Dear Shareholders,

In the first half of FY2026, the global economy progressed under pressure amid accelerated restructuring of the economic and trade, while China’s economy steadily recovered through structural transformation and targeted policies. Against the backdrop of multi-pronged policy shifts and volatile raw material costs and product prices, the paper-making industry gradually recovered from a stage of significant downturn. With the signs of marginal improvement emerged in the supply and demand pattern, the profitability of the industry exhibited a trend of structural divergence.

Completed the Establishment of Core Entities as Scheduled and Accelerated Strategic Payoffs
Amidst a complex and volatile macro environment with diverging industry landscape, the Group, as a whole, overcame challenges with unwavering strategic focus and solidly advanced its integrated pulp and paper production plans and optimization of its product portfolio. Having completed the establishment of the strategic core entities as scheduled, the Group entered into the harvest period in which the value of integrated pulp and paper production was unleashed, thereby achieving leapfrog growth. During the Period, the sales volume of the Group increased by 8.3% as compared with the corresponding period last year to approximately 12.40 million tonnes, setting a new record high for the third consecutive comparable period. The average selling price rose against headwinds by 2.7% as compared with the corresponding period last year. Driven by both sales volume and price growth, the revenue increased by 11.2% as compared with the corresponding period last year to RMB37.22 billion. Net profit soared by 225.1% as compared with the corresponding period last year to approximately RMB2.21 billion, while profit attributable to equity holders of the Company increased substantially by 318.8% as compared with the corresponding period last year to approximately RMB1.97 billion, outperforming the industry in terms of profitability.

Comprehensively Deepened the Integrated Pulp and Paper Production Layout to Further Strengthen the Foundation for Competitiveness
In terms of raw materials, the Group has basically completed the expansion plans for core raw materials, enabling it to effectively hedge against market price volatility risks associated with external purchase of wood pulp, which laid a solid foundation for the upgrade of the Group’s product mix towards high-end and differentiated supply. The promising growth in results performance during the Period not only fully showcased the foresight and appropriateness of the Group’s strategy to regard raw materials as its top priority, but also further highlighted the urgency and strategic value of continuous optimization of the raw material expansion plans.

Currently, an annual design production capacity of approximately 5.4 million tonnes for wood pulp have commenced production. Looking ahead, the Group will, on the one hand, continue to expand the production capacity for high-end raw materials in mature bases, such as Tianjin, Chongqing and Dongguan, and, on the other hand, further accelerate the release of new production capacity from its new bases in Beihai and other places, aiming to maximize the efficiency and profitability of all bases and enhance the flexibility of operation and resilience of profitability on all fronts. Upon the commencement of operation of all new projects in full scale, it is expected that the Group’s total design production capacity for fiber raw materials will increase to approximately 10.7 million tpa (including wood pulp of 7.9 million tonnes, recycled pulp of 0.7 million tonnes and wood fibre of 2.1 million tonnes). The strategy of integrated pulp and paper production will hence reach a new level, and a solidified safety margin and competitive moat for the Group’s profitability will be secured.

In terms of products, leveraging the advantages in integrated pulp and paper production of its two new bases in Beihai and Hubei, the Group has comprehensively increased the proportion of high-end paper grades, thereby optimizing its profit structure. During the Period, a production capacity of 1.2 million tonnes for bleached folding boxboard and 0.7 million tonnes for printing and writing paper was successfully achieved in Hubei base and Beihai base, respectively, which further increased the proportion of the Group’s high-end linerboard. Through vertical integration of the raw material supply chain of wood pulp, the Group has effectively controlled costs and enhanced quality, supporting the performance upgrades and brand premium for high-end paper categories while boosting the profitability of the Group.

Promote Quality and Efficiency Enhancement through Lean Operations, while Empowering Development with Technological Innovation
In the face of challenges presented by the complex changes and uncertainties in the external environment, the Group continued to strengthen its business foundation by adhering to high-quality development as the main objective. While deepening the refined management, the Group promoted technological empowerment and unlocked talent value, bolstering its risk tolerance and resilience of profitability.

