. The company will thoroughly implement the circular development strategy, empower traditional industries to improve quality and efficiency through green and low-carbon technologies as well as digital and intelligent means, explore more sustainable circular development paths, and fully promote the strategic transformation from a manufacturing enterprise to a technology innovation-oriented enterprise. It will strive to build itself into a private multinational industrial group characterized by "technological leadership, cost advantages, and ecological synergy," advancing confidently toward the new development vision of "advancing both on land and sea, integrating oil and coal."

(II) Prospects for the industrial development of the Company

For details, please refer to this section (I)Overview of the Chemical and Chemical Fiber Business under the heading "I.Major business activities of the company during the reporting period".

(III) Business strategy of the company for 2026

1. Accelerate the Implementation of Major Strategic Projects to Create a New Landscape of Advancing "Oil," "Coal," and "Textiles" Simultaneously

(1) Fully Advance the Construction of the Brunei Refining and Chemical Phase II Project to Further Enhance Project Profitability

Based on comprehensive analysis and prudent evaluation, the company has optimized and adjusted the designed capacity of the Brunei Refinery Project Phase II Project to 12 million tons per year. The project primarily processes heavy oil, mainly producing Diesel, PX, BZ, and other refined oil and chemical products with higher added value. The feedstock structure and product slate have been significantly optimized, and product yields have notably improved compared to Phase I.

The company has obtained the relevant certificate approval for corporate tax incentives from the Government of Brunei Darussalam, a financing loan intent letter from Bank Islam Brunei Darussalam, and a shareholder loan commitment letter from Damai Holdings Limited, a shareholder of Hengyi Industries Sdn Bhd. The loan funds will be used for the investment and construction of the Brunei Refinery Project Phase II, and the required project construction funds have been secured.

Upon completion, the total capacity of the Brunei refinery will reach 20 million tons per year. It will form deep industrial synergy with the Phase I project. Through economies of scale in capacity and intensive resource allocation, the refinement and integration level of the Brunei refining and chemical project will be further enhanced, effectively driving the improvement of the project's overall profitability. This will further increase the company's market share overseas, boost company profits, strengthen the advantages of industrial chain integration and scale, reduce product production costs, ensure the stability of raw material supply, and enhance the company's sustainable profitability and risk resilience.

(2) Actively Respond to the Energy Security Strategy; Coal-Chemical Integration Enhances Profitability Resilience Across the Entire Industrial Chain With increasing uncertainty in global energy supply, the completeness and self-sufficiency of the industrial chain have become crucial cornerstones of national strategic security. Secure and reliable raw material supply has become a primary objective for enterprises. Consequently, the strategic advantages of coal chemical projects based on coal resource endowments are increasingly evident. Aligning closely with national energy security strategy and industrial transformation and upgrading plans, the company has established coal-based new materials as a core strategic development direction, using coal to replace oil for producing high-end chemical products. The company is vigorously advancing the 2.4 million tons per year high-quality fiber-grade coal-to-ethylene glycol project in Turpan, Xinjiang, which is expected to commence operation in the first half of 2028.

This project adopts internationally advanced coal gasification and syngas-to-ethylene glycol technology. It primarily produces 2.4 million tons per year of high-quality polyester-grade ethylene glycol, with by-products including DMC, coal-based ethanol, and other high-value-added products. It is simultaneously equipped with low-carbon technologies such as CCS carbon capture and storage, green power coupling, and circular economy. This achieves the chain transformation of coal from a traditional fuel to a high-end chemical raw material and further to new chemical fiber materials, striving to build a high-end, green, and integrated industrial chain "from a lump of coal to two strands of fiber."

Ethylene glycol is a key raw material for downstream polyester products. This move by the company is both a crucial step to extend upstream in the polyester industrial chain and achieve raw material self-sufficiency, and a strategic choice to diversify raw material sources, break free from the constraints of crude oil price fluctuations, and enhance profitability resilience across the entire industrial chain. Upon completion, the company will establish a vertical integration advantage of "coal resources – ethylene glycol – polyester manufacturing," facilitating the transition from "sole reliance on crude oil" to "complementary multi-feedstocks of oil, coal, and textiles." This will help enhance the stability and predictability of profits across the entire industrial chain and significantly improve the company's profitability and risk resilience.

(3) Build a New Green and Low-Carbon Industry, Leading Industry Technological Transformation

In March 2022, the National Development and Reform Commission, the Ministry of Commerce, and the Ministry of Industry and Information Technology jointly issued the "Implementation Opinions on Accelerating the Recycling of Waste Textiles." In July 2024, the State Council issued the "Opinions on Accelerating the Comprehensive Green Transformation of Economic and Social Development." The documents state that recycling waste textiles is of great significance for resource conservation, pollution reduction, and carbon emission reduction. It is an important measure to effectively supplement the raw material supply for China's textile industry and alleviate resource and environmental constraints, and a key component of establishing and improving a green, low-carbon, and circular economic system. Main targets were set: by 2030, a relatively complete waste textile recycling system will be established; awareness of recycling among producers and consumers will be significantly improved; high-value utilization pathways will be continuously expanded; the industry development level will be significantly enhanced; the recycling rate of waste textiles will reach 30% ; and the output of recycled fiber from waste textiles will reach 3 million tons.

As a firm practitioner of the circular economy, the company is committed to steering the textile industry towards a future of resource circulation and low-carbon sustainable development. The company is investing in the construction of a 300,000 tons per year circular new materials industrial demonstration project in Jingzhou, Hubei. Aiming to reshape the textile lifecycle, it innovatively uses waste textiles as the primary industrial raw material, revitalizing resources through circulation. The company has established a nationwide dual-track recycling system combining "online digital platforms and offline physical collection." Using self-developed proprietary technology, it decomposes recycled waste textiles like used clothing and reprocesses them into key intermediates for recycled polyester, used in high-end products such as high-performance new polyester materials and functional specialty fibers. This achieves the substitution of waste textile raw materials for petroleum-based raw materials, building a closed-loop industrial chain from "waste textiles" to new materials. The products can be widely used in clothing, footwear, hats, home furnishings, transportation vehicles, and various other fields, achieving a win-win situation for economic and social benefits.

(4) Enhance the Competitiveness of the Caprolactam-Polyamide (CPL-PA6) Industry, Creating a New Engine for High-Quality Development

The company will continue to increase the application of CPL-PA6 technology, focus on enhancing market share and industrial competitiveness, promote the technological upgrade of the "1.2 million tons per year Caprolactam-Polyamide Industry Integration and Supporting Project," strengthen the integrated, large-scale, and high-end caprolactam-polyamide production system, facilitate leapfrog growth in the company's caprolactam and PA6 capacity, form a complete integrated industrial chain layout of "BZ-CPL-PA6," and make it a new engine driving the company's high-quality development.

2. Seize Market Improvement Opportunities to Enhance the Contribution of Existing Capacity to Profits

In 2026, refinery profitability in Southeast Asia has significantly improved, with product spreads and supply-demand dynamics in the refined oil and chemical products markets continuing to improve. The domestic economy is steadily recovering and improving, with demand for PTA, PET, and PA6 products continuing to grow. Furthermore, influenced by the "Carbon Peak and Carbon Neutrality" policies, future new capacity additions for various products are severely constrained, and supply-demand dynamics have improved, driving a recovery and improvement in industrial chain profitability in the coming years.

