Review on the Management of Xintian Technology’s 2023 Annual Board of Directors

() The operating comments of the Board of Directors in 2023 are as follows:

　　I. The industry in which the company is located during the reporting period.

(a) the basic situation of the company’s industry

The company is a high-tech enterprise that integrated smart energy solutions from the Internet of Things earlier in China, and is committed to improving the informationization and intelligence level of energy management with the new generation of information technologies such as the Internet of Things, big data, cloud computing, GIS geographic information and digital twins. After years of development, the company has accumulated a number of core technologies and patented products in the field of smart energy management, and built an efficient overall solution of Internet of Things, including data perception, data transmission, data analysis and data application to the overall digital transformation. The company’s products are mainly used in the digital management of energy management departments such as water companies, gas companies, heating companies, water conservancy bureaus and agricultural bureaus.

With the acceleration of urbanization and population growth, especially the rapid development of big data information technology, the comprehensive application of new technologies and Internet thinking is an inevitable choice for energy management departments to improve their public service capabilities and ensure the sustainable development of energy. In recent years, with the rapid development of next-generation information technologies such as Internet of Things, big data and cloud computing, and the continuous overweight of policies related to digital economy, water, electricity, gas and heating, as key components of people’s lives, its intelligent management has become the general trend, bringing greater development opportunities to the industry in which the company is located.

1. The development of digital economy accelerates the digital transformation of energy management.

Digital economy is an important embodiment of the country’s comprehensive strength in the digital age and an important engine for building a modern economic system. Major countries in the world attach great importance to the development of digital economy, and have issued strategic plans and taken various measures to create new competitive advantages. The digital economy is promoting profound changes in production methods, lifestyles and governance methods, and has become a key force in reorganizing global factor resources, reshaping the global economic structure and changing the global competitive landscape. In January, 2022, the State Council issued the "14th Five-Year Plan for Digital Economy Development", which stated that during the 14th Five-Year Plan period, China’s digital economy will turn to a new stage of deepening application, standardized development and universal sharing, and it is necessary to promote the intelligent upgrading of infrastructure in an orderly manner and accelerate the digital transformation of infrastructure in the fields of energy, transportation, water conservancy, logistics and environmental protection. Promote the construction of new urban infrastructure and improve the intelligent level of municipal public facilities and buildings. Vigorously improve the level of agricultural digitalization, promote the comprehensive information services for agriculture, rural areas and farmers, and innovate and develop smart agriculture. Strengthen the in-depth application of technologies such as big data, Internet of Things and artificial intelligence, and improve the digital level of agricultural production and operation. Promote the development of cloud network collaboration and computing network integration, and provide systematic artificial intelligence services for key emerging fields such as government services, smart cities, intelligent manufacturing, autonomous driving, and language intelligence.

In February 2023, the General Office of the State Council issued the Overall Layout Plan for the Construction of Digital China, which clearly pointed out that the construction of digital China is an important engine for promoting Chinese modernization in the digital age and a strong support for building a new competitive advantage of the country. We should focus on promoting high-quality development, coordinating development and safety, strengthening system concepts and bottom-line thinking, strengthening the overall layout, and comprehensively improving the integrity, systematicness and optimization of the construction of digital China in accordance with the strategic path of laying a solid foundation, empowering the overall situation, strengthening capabilities and optimizing the environment. It is also proposed that by 2025, an integrated promotion pattern with horizontal opening, vertical penetration and strong coordination will basically be formed; By 2035, the level of digital development will be in the forefront of the world, and great achievements will be made in the construction of digital China.

Smart water, smart gas, smart heat and smart agriculture are the foundations to promote the construction of smart cities and digital villages in China. With the vigorous development of digital economy and digital China, the digital transformation of energy, water conservancy, municipal infrastructure and agricultural production and operation will be accelerated, which will bring greater development opportunities for related products of the company.

According to Zhiyan Consulting, the market penetration rate of smart water meters in China has increased year after year from 2008 to 2021. In 2008, the market penetration rate of smart water meters was only 8.1%, and in 2021, the market penetration rate of smart water meters has risen to over 40%. With the construction of new urbanization, smart city, sponge city, water-saving city and urban-rural water supply integration, smart water meters will cover more residents and users in the future. According to Zhiyan Consulting’s In-depth Investigation and Investment Prospect Analysis Report of China Smart Water Meter Market from 2020 to 2026, it is estimated that the sales volume of China’s smart water meter market will be 50 million units in 2022 and 70 million units in 2026, and the demand for smart water meters will be broad.

