DFZQ — Management Reports 2025

Apr 29, 2025

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

东方证券
—DFZQ—

(A joint stock company incorporated in the People's Republic of China with limited liability under the Chinese corporate name “东方证券股份有限公司” and carrying on business in Hong Kong as “東方證券” (in Chinese) and “DFZQ” (in English))

(Stock Code: 03958)

2024 ANNUAL IMPLEMENTATION ASSESSMENT REPORT ON DFZQ CORPORATE VALUE AND RETURN ENHANCEMENT ACTION PLAN

Reference is made to the announcement of 東方證券股份有限公司 (the "Company") dated April 29, 2024. To thoroughly implement the spirit of the 20th National Congress of the Communist Party of China and the Central Financial Work Conference, adhere to the fundamental principle of "financial services for the real economy", and uphold the value orientation of "people-centered development", the Company formulated and released the "Corporate Value and Return Enhancement Action Plan of the Company" in April 2024, which aligns with the requirements for deepening reforms in the capital market and focuses on the overarching theme of high-quality development.

In 2024, the Company proactively implemented all tasks under the action plan, achieving significant progress and good results in key areas such as strengthening core operations, refining functional positioning, enhancing operational quality and efficiency, and improving shareholders' returns. The annual implementation status is reported as follows:

I. UPHOLDING THE ORIGINAL MISSION AND ADHERING TO THE FUNCTIONAL POSITIONING

The Company anchored its strategic direction and pursued the development path with DFZQ characteristics. The 2025-2027 strategic plan, formulated by the Company in March 2025, fully embodies the political and people-oriented nature of financial work. The Company aims to balance functionality and profitability effectively, striving to build a first-class modern investment bank with domestic competitiveness and international influence, thereby contributing robustly to China's vision of becoming a financial powerhouse and supporting the construction of "Five Centers" in Shanghai. Guided by the strategic drivers of "collectivization, digitalization, and internationalization", the Company adhered to a holistic vision of high-quality development rooted in DFZQ's unique strengths. It focused on two key areas of comprehensive wealth management and comprehensive investment banking. The Company will forge three core capability pillars of comprehensive customer group management, digital technology-driven initiatives and endogenous compliance and risk control, create four characteristic advantages of buyer's investment advisory, industrial investment banking, institutional finance, and digital technology, and promote five coordinated developments including comprehensive wealth management, comprehensive investment banking, comprehensive institution, energy and finance, domestic sector and offshore sector.

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The Company strengthened its functional positioning and served the real economy through finance. Firstly, the Company fulfilled its role as a service provider for direct financing by deeply exploring the financing needs of high-quality enterprises across various industries, offering comprehensive capital market services to facilitate corporate growth. In 2024, the Company completed four equity financing projects with a total underwriting amount of RMB1.331 billion, ranking 8th in the industry for placement projects. Secondly, the Company acted as a “gatekeeper” in capital markets by continuously improving due diligence standard and professional practice quality to safeguard market security. Thirdly, the Company excelled as a manager of social wealth by restructuring its wealth management operations, providing residents with a more comprehensive and diverse selection of high-quality products to support clients in achieving long-term stable asset growth.

The Company performed social responsibility and persistently deepened sustainable development. The Company actively implemented the ESG development philosophy, maintaining an AA rating in MSCI ESG ratings in 2024. In response to the rural revitalization strategy and the “One Company, One County” assistance initiative, the Company and its subsidiaries had signed agreements to assist 49 regions by the end of 2024, and carried out 92 projects to consolidate poverty alleviation achievements and promote rural revitalization, with total funding allocated to various assistance programs reaching RMB24.0078 million.

II. CONTINUOUSLY STRENGTHENING CAPABILITY AND ENHANCING CORPORATE VALUE

The Company comprehensively promoted corporate value with a focus on enhancing overall asset quality. In 2024, the Company realized operating income of RMB19.19 billion, and the net profit attributable to the owners of the parent company of RMB3.35 billion, representing year-on-year increases of 12.3% and 21.7%, respectively. By the end of 2024, the Company’s total assets were RMB417.74 billion, and the net assets attributable to the parent company were RMB81.40 billion, representing an increase of 8.9% and 3.4%, respectively compared to the end of the previous year. The Company formulated and released a capital-intensive management plan to further improve the efficiency of capital utilization across various categories, thereby solidifying its asset quality foundation.

The Company deepened the reform of business lines with a focus on enhancing core competitiveness. In 2024, the Company adhered to a client-centric approach to drive the transformation and development of three major business lines: comprehensive wealth management, comprehensive investment banking and comprehensive institutional business. The Company established a wealth management committee to restructure the wealth management business system, enhancing comprehensive customer group management capabilities, optimized product portfolios, and improved asset allocation services to meet diversified and professional wealth management needs; completed the restructuring of the investment banking subsidiary and established an investment banking management committee to promote the construction of a comprehensive investment banking framework, focusing on the development of industrial investment banking, while building distinctive specializations in technology innovation investment banking and energy investment banking. The Company strengthened the “Unified Orient” strategic layout by establishing an institutional client headquarters, thereby enhancing coverage of diverse institutional clients, deepening value extraction from individual institutions, and forging a powerful synergy in institutional client services.