Against this backdrop, guided by the principle of "optimizing operations by closely following the market, ensuring safety by consolidating foundations, promoting development by balancing priorities, and creating profits through meticulous management," the company will, while ensuring safe production, continuously benchmark against advanced operational management systems, deepen the construction of lean production, stably and efficiently operate facilities such as refining and chemical, PTA, PET, and CPL plants, and strive to tap the potential of existing capacity. Simultaneously, it will strengthen cost reduction and efficiency enhancement awareness across all levels from top to bottom, implement more refined control over key areas such as production costs, operational costs, and financing costs, improve production organization efficiency and operational management effectiveness, elevate the overall operational level to a new stage, and provide solid support for high-quality development. Key measures are as follows:

(1) While ensuring product quality meets market demand, comprehensively utilize management and technical means to promote cost reduction and efficiency enhancement, continuously optimize the product mix, and increase the output of high-value-added products; reduce product waste fiber rate, improve the rate of premium-grade products, optimize energy consumption levels, and achieve steady profit improvement.

(2) Continuously deepen the optimization of the organizational structure, strengthen the development of the talent pipeline, further enhance per capita efficiency, and drive steady improvement in labor productivity.

(3) Strictly coordinate all capital expenditures, continuously optimize the debt maturity structure, seize the window period of moderately accommodative macro policies, meticulously manage the capital structure, and further reduce financing costs.

(4) Establish a cross-departmental collaborative cost reduction mechanism, strengthen cost linkage management across R&D, procurement, production, sales, and other links, explore cost reduction potential across the entire value chain, and achieve systematic and sustainable cost optimization.

3. Technology Empowerment: Elevating Technological Content through R&D Investment, Leading Industry Transformation through Innovation

In 2026, the company will comprehensively deepen the implementation of the "Technology-driven Hengyi" strategy, driven by the dual engines of "advanced manufacturing" and "circular economy." It will continue to increase investment in technological R&D, closely align with industrial layouts, target cutting-edge technologies, integrate innovation resources, and accelerate the cultivation of high-end innovative achievements.

Focusing on building an innovation system, the company will achieve key breakthroughs in areas such as green processes, bio-based materials, new polyester and polyamide materials, functional fibers, specialty and fine chemicals, and smart manufacturing, striving to establish an R&D hub aimed at industrialization. At the same time, the company will continue to advance the R&D and industrialization of green chemicals and advanced materials, steadily moving toward becoming a technology leader across the industry. Key initiatives are as follows:

(1) Continue to promote the internal application and external promotion of self-developed chemical "three types of agents," such as titanium-based catalysts, oils, masterbatches, and matting agents, to expand product benefits.

(2) Align with the company’s industrial layout in refining, coal chemical, and waste textiles, and accelerate R&D projects with the goal of "supplementing, strengthening, and extending the industrial chain."

(3) Optimize and enhance the technical level and market promotion of fiber materials with properties such as flame retardancy, easy care, antibacterial, and biodegradability, accelerate the progress of R&D projects in functional materials and green materials, and plan and launch new projects based on market demand.

(4) Strengthen independent R&D capabilities while deepening collaboration with universities and research institutes to accelerate the development and application of new technologies.

4. Digital-Intelligence Drive: Promoting Deep Integration of "AI+," Building an Efficient and Collaborative Smart Operation System

In 2026, the company will actively align with the wave of technological advancement, deeply integrate artificial intelligence into marketing scenarios, and launch a series of innovative and targeted vertical applications. By driving broader adoption through focused initiatives, AI agents will progressively permeate the company ’ s daily production, operation, and management activities, comprehensively empowering key areas such as manufacturing, sales, operational control, and management decision-making, thereby building an efficient and collaborative intelligent decision-making system. The company will further optimize and enhance its chemical fiber industrial internet platform to create an interconnected, collaborative, and intelligent industrial middle platform, providing management with end-to-end scientific decision support from production to sales. At the same time, the company will continue to promote its self-developed park logistics management system, strengthen the efficiency of internal and external resource scheduling, effectively reduce operational costs, and improve supply chain collaboration. By leveraging digital and intelligent technologies to empower its core business for quality and efficiency gains, the company will solidify its core competitive advantages for high-quality development.

(IV) Risks and countermeasures faced by the Company

1. Macroeconomic risk

The company's main business involves the production and sales of petroleum products and chemical fiber products. The chemical fiber industry is highly correlated with the development of both domestic and international macroeconomics and is closely tied to the national economy and people's livelihood. Factors such as macroeconomic fluctuations and changes in supply and demand impact the pricing and sales of the company's products. The company will closely monitor macroeconomic trends and supply-demand dynamics within the industry, proactively formulate targeted response strategies based on specific circumstances, and strive to mitigate the adverse effects of the external environment on the company.

2. Safety and Production Risks

In recent years, regulatory requirements for safety and environmental protection have become increasingly stringent. The company strictly implements and adheres to relevant laws and regulations such as the Workplace Safety Law of the People's Republic of China and the Environmental Protection Law of the People's Republic of China, while also paying close attention to the updated requirements of the Ecological Environment Code in March 2026. The company is committed to continuously improving its compliance management system and has long been dedicated to safe and environmentally friendly production, earnestly fulfilling its social responsibilities. Since the commencement of its production operations, no major safety or environmental incidents with significant impact have occurred. As the company expands its production scale and extends its industrial chain, preventing safety and environmental accidents remains a key focus of its operational management. In accordance with the national requirements for Grade I, II, and III safety standardization, the company will actively carry out safety standardization compliance assessments, focusing on building a safety standardization management system. It will implement a dual preventive mechanism for safety risk classification control and hidden hazard investigation and management, strengthen safety training, increase safety investments, adopt technology-driven safety strategies, promptly eliminate safety and environmental hazards, and eliminate all possibilities of major accidents.

3. Raw Material Price Volatility Risks

Over 80% of the company’s production costs depend on upstream raw materials, particularly crude oil. Price fluctuations in crude oil significantly impact operations and may affect product prices across the supply chain, leading to profit volatility. The company will optimize sales and inventory strategies and utilize hedging instruments to mitigate adverse effects from raw material price fluctuations.

4. Environmental Protection Risks

The company's production and operation activities must comply with numerous environmental laws and regulations concerning air, water quality, waste disposal, public health and safety, obtain relevant environmental permits, and undergo inspections by relevant national environmental authorities. As the company continues to expand, the implementation of stricter environmental standards domestically or in Brunei may increase environmental compliance costs and management complexity. The company will continue to invest in personnel, capital, and technological resources to promote the upgrading of environmental protection equipment and the transformation of production processes, actively adapting to more stringent environmental standards

5. Exchange Rate and Interest Rate Volatility Risks

Hengyi Brunei, a key subsidiary, operates overseas and conducts transactions primarily in USD. Exchange rate and interest rate fluctuations between USD and RMB, influenced by global political and economic conditions, pose uncertainties. The company will manage foreign currency assets and liabilities prudently, using hedging tools to reduce exchange rate risks. For interest rate risks linked to bank loans, the company maintains strong banking relationships, designs diversified credit facilities (e.g., credit lines, terms, and products), and ensures sufficient financing to stabilize borrowing costs.

XII. Reception of research, communication, interview and other activities during the reporting period

XIII. Implementation status of the market value management regulations and the valuation enhancement plan

1. Whether the company has developed market value management regulations.

□Yes ☑No

2.Whether the company has disclosed its valuation enhancement plan.