2. The digital construction of water network will accelerate the development of smart water service, smart water meter and smart agriculture water-saving industry.

National water network is an important component of national infrastructure system, and it is an important foundation and support for systematically solving water disasters, water resources, water ecology and water environment problems and ensuring national water security. In order to accelerate the construction of China’s water network, on May 25th, 2023, the Central Committee of the Communist Party of China and the State Council issued the Outline of National Water Network Construction Planning, which proposed that in 2025, China should build a number of national water network backbone projects, and make efforts to fill the shortcomings and weak links such as water resources allocation, urban and rural water supply, flood control and drainage, water ecological protection, and intelligent water network, so that the intelligent level of water network projects has been improved and the national water security guarantee capacity has been significantly enhanced. By 2035, the overall pattern of the national water network will be basically formed, the main skeleton and arteries of the national water network will be gradually completed, the water networks of provinces, cities and counties will be basically improved, and a national water security system will be built to meet the basic realization of socialist modernization. The management and protection mechanism for the benign operation of the national water network project is sound, and the application of digital, networked and intelligent dispatching is basically realized.

The outline also proposes to promote the high-quality development of the national water network and strengthen the digital construction of the water network. Deepen the integration of national water network project and new infrastructure construction, promote the digital and intelligent construction of water network project, build digital twin water network, improve the digital level of water network project, and realize the dynamic real-time information interaction and deep integration between physical water network and digital water network. Promote the connection between water network engineering and digital platforms of related industries to realize information sharing. Improve the intelligent level of water network dispatching management, improve the water network monitoring system, promote the application of new technologies and means such as new generation communication technology, high-resolution remote sensing satellite and artificial intelligence, improve the automation and intelligence level of monitoring equipment, and create a full coverage, high precision, multi-dimensional and safe water network monitoring system. Accelerate the construction of national water network dispatching center, big data center and basin sub-center, and build a national water network dispatching command system. Through intelligent simulation, it supports the simulation analysis of all factors forecast, early warning, rehearsal and plan of water network, provides intelligent decision support, and improves the comprehensive dispatching management level of water network such as flood control, water supply and ecology. Promote the integrated development of national water network and modern agriculture, build a number of modern large-scale irrigation areas in major grain producing areas and areas with suitable water and soil resources conditions, and improve the ability of grain production support; Promote the continuous construction and transformation of large and medium-sized irrigation areas, and improve the efficiency of water transmission and distribution in irrigation areas.

Smart water meter, smart water service and smart water conservancy are the keys to the intelligent construction of water network. With the blessing of relevant policies for the construction of smart water network, there will be greater market demand for smart water meter, smart water service and smart agricultural water-saving products.

3, water supply network leakage control to accelerate the application of smart water and smart water meter.

With the development of urbanization, the construction of water supply network facilities in cities and counties in China has achieved remarkable results, and the popularization rate of public water supply has been continuously improved, but the leakage rate of water supply network in many cities and counties is high. According to the Statistical Yearbook of Urban Construction in 2022 issued by the Ministry of Housing and Urban-Rural Development, in 2022, the length of urban water supply pipelines in China was 1,103,000 kilometers, an increase of 4.06% compared with 2021; The urban water penetration rate further rose to 99.39%. In 2022, the water leakage of public water supply networks in 32 major regions of China was 8.191 billion cubic meters, with an average leakage rate of 12.89%, and the water leakage rate in some regions was as high as 20%. The leakage of water supply network is serious. Leakage of pipe network not only wastes water resources, increases the cost of water supply enterprises, but also affects water quality and brings hidden dangers to drinking water safety.