In terms of operational management and control, the Group has established and optimized the full-chain refined benchmarking system, covering all its processes from raw material procurement, commissioning of production, operational management to sales services and logistics and transportation, enabling horizontally benchmarking and vertically tapping the potential of all bases on a continuous basis. By deepening collaborations and sharing of best practices among its bases, it promoted optimization of resources coordination as well as systematic cost reduction and efficiency enhancement.

In terms of technological innovation, the Group persisted to pursue its development with technology as the driving force, focusing on major technological breakthroughs and upgrades of product structure in the industry. It pushed ahead with the innovation-driven transformation of products towards differentiation and high-end development, continuously enhancing the brand value of “Nine Dragons Paper”. Meanwhile, integrating the characteristics of the Group’s business development with information technologies such as big data and artificial intelligence, the Group realised optimization of production, synergies in management and decision intelligence, which has introduced technological momentum into the Group’s high-quality development and further enhanced its value creation capability.

In terms of unlocking talent value, the Group thoroughly implemented the “talent empowering enterprise” strategy with an emphasis on enhancing the efficiency of human-machine collaboration. It made strenuous efforts in cultivating technically versatile talents and management teams who are familiar with production processes and excel in operation and management. Centered on efficient operation of large-scale equipment and value exploration, the Group worked aggressively on promoting in-depth integration of personnel skills with equipment performance, through which it has transformed talent advantages into continuous improvement in overall equipment effectiveness and production efficiency, providing solid talent and efficiency support for the Group’s high-quality development.

Looking ahead, the Chinese government will continue to launch a series of more aggressive policies to expand domestic demand and boost consumption. This, coupled with the environmental trend of “replacing plastic with paper” and the optimization of the supply side driven by “anti-involution” campaign, is expected to drive marginal improvements in both supply and demand in the paper-making industry. Besides, the Group has largely completed its expansion plans for integrated pulp and paper production, and adjustments for diversified product mix, embracing favourable conditions for its development.

Looking ahead, our Core Strategies are Set Out as Follows:

1. Exercise stringent control over production costs and further implement measures of cost reduction and efficiency enhancement. We will put all-out efforts to ensure commencement of production of wood pulp projects with production targets and standards met. We will continue to refine the procurement strategy so as to fully optimize the costs of major raw materials such as recovered paper and woodchips. By strengthening all-process precision control during production, we will enhance the formulation ratios and precise commissioning of resources to increase the yield of recovered paper, and to curb the overall cost of wood pulp per tonne;
2. Focus our concerted efforts in development and unlock the value and potential of talents. Adhering to the core principle of unlocking talent value, we will focus on enhancing both their technical and managerial capabilities to promote human-machine collaboration and optimize the matched workforce efficiency. We will continue to enhance inter-departmental and inter-base collaborations to fully motivate the organic vibrance and potential creativity of employees in a bid to maximize the efficiency of manpower resources;
3. Promote high-end development and product differentiation to accelerate the realization of strategic value. By giving full rein to our core advantages of integrated pulp and paper production oriented with technological innovation, we will continue to achieve sustainable supply of exemplary quality paper that embodies the characteristics of Nine Dragons Paper, while raising the proportion of high added-value products and expanding domestic and international sales channels to further increase our share in the high-end markets;
4. Refine lean operations and enhance operating efficiency of systems. Taking into account the characteristic of our business, we will leverage big data and AI-empowered end-to-end operational management to track the dynamics of raw material market and sales on a real time basis, and to enhance our inventory structure in a scientific manner. Besides, we will strengthen capital management and compliance controls to ensure a balance between the needs for business development and liquidity security;
5. Build a sustainable foundation by upholding our lifeline and bottom lines for development. We value reputation as the lifeline of the Group. We live up to our reputation across all processes and stages of production and operations, thereby building a foundation for our brand with concrete actions. Additionally, upholding security, fire safety, environmental protection and integrity as the bottom lines for development, we will ensure they are fully incorporated into our day-to-day management in order to establish a sound and long-term management mechanism.

Last but not least, on behalf of all members of the Board, I would like to extend my heartfelt gratitude to all shareholders for their longstanding trust and unwavering support. In the face of the opportunities and challenges in the new stage of development, I will lead all employees in unison to anchor our direction with strategic focus, drive quality development with innovation and practical actions, continuously enhance the corporate value, and repay the trust and expectations of our shareholders with robust results. Thank you.

Cheung Yan
Chairlady

25 February 2026