□Yes ☑No

XIV. Implementation Status of the "Dual Enhancement of Quality and Returns"

Action Plan

For details, please refer to the Announcement on the "Dual Enhancement of Quality and Returns" Action Plan disclosed by the company on the Cninfo website (http://www.cninfo.com.cn) on April 14, 2026.

Section IV Corporate governance

I.Overview of corporate governance

During the reporting period, the Company strictly complied with the Company Law, Securities Law, Code of Corporate Governance for Listed Companies in China, Rules Governing the Listing of Shares on Shenzhen Stock Exchange, Shenzhen Stock Exchange Self-Regulatory Guidelines for Listed Companies No. 1 - Standardized Operation of Listed Companies on the Main Board and other relevant laws and regulations. Based on the actual situation of the Company, we continuously improved and enhanced the standardized operation of corporate governance, and established a sound internal management and control system to regulate the operation of the Company. The Company's internal control system has been increasingly improved, and the standardization level of governance has been continuously increased.

1. Shareholders and shareholders' general meetings

During the reporting period, the Company strictly complied with laws and regulations, and convened and held shareholders' general meetings in a standardized manner. The convening and holding procedures of the shareholders' general meetings, the qualifications of the persons attending the shareholders' general meetings, the voting procedures and voting results of the shareholders' general meetings all complied with the Company Law, Rules for the Shareholders' Meetings of Listed Companies and other laws and regulations and the Company's Rules of Procedure for the General Meeting of Shareholders, which ensured that all shareholders, especially minority shareholders, could fully exercise their rights. The Company's shareholders' general meetings during the reporting period were convened by the BOD, and lawyers were engaged to witness the meetings on site, ensuring the legality of the meeting convening, holding and voting procedures, and safeguarding the legitimate rights and interests of the Company and shareholders.

2. The Company and the controlling shareholder

The Company is completely independent from the controlling shareholder and its subsidiaries in terms of business, personnel, assets, organization, and finance. The Company has independent and complete business and the ability to operate independently. The Company's BOD, BOS and internal organizations operate independently. The controlling shareholder of the Company can strictly regulate its behavior. Major decisions of the Company were made by the shareholders’ general meetings in accordance with the law. The controlling shareholder exercised its shareholder rights in accordance with the law, and did not directly or indirectly interfere with the decision-making and operating activities of the Company beyond the shareholders’ general meetings of the Company.

3. Directors and the BOD

The Company elected directors in strict accordance with the selection and appointment procedures stipulated in the Company Law and the Articles of Association of the Company. The number and composition of the BOD of the Company met the requirements of laws and regulations. All directors of the Company could carry out their work in accordance with the Rules of Procedure of the BOD, attend the board meetings and shareholders' general meetings on time with a conscientious and responsible attitude, faithfully perform their duties in the interests of the Company and all shareholders, actively participate in training on relevant knowledge, study relevant laws and regulations, and promote the standardized operation and scientific decision-making of the BOD. The independent directors of the Company could perform their duties independently in accordance with the corresponding rules and regulations, without being influenced by the actual controller of the Company or other units or persons that have an interest in the Company.

During the reporting period, the procedures of the meetings of the BOD of the Company were in compliance with relevant regulations, the minutes of the meeting were complete and true, and the disclosure of relevant information at the meetings was timely, accurate and adequate. The BOD of the Company set up four special committees, namely the Remuneration Assessment and Nomination Committee, the Risk Control Committee, the Audit Committee and the Strategy and Investment Committee, which have played an important role in promoting the standardized operation and healthy development of the Company.

4. Stakeholders

The Company fully respected and safeguarded the legitimate rights and interests of relevant stakeholders to achieve a win-win situation for customers, suppliers, employees, shareholders and other stakeholders and jointly promote the Company's sustainable and steady development.

5. Information disclosure and transparency

The Company strictly followed the requirements of relevant laws and regulations as well as the Information Disclosure Management System and the Investor Relations Management System to conscientiously fulfill our information disclosure obligations, disclose the Company's operation and management and matters that have significant impact on the Company in a true, accurate, complete and timely manner, coordinate the relationship between the Company and investors, receive investors’ visits, and answer investors’ inquiries. The Company's designated newspapers and websites such as STCN, China Securities Journal, Shanghai Securities News, Securities Daily and CNINFO (http://www.cninfo.com.cn) for the Company's information disclosure.

6. Performance evaluation and incentive and restraint mechanisms

The Company is gradually improving and establishing fair and transparent performance evaluation standards and incentive and restraint mechanisms for directors, supervisors and senior executives. The appointment of senior executives of the Company was open and transparent, in line with laws and regulations.

7.Whether there is any material difference between the actual situation of corporate governance of the Company and the laws, administrative regulations

and the rules on the governance of listed companies issued by the China Securities Regulatory Commission

There is no material difference between the actual situation of corporate governance of the Company and laws, administrative regulations and the rules on the governance of listed companies issued by the China Securities Regulatory Commission.

II. Independence of the Company in guaranteeing the Company's assets, personnel, finance, organization, and business relative to the controlling shareholder and actual controller

The Company carried out operations in strict accordance with the Company Law, Articles of Association and other laws, regulations and rules, established a sound corporate governance structure of the Company, and maintained independent from the controlling shareholder in terms of business, personnel, assets, organization, and finance. The Company has an independent and complete business system and the ability to operate independently.

1. Business: The Company has an independent and complete supply, R&D, production and sales system, has the ability to operate independently in the market, conduct business, accounting and decision-making, assume responsibilities and risks independently, and does not rely on the controlling shareholder or any other related parties.

2. Personnel: The Company has formed a complete system for labor, personnel and salary management, and an independent human resources management department to manage labor, personnel and salary independently of the controlling shareholder. The Company has an independent workforce. The Company's directors, supervisors and senior executives are legally elected in accordance with the Company Law, Articles of Association and other relevant laws, regulations and rules. The Company's senior executives all work in the Company and receive remuneration, and do not hold any positions other than directors and supervisors in the controlling shareholder and its subsidiaries.

3. Assets: The Company has a clear property relationship with the controlling shareholder, and independently owns complete legal person assets, production and supporting facilities, land, plant, machinery and equipment related to production and operation, as well as ownership and right to use of trademarks, patents and non-patented technologies. The Company has full control over all assets, and its assets and funds are not occupied by the controlling shareholder to the detriment of the interests of the Company.

4. Organization: The Company established a sound organizational system to meets its own production and operation needs. The functional departments operate independently and smoothly, and there is no subordination relationship between the controlling shareholder and the functional departments.

5.Finance: The Company has an independent financial and accounting department equipped with full-time financial personnel. The Company established an independent accounting system and a standardized financial management system, and financial decisions were made independently. The Company opened an independent bank account to independently make tax declarations and perform tax obligations in accordance with the law. There is no shared bank account or mixed tax payment with the controlling shareholder.