In order to reduce the leakage of public water supply network and improve the efficiency of water resources utilization, in January 2022, the Ministry of Housing and Urban-Rural Development and the National Development and Reform Commission jointly issued the Notice on Strengthening the Leakage Control of Public Water Supply Network, which stated that the leakage rate of urban public water supply network in China should be controlled within 9% by 2025. In February of the same year, the National Development and Reform Commission and the Ministry of Housing and Urban-Rural Development issued the Notice on Organizing the Pilot Construction of Leakage Control of Public Water Supply Network: it is planned to select 50 pilot cities for leakage control of public water supply network, with the goal that the leakage rate of public water supply network is higher than 12% (in 2020), and the leakage rate is not higher than 8% in 2025, and that of other pilot cities (counties) in 2025.

The Notice also puts forward five tasks: (1) Implementing the reconstruction project of water supply pipe network. Combined with urban renewal, renovation of old residential areas, renovation of secondary water supply facilities and renovation of one household and one meter, the water supply pipe network that has exceeded its service life, is backward in materials or damaged and disrepair will be renovated to ensure the construction quality. (2) Promote the water supply network partition metering project. In the pipeline construction and renovation, equipment installation and district metering system construction, advanced flow metering equipment, valves, water pressure and water quality monitoring equipment and data acquisition and transmission devices are actively promoted to gradually realize the grid and fine management of water supply network. Implement the transformation of "one household, one meter". Improve the municipal, greening, fire protection, sanitation and other water metering systems. (3) Promote the pressure control project of water supply network. In the high pressure area of water supply network, pressure regulating equipment should be configured at the key nodes of water supply network; In the low-pressure area of water supply network, water supply pressure should be guaranteed by forming water supply ring network and secondary pressurization, so as to gradually realize the space-time balance of water supply network pressure. (4) Carry out intelligent construction project of water supply pipe network. Establish an intelligent water supply management platform based on the Internet of Things. Gradually improve the information and intelligent management level of urban water supply network leakage. Popularize the experience of intelligent transformation and operation management of urban water supply network in typical areas. (5) Improve the management system of water supply network. Promote water supply enterprises to share the data of water supply network geographic information system, revenue, table service, dispatching management and leakage control, and strive to achieve unified collection, unified management and unified operation.

The introduction of the above leakage control policies will further promote water companies to reduce costs and increase efficiency by increasing information means, and catalyze the prosperity of smart water, smart water meters, smart electromagnetic flowmeters and other related products, and the market demand will be accelerated. According to the data compiled by Zhiyan Consulting, the smart water market in China will be 10.44 billion yuan in 2020, and it is estimated that the smart water market will be 20.94 billion yuan in 2025. Smart water will usher in an opportunity period of rapid development.

4. Rural revitalization, high-standard farmland construction and other factors promote the development of smart agriculture and smart water saving.

Rural revitalization is a key measure to build a beautiful China. Promoting rural revitalization and accelerating the construction of an agricultural power throughout the country is a strategic plan made by the CPC Central Committee with a view to building a socialist modernization power in an all-round way. A strong country must first strengthen agriculture and strengthen Fang Guoqiang by agriculture. Farmland is the key to agricultural development and the foundation of food security. The construction of high-standard farmland is an important foundation to ensure national food security and an effective means to promote agricultural transformation and upgrading. Accelerating the construction of high-standard farmland is of great significance to improving agricultural production conditions, promoting the scale of agricultural industrialization, promoting the sustained and stable development of agriculture and helping rural revitalization.

On September 6, 2021, the Ministry of Agriculture and Rural Affairs issued the National High-standard Farmland Construction Plan (2021-2030), which proposed to build 1.075 billion mu of high-standard farmland by 2025, and upgrade and upgrade 105 million mu of high-standard farmland. By 2030, 1.2 billion mu of high-standard farmland will be built, and 280 million mu of high-standard farmland will be upgraded to ensure a stable grain production capacity of more than 1.2 trillion Jin. It is mentioned that high-efficiency water-saving irrigation and high-standard farmland construction will be planned and implemented simultaneously, and 110 million mu of new high-efficiency water-saving irrigation construction tasks will be completed during the planning period.

In January, 2023, the Central Committee of the Communist Party of China and the State Council issued the Opinions on Doing a Good Job in Promoting Rural Revitalization in 2023, which mentioned: (1) Strengthening the construction of high-standard farmland. Complete the annual task of new construction, renovation and upgrading of high-standard farmland, focus on filling shortcomings such as soil improvement and farmland irrigation and drainage facilities, and make overall plans to promote efficient water-saving irrigation. Formulate an implementation plan to gradually build all permanent basic farmland into high-standard farmland (2) Strengthen the construction of water conservancy infrastructure. Solidly promote the construction of major water conservancy projects and accelerate the construction of the backbone network of the national water network. Accelerate the construction and modernization of large and medium-sized irrigation areas. Strengthen the construction of farmland water conservancy facilities such as the connection between the field drainage system and the backbone projects of irrigation areas.