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The Company implemented a talent empowerment strategy with a focus on stimulating endogenous momentum within the organization. In 2024, the Company convened a talent work conference to improve its incentive and restraint mechanisms. The Company initiated reforms under the "Three-Capability Mechanism", and established a high-level talent acquisition program under the brand "Wisdom Converges Orient, Futures Forged Ahead". By optimizing human resource allocation, the Company continued to conduct diversified training programs for employees and managers at all levels, including initiating the "Inaugural Political Education Training Program for Cadres" and the "Orient Spark" internal trainer development program, thereby consistently injecting talent-driven energy to fuel high-quality development.

III. PERSISTING IN SERVING THE REAL ECONOMY AND EMPOWERING NEW HIGH-QUALITY PRODUCTIVITY

The Company served the national strategy and proceeded with the tasks in "five major areas" of finance. Aligned with national strategies, the Company focuses on "five major areas" of finance, including technology finance, green finance, inclusive finance, pension finance and digital finance. In technology finance, the Company has vigorously promoted the development of science and innovation investment banking, providing comprehensive full-chain and full-lifecycle financial services for high-quality technology enterprises. In green finance, the Company supported green industries and projects through diversified financing channels and instruments, with significant growth in underwriting scale of green financial bonds and energy sector bonds. In inclusive finance, the Company offered retail customers all-round, high-quality and multi-tiered wealth and asset management services, while continuously supporting financing for private enterprises and small and micro enterprises. In pension finance, the Company has established a system for personal pension investment and education, achieving sustained growth in pension business assets. Shanghai Orient Securities Asset Management Co., Ltd. and China Universal Asset Management Company Limited actively participated in national pension system development, offering "one-stop" pension investment advisory services. In digital finance, the Company applied digital technologies to empower business decision-making, resource allocation, operational transformation, risk management and product development across all processes, comprehensively enhancing technology-driven capabilities and financial service efficiency.

The Company empowered industrial upgrading and fostered the development of new high-quality productivity. The Company has deeply aligned with the strategic development of Shanghai International Science and Innovation Centre and was committed to closely serving shareholders' development of their major energy industries. In 2024, the Company underwrote a total of 44 issuances of technology innovation corporate bonds, with an aggregate underwriting volume of RMB16.164 billion. It successfully executed refinancing projects for multiple new energy enterprises, including SK Technology, Guanghua Sci-tech and Haimo Technologies. The Company's subsidiary Shanghai Orient Securities Innovation Investment Co., Ltd. has made anchor investment in a total of 10 projects with an investment scale of RMB549 million. Shanghai Orient Securities Capital Investment Co., Ltd., responding to national strategic priorities, has focused on high-potential sectors, such as semiconductors, robotics and AI and military-aerospace industries, driving steady progress in equity investment operations.

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IV. ADHERING TO FINANCIAL SERVICES FOR PUBLIC INTEREST AND STABILIZING SHAREHOLDERS' RETURNS

The Company upheld shareholder value and implemented a sustainable dividend policy. The Company adhered to an “investor-oriented” philosophy, consistently executing an active and stable shareholder return policy. In response to the new “National Nine Guidelines” and the CSRC’s advocacy for enhancing shareholder returns and encouraging multiple dividends in a year, the Company completed its 2024 interim cash dividend distribution in December 2024, allocating RMB0.75 per 10 shares (tax inclusive), totaling RMB635 million in cash dividends. On March 28, 2025, the board of directors of the Company reviewed and approved the “Proposal on the 2024 Profit Distribution Plan of the Company”, and planned to distribute a cash dividend of RMB1.00 per 10 shares (tax inclusive) to the Company’s shareholders. The total cash dividends distributed in 2024 accounted for 44.20% of the net profit attributable to owners of the parent company.

The Company implemented a share repurchase plan to safeguard the interests of shareholders. To effectively safeguard the value of the Company and the interests of shareholders, while boosting market confidence, the board of directors of the Company successfully completed the repurchase of 34,843,324 A shares on January 30, 2024. The Company will comprehensively evaluate and steadily advance the disposal of the repurchased shares to effectively safeguard investors’ interests.

The Company promoted market capitalization management and established a long-term development mechanism. In strict compliance with regulatory requirements of the China Securities Regulatory Commission (CSRC), the Company has systematically promoted the development of its market capitalization management framework. In March 2025, the Company formulated the “Market Capitalization Management System of the Company”, which clarifies the comprehensive utilization of various market capitalization management tools. These include lawful and compliant applications of mergers and acquisitions, equity incentives, cash dividends, investor relations management, information disclosure and share repurchases. These measures aim to ensure that the Company’s investment value reasonably reflects its intrinsic quality and long-term growth potential.