III. Competition in the same industry

□Applicable ☑Not applicable

IV. Directors, supervisors and senior executives

1. Basic information

(1)Whether there was any departure of directors and supervisors and dismissal of senior management during the term of office during the reporting period

□Yes ☑No

(2)Changes in directors, supervisors and senior executives of the Company

2.Employment status

(1)Professional background, main work experience and main responsibilities of the current directors, supervisors and senior executives of the Company

1)Directors

Qiu Yibo, male, born in December 1987, Chinese nationality, holds an EMBA from CEIBS (China Europe International Business School). Previously worked at Sinopec Chemical Sales Co., Ltd. East China Branch and as the Investment Development Department Manager of Zhejiang Hengyi Group Co., Ltd. Currently, he serves as the Chairman and President of Hengyi Petrochemical Co., Ltd., while also holding the positions of Executive Director of Zhejiang Hengyi Group Co., Ltd., Executive Director of Suqian Yida New Materials Co., Ltd., Vice Chairman of Zhejiang Hengyi Nylon Co., Ltd., Director of Zhejiang Baling Hengyi Caprolactam Co., Ltd., Director of Dongzhan Shipping Co., Ltd., Executive Director and Manager of Ningbo Jin Hou Industrial Investment Co., Ltd., Director of Zhejiang Xianfeng Data Technology Co., Ltd., Executive Director and General Manager of Zhejiang Hengyi Hanlin Enterprise Management Co., Ltd., Executive Director of Hangzhou Yibo Investment Management Co., Ltd., Director of Zhejiang Hengyi Polymer Co., Ltd., General Manager of Hangzhou Yixian Energy Technology Co., Ltd., and Director of Zhejiang Hengyi Resource Recycling Technology Co., Ltd. Additionally, he is a significant shareholder of Zhejiang Hengyi Group Co., Ltd., the controlling shareholder of Hengyi Petrochemical Co., Ltd.

Fang xianshui, male, born in March 1964, Chinese nationality, holds a bachelor's degree, and is a Senior Economist with over 30 years of production and management experience in the chemical fiber industry. He previously served as General Manager of Hangzhou Hengyi Industrial Corporation, General Manager of Hangzhou Hengyi Chemical Fiber Co., Ltd., General Manager of Zhejiang Hengyi Group Co., Ltd., and Chief Financial Officer of Hengyi Petrochemical Co., Ltd. Currently, he serves as Vice Chairman of Hengyi Petrochemical Co., Ltd., while also holding the positions of Director of Zhejiang Hengyi Group Co., Ltd., Executive Director and Manager of Hangzhou Hengyi Investment Co., Ltd., Executive Director and General Manager of Zhejiang Hengyi Petrochemical Co., Ltd., Chairman of Zhejiang Hengyi Polymer Co., Ltd., Chairman of Zhejiang Yisheng Petrochemical Co., Ltd., Executive Director and General Manager of Zhejiang Hengyi Advanced Materials Co., Ltd., Director of Zhejiang Baling Hengyi Caprolactam Co., Ltd., Director of Jia Bai International Investment Co., Ltd., Director of Yisheng Dahua Petrochemical Co., Ltd., Executive Director of Zhejiang Yixin Chemical Fiber Co., Ltd., Executive Director and General Manager of Ningbo Hengyi Engineering Management Co., Ltd., Chairman of Hainan Yisheng Petrochemical Co., Ltd., Executive Director and Manager of Zhejiang Hengyi Petrochemical Sales Co., Ltd., Director of Hong Kong Yisheng Co., Ltd., Executive Director of Shanghai Hengyi Polyester Fiber Co., Ltd., Director of Zhejiang Yisheng New Materials Co., Ltd., Director of Zhejiang Hengyi Nylon Co., Ltd., Executive Director of Zhejiang Hengkai Energy Co., Ltd., Executive Director and General Manager of Zhejiang Hengyi Energy Co., Ltd., Executive Director and General Manager of Zhejiang Xiaoyi Supply Chain Management Co., Ltd., and Director of Dalian Yisheng Investment Co., Ltd. Additionally, he is a significant shareholder of Zhejiang Hengyi Group Co., Ltd., the controlling shareholder of the company.

Ni Defeng, male, born in January 1978, Chinese nationality, holds a Ph.D. degree, and is a Senior Economist (Professor-level) with nearly 20 years of experience in finance and investment. He has previously served as an auditor at Zhejiang Tianjian Certified Public Accountants, Manager of the Finance Department, Manager of the Investment Development Department, Assistant to the President at Zhejiang Hengyi Group Co., Ltd., and Investment Director at Hengyi Petrochemical Co., Ltd. Currently serves as Director of Hengyi Petrochemical Co., Ltd., while also holding the positions of Director and President of Zhejiang Hengyi Group Co., Ltd., Director of Zhejiang Xianfeng Data Technology Co., Ltd., Director of Zhejiang Hengyi Nylon Co., Ltd., Manager of Ningbo Jingren Investment Co., Ltd., Director of Hainan Hengshengyuan International Tourism Development Co., Ltd., Executive Director and General Manager of Hangzhou Jinglin Self-owned Capital Investment Co., Ltd., Director of Dalian Yishengyuan Property Co., Ltd., Chairman and General Manager of Hangzhou Jinyi Industrial Co., Ltd., Chairman of Xinjiang Aiding Coal Industry Co., Ltd., and Director and General Manager of Xinjiang Hengyi Chemical Products Sales Co., Ltd.

Wu Zhong, male, born in July 1989, Chinese nationality, holds a Bachelor's degree from Zhejiang Gongshang University and a Master's degree from Shanghai Jiao Tong University. He previously served as Deputy General Manager at Zhejiang Hengyi Petrochemical Sales Co., Ltd. Currently, he is a Director and Vice President of Hengyi Petrochemical Co., Ltd. Additionally, he holds the following positions:Director of Fujian Yijin Chemical Fiber Co., Ltd.Director of Hong Kong Tianyi International Holdings Co., Ltd.Manager of Zhejiang Hengyi Resource Recycling Technology Co., Ltd.Director and Manager of Jingzhou Hengyi Resource Recycling Co., Ltd.Director and Manager of Wenzhou Hengyi Resource Regeneration Co., Ltd. Director of Good Park International Investment Co., Ltd. Director of Ningbo Qingzhi Chemical Terminal Co., Ltd.Director of Hong Kong Yitian Co., Ltd.

Zhao Donghua, male, born in February 1985, Chinese nationality, holds a Master's degree in Law from Zhejiang University and an EMBA from China Europe

International Business School (CEIBS). He is a Certified Intermediate Economist. He previously served as Securities Affairs Representative, Deputy Manager of the Legal Affairs Department, and Assistant to the General Manager of the Marketing Center at Hengyi Petrochemical Co., Ltd. Currently, he is the Vice President of Hengyi Petrochemical Co., Ltd. and the General Manager of Zhejiang Hengyi Petrochemical Sales Co., Ltd.

Luo Dan, female, born in September 1983, Chinese nationality, holds a Bachelor's degree from Zhejiang A&F University and a Master's degree from Wuhan University of Technology. She previously served as Manager of the General Affairs Department in the Comprehensive Management Center at Hengyi Petrochemical Co., Ltd. Currently, she is the General Manager of the Investment Management Department at Hengyi Petrochemical Co., Ltd.

Chen Linrong, male, born in November 1971, member of CPC, PhD, postdoctoral fellow, associate professor, master's supervisor, certified public accountant of China, independent director of listed companies, graduated from Jiangxi University of Finance and Economics with master's degree, graduated from Central South University with doctorate degree, completed postdoctoral research at Fudan University, and was a senior visiting scholar at Tokyo Keizai University (Japan) and Tsinghua University. He is now an associate professor and master's supervisor at the School of Accounting of Zhejiang Gongshang University, the director of the doctoral programme in accounting, independent director of Shenzhen Transsion Holdings Co., Ltd..