In February 2023, the Ministry of Rural Agriculture issued the "Implementation Opinions on Implementing the Central Committee of the Communist Party of China’s the State Council’s Plan for Comprehensively Promoting the Key Work of Rural Revitalization in 2023", which proposed to formulate an implementation plan for gradually building all permanent basic farmland into high-standard farmland, clarify the task layout and timing arrangement by region and type, and increase investment and sustainable construction. Implement the annual task. Ensure the completion of the annual task of building 45 million mu and upgrading 35 million mu, make up for shortcomings such as soil improvement and field irrigation and drainage facilities, and make overall plans to promote the construction of efficient water-saving and water-fertilizer integrated facilities.

On May 30, 2023, the General Office of the Ministry of Water Resources issued the Notice on Promoting the Construction of Digital Twin Rural Water Supply Project, which mentioned that in accordance with the requirements of "demand traction, application first, digital empowerment and capacity improvement", in order to realize the "four pre-plans" function of rural water supply business, taking digital scenes, intelligent simulation and accurate decision-making as the path, a number of digital twin rural water supply projects will be built or upgraded in about three years.

On October 9, 2023, the Ministry of Water Resources issued "Guiding Opinions on Accelerating the High-quality Development of Rural Water Supply". The opinions put forward that it is necessary to fully implement the requirements of rural revitalization strategy, accelerate the integration of urban and rural water supply and the large-scale development of centralized water supply, establish and improve the water quality guarantee system, and maximize the realization of urban and rural water supply with the same source, network, homogeneity, service and supervision. By 2035, the rural water supply project system and the benign operation management and protection mechanism will be further improved, and the rural water supply will be basically modernized. Accelerate the installation of water metering equipment, promote water metering and charging, and let rural people use "safe water" and pay "clear fees". Strengthen digital empowerment, realize the functions of forecasting, early warning, rehearsal and pre-planning, promote the construction of digital twin rural water supply projects, and improve the level of digitalization, networking and intelligence.

In recent years, the state has successively issued a series of industrial policies to encourage the use of emerging technologies such as big data and cloud computing to develop smart agriculture and digital villages, establish and improve an intelligent and networked agricultural and rural production and operation service system, and use digital technology to plug in the wings of "wisdom" for modern agricultural and rural development. With the rapid development of the Internet of Things and the proposal of the national rural revitalization strategy, digital technology has become a key link in building a modern agricultural industrial system and a new kinetic energy to stimulate rural revitalization. With the promotion of many factors, smart agriculture has broad prospects. According to the forward-looking forecast, the market size of smart agriculture will maintain medium-high speed development. Based on the preliminary calculation of the compound annual growth rate of 10%, the market size of smart agriculture in China will be 75.4 billion yuan in 2022, and it is expected to reach 121.4 billion yuan in 2027. The great development of smart agriculture has brought good market opportunities for the company’s smart agriculture water-saving related products.

5. Expanding the scale of natural gas use to promote the healthy development of the smart gas meter industry.

Natural gas is a high-quality, clean and low-carbon energy. With the development of low-carbon economy, energy structure adjustment and policy-driven, natural gas-based clean energy has gradually become the mainstream. According to statistics, the total supply, consumption and population of natural gas in China are on the rise as a whole, and the expansion of natural gas use scale has prompted the gas industry to usher in new development opportunities. As an important part of gas system, the market demand of gas meters is closely related to the total supply of natural gas and the number of gas users. In recent years, with the overall upward trend of natural gas consumption in China, the healthy development of intelligent gas meter industry has been promoted. At the same time, with the frequent occurrence of gas safety accidents in recent years, the safety of the natural gas industry has been promoted to a new height, and the concept of safe gas use has been deeply rooted in the hearts of the people, making intelligence a trend of the times. As an important part of gas operation management, in recent years, under the background of smart city construction and Internet of Things era, the scale of the smart gas meter market is constantly increasing.