V. UPHOLDING OPENNESS AND TRANSPARENCY AND STRENGTHENING INVESTOR RELATIONS MANAGEMENT

The Company enhanced the quality of information disclosure to safeguard the information rights of investors. In 2024, the Company strictly complied with regulatory requirements in both Hong Kong and Shanghai, successfully completing the preparation and disclosure of over 100 ad hoc announcements, online documents and four periodic reports. The Company ensured timely, accurate and comprehensive communication of corporate developments to the market, effectively protecting the information rights of small and medium-sized investors. The Company consistently prioritized investor needs, taking into account actual circumstances. To ensure information disclosure is comprehensive and diverse in form, concise and clear in content, and easy to understand, the Company adopted innovative and visual presentation formats to professionally interpret periodic reports and important interim announcements. These efforts continuously improved the effectiveness and readability of the Company’s information disclosure mechanisms.

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The Company enhanced the two-way communication mechanism and built a diversified communication platform. The Company continued to deepen its “investor-oriented” philosophy and optimized its investor relations management system. In 2024, the Company held 4 regular results briefings and participated in 43 roadshow activities, including brokerage strategy meetings and online/offline company research sessions. On the SSE E-Interaction platform, the Company responded to 58 investor inquiries and addressed over 100 investor hotline consultations. By establishing a regularized, multi-tiered investor communication mechanism, the Company comprehensively showcased its strategic direction and business strengths to investors, building an effective communication bridge. During the year, the Company was honored with awards such as New Fortune’s “Best IR Hong Kong Listed Company (A+H Shares)” and the China Association of Listed Companies’ “Best Practice in Listed Company Investor Relations Management”.

VI. UPHOLDING THE LEADERSHIP OF THE PARTY AND PROMOTING FINANCIAL CULTURE

The Company upheld the effective integration of Party leadership with corporate governance. The Company continuously advanced the organic integration of Party leadership into corporate governance, constantly optimizing the collective decision-making system for “decisions on major issues, appointment and dismissal of important executives, major project investment decisions, and large-scale fund utilization”, and the Party Committee’s pre-research procedures. The Company persistently improved governance structures, strengthened internal controls and supervision mechanisms, promoted distinct responsibilities and coordinated operations among governing bodies with effective checks and balances, and continuously enhanced the standardization and scientific approach of corporate governance, thereby laying a solid institutional foundation for the Company’s high-quality development.

The Company strengthened management of endogenous compliance and risk control. The Company has always adhered to the operational philosophy of “overall compliance based on risk control”, forming a closed-loop compliance and risk management system of “culture – people – system – tool”. In 2024, the Company has fully launched the construction of its “regulatory management system” and “authorization management system”, while continuously advancing the optimization of group-wide consolidated risk management. It further deepened consolidated risk monitoring between parent and subsidiary companies, strengthened risk identification and monitoring in key sectors and core businesses, and enhanced compliance reviews for business access. Through innovative development of a “comprehensive supervision” mechanism and an “extensive accountability” framework, the Company was committed to elevating its holistic capabilities in risk prevention, mitigation and resolution.

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The Company deepened the foundation of financial culture with Chinese characteristics. The Company actively practiced the financial culture with Chinese characteristics featuring “Five Do’s and Five Don’ts” and the securities industry culture of “compliance, integrity, professionalism and prudence”, thereby consolidating its corporate identity of a “people-oriented, striving together” culture and fostering a clean and upright market environment and a positive corporate atmosphere.

Going forward, the Company will continue to deepen the implementation of the new “National Nine Guidelines” and the broader “1+N” policy framework, in line with its vision to become “a first-class modern investment bank providing top-tier financial services to clients, creating premier development platforms for employees, delivering superior investment value to shareholders with domestic competitiveness and international influence”, continuously advance the implementation of corporate value and return enhancement action plan, thereby contributing more robustly to building China into a financial powerhouse and supporting the construction of “Five Centers” in Shanghai.

By order of the Board of Directors

GONG Dexiong

Chairman

Shanghai, PRC

April 29, 2025

As at the date of this announcement, the Board of Directors comprises Mr. GONG Dexiong, Mr. LU Weiming and Mr. LU Dayin as executive Directors; Mr. XIE Weiqing, Mr. YANG Bo, Mr. SHI Lei, Ms. LI Yun, Mr. XU Yongmiao, Mr. REN Zhixiang and Mr. SUN Weidong as non-executive Directors; and Mr. WU Hong, Mr. FENG Xingdong, Mr. LUO Xinyu, Mr. CHAN Hon and Mr. ZHU Kai as independent non-executive Directors.

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