Hou Jiangtao, male, born in October 1974, of Chinese nationality, holds a Master's degree in Professional Accounting from The Chinese University of Hong Kong and a Bachelor's degree in Economics from Shanghai University of Finance and Economics. He currently serves as the General Manager of Hoshine Silicon Industry (Wanning) Co., Ltd., Vice President of Shanghai Taimi Robotics Co., Ltd., and Independent

Director of Zhongyuan Home Furnishing Co., Ltd. He has previously worked at Tianan Insurance Co., Ltd., Far East Credit Rating Co., Ltd., and CCB Engineering Consulting Co., Ltd. In addition, he is a Director of Shanghai Shantai Health Technology Co., Ltd., and serves as an expert advisor for multiple companies. He holds the Independent Director qualification from the Shanghai Stock Exchange and has extensive experience in corporate management and financial market investment and financing.

Hong Xin, male, born in March 1984, holds a Ph.D. in Finance, is an Associate Professor, Doctoral Supervisor, and a Qiushi Distinguished Scholar at Zhejiang University. He obtained a Bachelor's degree in Finance from Peking University and a Ph.D. in Finance from the University of Kentucky, USA. He currently serves as the Deputy Director of the Asset Management Research Center at Zhejiang University, Associate Professor at the School of Economics at Zhejiang University, Research Fellow at the Institute of Finance at Zhejiang University, and a Member of the Academic Committee of the Zhejiang Private Equity Investment Association. He has also served as the Deputy Director of the Development and Reform Bureau of Xiaoshan District, Hangzhou, in a temporary post.

2)Senior Management Personnel

Wang Songlin, male, born in April 1970, Chinese nationality, holds a Ph.D. in Materials and Chemical Engineering from Zhejiang University, is a Senior Engineer, an Outstanding Engineer of Zhejiang Province, and receives a subsidy from the Hangzhou Municipal Government. He has over 30 years of experience in the petrochemical and fiber industry. He has previously held positions such as Deputy Director at China Textile Construction Planning Institute, Office Director at China Chemical Fiber Corporation, General Manager of China Chemical Fiber Economic Information Network, General Manager of Beijing Cotton Outlook Company, and General Manager of Zhejiang Baling Hengyi Caprolactam Co., Ltd. He is currently the Executive Vice President of Hengyi Petrochemical Co., Ltd., and also serves as the Dean of Hengyi Petrochemical Research Institute and Chairman of the Technical Committee. Additionally, he holds various social positions such as Supervisor of the Supervisory Board of China Chemical Fiber Industry Association and Deputy Director of the Chemical Fiber Professional Committee of the China Textile Engineering Society.

Chen Liancai, male, born in June 1967, Chinese nationality, holds a postgraduate degree, is a Senior Engineer with over 30 years of experience in the petrochemical industry. He previously served as Deputy General Manager at Sinopec Zhenhai Refining and Chemical Company, Deputy General Manager (General Manager of the Chemical Division) at Guodian Sinopec Ningxia Energy and Chemical Co., Ltd., and General Manager of Sinopec Great Wall Energy and Chemical (Ningxia) Co., Ltd. He is currently the Chief Executive Officer (CEO) of Hengyi Brunei and Vice President of Hengyi Petrochemical Co., Ltd.

Zheng Xingang, male, born in December 1979, Chinese nationality, holds a Bachelor's degree from Huazhong University of Science and Technology, a Master's degree from Wuhan University, and an EMBA from Fudan University. He is a Senior Economist with nearly 20 years of experience in investment and financing, capital market operations, and financial work. Previously served as Deputy Manager of the Capital Operation Department, Deputy Manager of the Investment Development Department, and Director of the Board Office at Hengyi Petrochemical Co., Ltd. Currently serves as Director of Zhejiang Baling Hengyi Caprolactam Co., Ltd., Director of China Zheshang Bank Co., Ltd., and Vice President, Board Secretary, and CFO of Hengyi Petrochemical Co., Ltd.

Ni Jinmei, female, born in March 1976, Chinese nationality, is a Senior Economist. Previously served as Manager of the General Affairs Department at Zhejiang Hengyi Polymer Co., Ltd., General Manager of the Integrated Management Center at Zhejiang Hengyi Petrochemical Co., Ltd., and Executive Director and General

Manager of Hangzhou Yijing Chemical Fiber Co., Ltd. Currently serves as General Manager of Zhejiang Hengyi International Trade Co., Ltd. and Vice President of Hengyi Petrochemical Co., Ltd.

(2) The situation where the controlling shareholder and actual controller concurrently serve as the chairman and general manager of a listed company

□Applicable ☑Not applicable

(3)Posts held in corporate shareholders

(4)Posts held in other entities

(5)Punishments of the Company’s current and outgoing directors, supervisors and senior management by securities regulators during the reporting period in the previous three years

The current and former directors and senior management personnel of the company have not been subject to any penalties imposed by securities regulatory authorities in the past three years.

3.Remuneration of directors, supervisors and senior management

(1)Decision-making procedures, basis for determination, and actual payment of remuneration of directors, supervisors, and senior management

The company conducts performance evaluations and disburses remuneration to its directors, supervisors, and senior management personnel in accordance with the Management System for Senior Executive Compensation and Performance Appraisal (adopted at the 26th meeting of the 12th Board of Directors). The annual remuneration for directors, supervisors, and senior management personnel who received compensation from the company in 2025 (including base salary, bonuses, allowances, subsidies, employee welfare benefits, various insurance premiums, housing provident fund contributions, and the total pre-tax remuneration received from the company in other forms) was determined and disbursed based on the company's relevant regulations. The Board of Directors formulated the disbursement plan according to the company's operating conditions and the respective positions and work performance evaluations of the relevant personnel. During this reporting period, the remuneration for the company's directors, supervisors, and senior management personnel has been paid monthly.

As resolved at the first meeting of the 11th Board of Directors on September 15, 2020, and the 2020 Fifth Extraordinary General Meeting of Shareholders on October 12, 2020, the standard for independent directors' allowances was adjusted to RMB 150,000 per person per year (tax inclusive). These allowances are disbursed in equal monthly installments.

(2) Remuneration of directors, supervisors and senior management during the reporting period of the Company

Unit: 10,000

Note: On October 29, 2025, the company convened the 28th meeting of the 12th Board of Directors, which reviewed and approved the Proposal on the Appointment of the Company's Vice President. The Board of Directors unanimously agreed to appoint Ms. Ni Jinmei as the company's Vice President. During the reporting period, as Ms. Ni Jinmei served for less than one year, the amounts in the table above were calculated based on her actual tenure.

(3)Other information notes

□Applicable Not applicable

V.Performance of Duties by the Directors during the reporting period

1.Attendance of Directors in the Board Meeting and the General Meeting of Shareholders

The situation where a company director fails to attend two consecutive board meetings in person has not occurred.

2.Situation where a director raises objections to matters related to the company

During the reporting period, no director raised any objections to matters related to the company.

3.Additional Notes on Directors' Performance of Duties

(1)Whether directors’ suggestions to the Company are accepted

☑Yes □ No

(2)Description of the directors' recommendations that were adopted or refused During the reporting period, all directors of the Company strictly adhered to the Company Law, Securities Law, Code of Corporate Governance for Listed Companies, Shenzhen Stock Exchange Self-Regulatory Guidelines for Listed Companies No.1 - Standardized Operation of Main Board Listed Companies, along with the Articles of Association and Rules of Procedure for the Board of Directors in performing their duties. With due diligence and professional dedication, they proactively monitored the Company's operational management information, financial status, and material matters, provided substantive input on major corporate governance and operational decisions, conducted in-depth deliberations on all proposals submitted to the Board, and reached unanimous resolutions through robust discussions. Decision-making processes rigorously incorporated the interests and demands of minority shareholders, thereby enhancing the scientific rigor of Board resolutions. They resolutely supervised and advanced the implementation of Board decisions to ensure scientific, timely, and efficient governance, effectively safeguarding the legitimate rights and interests of the Company and all shareholders.