According to the statistics of Zhiyan Consulting, from 2015 to 2021, the annual market scale of smart gas meters in China has increased from 4 billion to 8.761 billion yuan, and the growth rate of market scale in 2021 is 13.73% compared with 2020. It is estimated that the market scale of smart gas meters in China will reach 10 billion yuan in 2024, and will increase to 11.923 billion yuan in 2028.

6. The goal of "double carbon" brings medium and long-term strategic opportunities for the company’s wisdom and heat.

In recent years, the domestic heating area, heat supply and heating pipe length have been increasing continuously. According to the statistics of the Ministry of Housing and Urban-Rural Development, the national central heating area was 8.309 billion square meters in 2017, and it has risen to 11.125 billion square meters in 2022. In 2017, the national central heating pipeline reached 276,300 kilometers, and in 2022, the national central heating pipeline reached 493,400 kilometers. With the increase of the central heating area and the length of the central heating pipeline, the traditional heating facilities are inefficient and the energy consumption is too high. Moreover, the heating system technology in most areas is backward, and the heat metering control measures are not adopted. Therefore, the heating enterprises cannot accurately control the whole heating system according to the heating needs of heat users. Excessive heating or insufficient heating occurs from time to time, and the difficulty of heating management increases. The traditional heating management mode has been difficult to ensure the safe and efficient operation of the heating system. New technologies and new technologies are used to replace the traditional heating management mode and promote the wisdom of the heating industry.

In addition, under the background of "double carbon", the heating industry will face the pressure of energy saving and emission reduction. According to statistics in 2020, China’s carbon dioxide emissions are about 10 billion tons, of which the carbon emissions generated by central heating are nearly 1 billion tons. Only the energy consumed by heating in northern towns in China is equivalent to the sum of all energy consumption in the UK. Realizing carbon emission reduction and energy transformation has become one of the important issues that heating enterprise managers need to think about. Under the background of the national "double carbon" strategy and policy, the contradiction between the existing urban heating system and the government’s green and low-carbon development strategy and the growing demand for heating by residents has become increasingly prominent.

As a major carbon emitter, with the increasing heating area and population, energy saving in heating needs to be promoted urgently under the goal of "double carbon", and energy saving and consumption reduction in heating field will play a vital role in low-carbon emission reduction. It has become an inevitable trend to study energy-saving heating technology, realize on-demand heating and precise heating, and change the traditional extensive heating into smart heating. At present, China’s smart heating is still in its infancy, and its penetration rate is low. Under the resonance of the two main lines of "double carbon" and digital China, the future smart heating market has a broad space.

7. The Action Plan for Promoting Large-scale Equipment Renewal and Trade-in of Consumer Goods brings new development opportunities for the company.

On March 13th, 2024, the State Council issued the Action Plan for Promoting Large-scale Equipment Renewal and Trade-in of Consumer Goods, which proposed to speed up the equipment renewal in the fields of construction and municipal infrastructure. Around the construction of new urbanization, combined with the promotion of urban renewal and the transformation of old residential areas, focusing on residential elevators, water supply, heating, gas supply, sewage treatment, urban lifeline projects, etc., we will promote the renewal and transformation in different categories. Promote the upgrading of waterworks and pressurized storage water supply facilities and equipment in various places. We will promote the transformation of heating metering in an orderly manner and continue to promote the renovation of heating facilities and equipment. Continue to implement the renovation of aging pipelines such as gas. Promote the construction of intelligent sensing equipment for urban lifeline projects such as underground pipe networks and manhole covers.

The introduction of the above policies has brought new development opportunities for the company’s smart water, smart water meter, electromagnetic flowmeter, smart heat meter and smart gas meter.

(II) The industry status of the company

The company is one of the first high-tech enterprises in China to integrate smart energy solutions from the Internet of Things, and it is also a comprehensive solution provider of energy management Internet of Things with a complete range of products in the industry. The company has been deeply involved in the field of smart energy informatization for more than 20 years. It is a national-level "specialized and innovative" small giant enterprise, "Top 100 enterprises of China Internet of Things", "National Technological Innovation Demonstration Enterprise", "National Excellent Enterprise with Quality and Credit" and "Leading Enterprise with Innovation in Henan Province". The company owns hundreds of patents and software copyrights, and has participated in the formulation of nearly 50 national industry-related standards, which continues to lead the development of smart energy industry. At present, the company’s products have covered every province and city in China, providing many water groups and gas groups with Internet of Things solutions for energy management, and the company has established a high brand and popularity in the industry.