VI.Performance of duties by the specialized committees under the BOD during the reporting period

VII.Performance of Duties by the Audit Committee

Whether there are any risks found by the Audit Committee in its supervisory activities during the reporting period

The Audit Committee had no objections to the matters under supervision during the reporting period

VIII.Employees of the Company

1.Number of employees, professional composition and education level

2.Compensation policies

The Company implements a labor contract system, sign labor contracts with every employee in accordance with the Labor Law of the PRC, the Labor Contract Law of the PRC and relevant labor laws and regulations. The Company strictly implements the national employment system, labor protection system, and social security system, pays social insurance for employees in accordance with national regulations, sets up corresponding safety protection measures, and creates a good and safe production environment for employees. Through innovative management mechanisms, the Company guides the functional system to continuously improve quality and efficiency, and to create a streamlined and efficient functional team of headquarters. The Company develops an effective salary incentive system for the Company's financial personnel, administrative personnel, technical personnel, production personnel and sales personnel, and gives corresponding performance rewards based on the performance evaluation of the Company, department and individual.

3.Training plans

The Company established Hengyi Enterprise University according to the needs of production and operation and talent training, aiming to build a competitive enterprise university and support Hengyi's global development. It serves as the power center and load bearing platform for Hengyi's organizational development, talent training, technology accumulation, and corporate transformation. The "Blue" series of talent projects are implemented in Hengyi University, to establish talent echelons at different levels; meanwhile, it attaches importance to continuous improvement, job skill assessment, and on-the-job education promotion to enhance professional skills and effectiveness. The Company develops training plans for different types of employees, organizes internal and outbound trainings according to the plan, pays special attention to job skills training, and provides certification for special positions and hazardous chemical operators to ensure safe production and normal operation. The Company also trains technical and business backbones through targeted training to improve their business capabilities.

4.The situation of labor outsourcing

IX.The Company’s common stock profit distribution and capitalization of capital reserves

1.The formulation, implementation, or adjustment of the profit distribution policy, especially the cash dividend policy, during the reporting period

The company, in accordance with the provisions and requirements outlined in documents such as the "Guidelines for the Supervision of Listed Companies No. 3 — Cash Dividends for Listed Companies (2025 Revision)" and the "Self-Regulatory Guidelines for Listed Companies No. 1 — Standard Operations for Main Board Listed Companies (December 2025 Revision)" issued by the Shenzhen Stock Exchange, has made specific provisions in the Articles of Association regarding the decision-making procedures for profit distribution and the profit distribution policy, based on the company's actual situation. Additionally, the company formulated the "Shareholder Dividend Return Plan for the Next Three Years ( 20 23 -20 25 ) prime prime to better ensure reasonable returns for all shareholders, further refine the Articles of Association's clauses related to the profit distribution policy, increase transparency and operability in dividend distribution decisions, and establish a sustainable, stable, and scientific return plan and mechanism for investors, ensuring the continuity and stability of the profit distribution policy. During the reporting period, the company strictly adhered to the aforementioned profit distribution policy.

According to the Proposal on the 2024 Profit Distribution Plan reviewed and approved at the 2024 Annual General Meeting of Shareholders held on May 15, 2025, the profit distribution plan for 2024 is as follows: based on the total share capital on the equity record date for the distribution, excluding shares held in the company’s special securities account for repurchases, a cash dividend of RMB 0.50 per 10 shares (tax inclusive) will be distributed to all shareholders. No bonus shares will be issued, and no capital reserve will be converted into share capital. The company published the Announcement on the Implementation of 2024 Annual Equity Distribution of Hengyi Petrochemical Co., Ltd., and the distribution was completed on June 20, 2025.

2.The Company was profitable during the reporting period and the parent

company’s profit available for distribution to ordinary shareholders was positive, but no distribution plan for cash dividend for ordinary shares was proposed

□Applicable ☑Not applicable

3.Distribution of profit and capitalisation of capital reserve for the reporting period

The company plans to distribute a cash dividend of RMB 0.50 per 10 shares (tax inclusive) to all shareholders, based on the total share capital on the equity record date for the distribution, excluding shares held in the company’s special securities account for repurchases. No bonus shares will be issued, and no capital reserve will be converted into share capital. If changes such as additional share issuances, share repurchase adjustments, or conversion of convertible bonds into share capital occur before the equity record date for the distribution, resulting in a change in the total share capital on the dividend distribution record date, the company will use the total share capital on the equity record date for the distribution as the basis, maintain the distribution amount per share unchanged, and adjust the total share capital base accordingly. If this plan is approved by the general meeting of shareholders, based on a preliminary calculation using the total share capital as of March 31, 2026, excluding shares held in the company ’ s special securities account for repurchases, the total cash dividend for 2025 is estimated to be RMB 172,098,362.15. The amount for share repurchase and cancellation implemented through centralized bidding using the company ’ s own funds is RMB 623,597,540.23. The total cash dividend and share repurchase cancellation for 2025 is estimated to be RMB 795,695,902.38, representing 30 8.01% of the net profit attributable to shareholders of the listed company in 2025.

(2)2026 Interim Cash Dividend Plan

To implement a regular cash dividend mechanism for listed companies and enhance returns for investors, in accordance with the CSRC Guidelines No. 3-Cash Dividends of Listed Companies and the Shenzhen Stock Exchange Self-Regulatory Guidelines No. 1-Standard Operations of Main Board Listed Companies, the board of directors is requested to be authorized by the general meeting of shareholders to formulate and implement the 2026 interim cash dividend plan under the following conditions, including but not limited to whether to implement the dividend, formulate the dividend plan, and determine the specific amount and timing of the dividend distribution.

The above proposals are subject to approval by the company’s 2025 Annual General Meeting

X.Implementation of the Company's SIPs, ESOPs or other employee incentives

1. Equity incentive

Not applicable

2.Implementation of the Employee Share Ownership Plan

Employee Share Ownership Schemes in force during the reporting period

3.Shareholdings of directors, supervisors and senior management in the Employee Share Ownership Plan during the reporting period

4.Changes in asset management organisations during the reporting period

□Applicable  Not applicable

5.Changes in equity during the reporting period arising from holders' disposals of shares, etc.

□Applicable  Not applicable

6.Exercise of shareholders' rights during the reporting period

□Applicable  Not applicable

7.Other relevant circumstances and description of the Employee Share Ownership Plan during the reporting period

□Applicable  Not applicable

8.Changes in the membership of the Management Committee of the Employee

Share Ownership Plan □Applicable  Not applicable

9.Financial impact of the Employee Share Ownership Plan on listed companies during the reporting period and related accounting treatment

□Applicable  Not applicable

10.Termination of the Employee Share Ownership Plan during the reporting period

On December 15, 2025, all 113,754,600 shares of the company held under the fourth employee stock ownership plan were sold out through block trades, accounting for 3.16% of the company’s total share capital at that time. The transferee of the block trades was the company’s controlling shareholder, Zhejiang Hengyi Group Co., Ltd. For details, please refer to the Announcement on the Completion of Share Sales and Termination of the Company’s Fourth Employee Stock Ownership Plan (2025-113) disclosed by the company on December 16, 2025

11.Other employee incentives

□Applicable  Not applicable

XI.Establishment and implementation of internal control system during the reporting period

1.Establishment and implementation

During the reporting period, the Company continuously updated and optimized its internal control system in accordance with the Basic Standard for Enterprise Internal Control and other relevant regulations to adapt to the changing external environment and internal management requirements. The Company's internal control system is sound and reasonable and covers the main aspects of its operation and management. It works well and there is no significant omission.

(1) Internal environment. The Company has an organizational structure that is suitable for its business, which has a clear division of labor and sound and complete functional departments, and the Company implements the principle of separation of incompatible duties to make these departments restrain with each other.

(2) Risk assessment. The Company collects relevant information in a comprehensive and systematic manner according to its strategic objectives, development thoughts and the industry characteristics to conduct risk assessment timely and weigh risks and benefits, then determines risk response strategies to keep the risks under control.

(3) Control activities. The Company continuously sorts out and improves the system according to the current state of its management and development needs, without comprising the legality, normality, feasibility and operability.

(4) Information and communication. The Company has established an information and communication system to define the procedures for the collection, processing and transmission of information related to internal control, in order to build a smooth communication line and promote effective conduct of internal control.

(5)Supervision. The Company has established a corporate governance mechanism, so that the independent directors and the BOS are able to independently perform their supervisory duties and independently conduct evaluation and provide recommendations on the Company's management. A special internal audit body is set up under the Audit Committee of the BOD to carry out internal audit work independently according to law in order to realize the effective supervision of the management and effective operation of the internal control system.

2.Details of significant internal control deficiency identified during the reporting period

□Yes ☑ No

XII.The Company ’ s management and control over subsidiaries during the reporting period

During the reporting period, in order to strengthen management and control over its subsidiaries, standardize their internal operations, and promote their healthy development, the company, following the operational standards for listed companies, formulated and improved the "Comprehensive Management System for Subsidiaries." This system provides specific regulations for subsidiaries in terms of establishing sound governance structures, operational and business decision-making, financial management, information management, investment decision-making, inspection, and performance evaluation. Subsidiaries are also required to uniformly implement the "Major Information Internal Reporting System," which clearly defines procedures for reporting and reviewing major matters. The company closely monitors significant issues regarding subsidiary governance, financial status, production and operations, project construction, safety, and environmental protection, while promptly fulfilling information disclosure obligations.To enhance the standardized operation levels of its subsidiaries, the company's Audit and Legal Department provides guidance, supervision, and evaluation of the establishment and implementation of internal control systems in all subsidiaries. This ensures the continuous improvement and effective implementation of the company's various internal control systems.

XIII.Internal control self-evaluation report or internal control audit report

1.Internal control self-evaluation report

2.Internal control audit report

modified and qualified opinions

□Yes ☑No

3.Whether the accounting firm has issued an internal control audit report with modified and qualified opinions □Yes ☑No

4.Whether the opinions in the internal control assurance report issued by the accounting firm are consistent with those in the self-evaluation report issued by the BOD

☑Yes □ No

5.Whether a non-standard audit opinion on internal control was issued during the reporting period or the previous year

□Yes ☑No

XIV. Self-examination and rectifications through the special campaign on corporate governance of listed companies

Not applicable

XV. Environmental Information Disclosure Status

1.Whether the listed company and its principal subsidiaries are included in the list of enterprises required to disclose environmental information in accordance with the law

2.Relevant information on the occurrence of environmental accidents by listed companies

Not applicable

XVI. Social Responsibility

Please see the Social, Environmental, Governance(ESG) report of 2025.

The Company shall comply with the disclosure requirements for petrochemical industry specified in Guidelines No. 3 for Self-Regulation of Listed Companies of Shenzhen Stock Exchange - Industry Information Disclosure

In 2025, the company maintained a stable safety production situation, with no major safety incidents occurring and zero new cases of occupational diseases reported. The company consistently prioritizes safety as the foremost element of development, fully fulfills its primary responsibility for safety management, and rigorously implements safety measures across all operational aspects.

Firstly, the company actively implemented safety responsibilities. At the beginning of the year, it signed the Safety and Environmental Protection Production Target Responsibility Agreement with each subsidiary and relevant department, clarifying safety production responsibilities, strengthening safety awareness, and fostering a structured approach where each level drives the next, ensuring accountability at every tier.

Secondly, the company actively promoted the establishment of safety standardization systems and dual-prevention mechanisms across its subsidiaries. In the road transportation sector, the company maintained Grade-1 safety production standardization; in hazardous chemical production, it upheld Grade-2 safety production standardization; and in chemical fiber manufacturing, 80% of enterprises achieved Grade-3 safety production standardization. Other subsidiaries are progressively improving their systems.

Third, comprehensive safety inspections and rectifications were carried out, along with specialized checks on the implementation of the full-staff safety production responsibility system. The depth and professionalism of safety supervision were enhanced through integrated inspections, specialized evaluations by external experts, and on-site monitoring, achieving a 100% annual completion rate for rectifying identified hazards.

Fourth, investment in safety production was increased by actively adopting new technologies, processes, and equipment to continuously improve safety conditions and elevate the enterprise's inherent safety level.

Fifth, emphasis was placed on safety education and training to raise awareness among all employees. The safety training system covers key personnel, including senior management, safety production managers, special operations and equipment operators, other employees, as well as contractors and laborers. Both the training completion rate and qualification rate reached 100% , ensuring comprehensive coverage with a focus on critical areas.

Sixth, a dual-prevention mechanism for safety production was established to strengthen the safety defense line. Throughout the year, subsidiaries underwent 39 routine safety inspections by regulatory authorities, with no violations, penalties, or major safety hazards identified.

XVII. Consolidating and Expanding Achievements in Poverty Alleviation and Rural Revitalization

The company has always regarded "serving the nation through industry" as its foundation, internalizing the fulfillment of social responsibility as an inherent driving force for its development. We adhere to interpreting our commitment through benevolent actions, integrating a philanthropic spirit into the pulse of our growth. By focusing on multiple dimensions such as educational support, industry collaboration, community integration, and care for special groups, we continuously convey the warmth of the enterprise. While creating economic value, we strive to contribute positive strength to social progress, jointly painting a humanistic picture of harmonious development with partners from all sectors. In 2025, the company and its controlling shareholder, Hengyi Group, actively engaged in public welfare, with cumulative donations reaching 25.07 million RMB, focusing on the following key initiatives:

(1) Education as the Foundation for Shaping the Future: The company has continuously increased its investment in educational philanthropy. During the reporting period, Hengyi Group signed a donation agreement with Zhejiang University, contributing an additional 20 million RMB. The full amount was placed under the unified management of the "Zhejiang University Education Foundation Hengyi Excellence Development Fund," specifically designated to support talent recruitment and the development of "Double First-Class" disciplines. A donation of 1 million RMB was made to the "Hengyi Education Incentive Fund" under the Xiaoshan District People's Education Foundation, specifically for incentivizing the cultivation of top innovative talents and the development of outstanding teachers. A targeted donation of 1 million RMB was provided to Hangzhou Xiaoshan District No.

3 Senior High School to support improvements in school facilities, updating of teaching equipment, and student/teacher awards and grants. Additionally, 600,000 RMB was donated to Gaochang District, Turpan City, for the "Cherishing Education, Spreading Love in the Land of Fire" public welfare fund to honor teachers and value education.

(2) Community Integration and Shared Development: The company's development is inseparable from the nourishment and support of its local regions. We are always committed to resonating and building a shared future with our communities. Hengyi Group contributed 5.625 million RMB to the "Hengyi Charity Fund," an endowment-named fund established within the Xiaoshan District Charity Federation. Through the Zhejiang Provincial Charity Union, a donation of 50,000 RMB was made to the Xiuzhou District Charity Federation in Jiaxing City to support community charity development. The company actively participated in the Qinzhou City Joint Charity Donation Activity, contributing 20,000 RMB for local public welfare causes. A donation of 150,000 RMB was made to support local school development and activities (e.g., Children's Day, Seniors' Day) in Yinglin Town, Jinjiang City. In Beilun District, Ningbo, the company has long been invested in environmental protection and charity. Since establishing a special fund in 2016, cumulative donations have reached 2.2 million RMB. During the reporting period, an additional 300,000 RMB was donated to support local environmental and charitable projects. These practical actions demonstrate our commitment to giving back and writing the warmth of the enterprise into reality.

(3) Hengyi Brunei's Community Initiatives: To support the growth and development of local Bruneian talent, create positive interactions, strengthen ties between Hengyi Brunei and the community, and protect local biodiversity and the natural environment, Hengyi Brunei has continuously launched multiple projects such as "Hengyi Future," "Hengyi Cares," and "Hengyi One Earth," contributing to the realization of Brunei's "Wawasan 2035" vision.

1) "Hengyi Future" Project: Focuses on supporting the cultivation and development of local talent and promoting youth entrepreneurship. In 2025, the company sponsored several educational support activities including the Hengyi Outstanding Student Award, Universiti Brunei Darussalam Bookworm Award (Chemical & Process Engineering), and Universiti Teknologi Brunei Excellence Student Award, presenting awards to outstanding students from various primary and secondary schools. Multiple educational promotion roadshows were also held, donating computers to local schools. Actual expenditure in 2025 was approximately 1.0878 million USD.

2) "Hengyi Cares" Project: Primarily sponsors community and national events, and organizes donation drives to help underprivileged families and orphans, striving to promote unity, care, progress, and inclusivity within the community. In 2025, Hengyi Brunei conducted donations for underprivileged families and orphans, and sponsored events such as the Teachers' Day Walkathon, Business Growth Exchange, and the 7th Blood Donation Drive. Actual expenditure in 2025 was approximately 157,400 USD. 3)"Hengyi One Earth" Project: Primarily aims to protect and preserve Brunei's biodiversity and natural environment, such as providing clean energy to local communities, sponsoring, and participating in events themed on environmental protection, sustainable development, and the green economy. Actual expenditure in 2025 was approximately 7,600 USD. Furthermore, Hengyi Brunei actively explores green production pathways by constructing photovoltaic power generation projects within the plant premises and deploying advanced environmental protection treatment facilities, continuously reducing energy consumption and environmental impact, contributing to sustainable development goals.

(4) Promoting Industry Development: Hengyi Group donated 900,000 RMB to the China Chemical Fibers Association · Hengyi Fund, continuously supporting innovation and collaborative development within the chemical fiber industry.

(5) Care for Vulnerable Groups: The company cares for and supports disadvantaged groups, providing free health check-ups and facilitating employee mutual medical aid applications for all disabled employees, while also driving more employment and prosperity opportunities for people with disabilities. The company designates May each year as the "Disability Service Month," organizing a series of support activities. It also regularly holds various healthy cultural and sports activities, opening channels for emotional exchange and expression of needs, enriching the spiritual and cultural lives of disabled employees.

The company firmly believes that the vitality of an enterprise lies not only in its operational performance but also in its creation and commitment to social value. In the future, we will continue to uphold our original aspirations, fulfilling our commitment to "acting with benevolence" through concrete actions, allowing the stream of public welfare to merge into the vast river of era development.

Section V Important Matters

I.Fulfillment of commitments

1.Commitments that the Company’s actual controllers, shareholders, related parties, acquirers, and the Company and other relevant parties have fulfilled during the reporting period and that have not been fulfilled as of the end of the reporting period

2.There is a profit forecast for the Company’s assets or projects, and it is still in the profit forecast period at the reporting period, the Company provides an explanation of the reason for the assets or projects reaching the original profit forecast

□Applicable ☑Not applicable

3.The company is subject to performance commitments □Applicable ☑Not applicable

II.The non-operating capital occupation of the listed company by the controlling shareholder and its related parties

During the reporting period of the Company, there was no non-operating capital occupation of the listed company by the controlling shareholder and its related parties.

III.External Guarantees Against the Rules and Regulations

There was no external guarantee provided by the Company which was against rules and regulations during the reporting period.

IV.Explanation of the BOD on the latest “Non-standard Audit Report ”

□Applicable ☑Not applicable

V.Description of the BOD and the independent directors (if any) on the “Nonstandard Audit Report” for the current reporting period issued by the accounting firm

□Applicable ☑Not applicable

VI.Description of changes in accounting policies, accounting estimates or corrections of material accounting errors compared to the financial report of the previous year

During the reporting period, there were no changes in accounting policies, accounting estimates, or corrections of significant accounting errors.

VII. Description of changes in the scope of the consolidated financial statements compared to the financial report of the previous year

The total number of subsidiaries included in the scope of consolidation in fiscal year 2025 was 56, an increase of 2 subsidiaries and a decrease of 0 subsidiaries compared with the previous year. For details, please refer to "VII. Interests in Other Entities" in "Section VIII. Financial Reporting".

VIII.Appointment and dismissal of the accounting firms

1.Currently employed accounting firm

2.Whether to reappoint an accounting firm in current period

□Yes ☑No

3.Employment of internal control auditing accounting firms, financial consultants or sponsors

During the reporting period, the Company hired Zhongxinghua Certified Public Accountants LLP as the internal control audit agency, with an internal control audit fee of RMB 550,000.

IX.Delisting after the disclosure of annual report

□Applicable ☑Not applicable

X.Matters Related to bankruptcy and reorganization

During the reporting period, the Company did not have any bankruptcy and reorganization related matters.

XI.Major litigations and arbitrations

The Company had no major litigation or arbitration matters during the reporting period.

XII.Penalties and rectifications

There were no penalties and rectifications during the reporting period of the Company.

XIII.Integrity of the Company and its controlling shareholders and the actual controller

Applicable ☑Not applicable

XIV.Significant related-party transactions

1.Related-party transactions related to daily operations

2.Related Party Transactions Arising from Asset or Equity Acquisition and Sale During the reporting period, the company had no related-party transactions involving the acquisition or sale of assets or equity.

3.Related-party transactions involving joint external investments

During the reporting period, the company did not engage in any related-party transactions involving joint external investments.

4.Related creditor-debtor transactions

Payable to Related Parties Debt

5.Transactions with Affiliated Financial Companies

There were no deposits, loans, credit facilities, or other financial transactions between the company and affiliated financial companies.

6.Transactions between Company-controlled Financial Companies and Affiliates

There were no deposits, loans, credit facilities, or other financial transactions between company-controlled financial companies and affiliates.

7.Other Significant Related Party Transactions

There were no other significant related party transactions during the reporting period.

XV.Major contracts and their performance

1.Custody, contracting and leasing matters

(1)Custody situation

There was no custody in the Company during the reporting period.

(2)Contracting situation

There was no contracting situation during the reporting period of the Company.

(3)Leasing situation

During the reporting period, there was no leasing situation.

2.Major guarantees

Unit: RMB 10,000