II. Main businesses of the Company during the reporting period

(a) the company’s main business and product overview

Since its establishment, Xintian Technology has been focusing on the research and development, production, sales and service of intelligent energy integrated solutions and related products of the Internet of Things. The company’s products mainly include Internet of Things smart water meters, smart gas meters, smart heat meters, industrial and commercial smart electromagnetic flowmeters, smart water affairs, smart agriculture water saving, smart water conservancy, smart heat and cloud services. The company has formed a strong R&D strength in the fields of Internet of Things technology, network communication technology, data transmission technology, automatic control technology, cloud computing technology, GIS geographic information technology, digital twinning, etc. During the R&D process, it has obtained many patented technologies and independent intellectual property rights, and has accumulated hundreds of patents and software copyrights. Based on the company’s mastery of many technologies, the company is a comprehensive solution provider of Internet of Things for energy management with a complete range of products in the industry. The company’s products cover energy measurement, data collection, data monitoring, data analysis and cloud platform services. The company’s products are widely used in digital management of energy management departments such as water companies, gas companies, heating companies and property management companies.

1. Internet of Things civil smart meter system

The company’s Internet of Things civil smart meter system mainly includes smart water meters, smart gas meters, smart heat meters and related software systems. The products are mainly applied to the intelligent measurement, monitoring and management of water, gas and warmth of residential users. The products adopt Internet of Things technology, automatic control technology, zero power consumption technology and cloud computing technology, which can realize remote data acquisition, remote data monitoring and remote control of valve opening and closing. In addition, it can also realize the functions of step pricing, abnormal alarm and arrears alarm, which solves the problems of traditional manual door-to-door meter reading, charging and abnormal detection in water companies and gas companies. At the same time, it also avoids the disadvantages caused by human factors, such as missing copying, misreading, less copying, human copying and meter reading disturbing people, and can effectively protect the privacy and safety of residents’ lives, which is in line with people’s pursuit of high-quality life.

2. Internet of Things industrial and commercial smart meter system

The company’s industrial and commercial intelligent meter system based on Internet of Things is developed to improve the economic benefits of water supply enterprises, solve the problem of low accuracy and small range of traditional mechanical water meters, and combine different application scenarios and application characteristics. The products have the advantages of wide range ratio, high accuracy and strong anti-interference ability. It is mainly used in the measurement of factory water, the regional measurement of pipe network leakage control, the trade measurement of industrial and commercial users and the refined management of secondary water supply. The system can remotely monitor the water flow and pressure of large users and pipe networks, and find out the leakage situation of pipe networks and regions through data analysis, which can effectively reduce the loss of water resources, reduce the difference between production and sales, and improve the yield of water supply.

3. Smart Water Affairs

Xintian Science and Technology Smart Water System integrates cloud computing, big data, artificial intelligence, digital twinning, GIS geographic information and Internet of Things technologies around the strategic development goals of water enterprises, which can relate many elements of water supply system such as water plant production, pressure, water quality, flow, energy consumption and secondary water supply to a comprehensive system platform, and realize the intelligent management and control of the whole process from the water source to the user tap.

Through modeling and analysis of water supply data, spatial analysis of pipe network and hydraulic model, the management of water companies will be scientific, standardized, streamlined, refined, electronic, networked and dynamic in a more refined and dynamic way. At the same time, through the whole process of operation data collection and storage, visual display of operation situation, dispatching analysis and decision-making, business process management, abnormal detection and early warning, operation energy efficiency analysis and intelligent report management, the pipe network explosion can be effectively reduced, and the leakage rate can be reduced, thus ensuring the safety of water supply system of water companies.

Xintian Smart Water Management and Control Integration Platform includes "two centers, six plates and 38 subsystems", covering the business fields of water companies such as production, pipe network, marketing, service, operation and decision-making.

The company’s smart water business application systems mainly include smart production (integrated water source management system, integrated water plant management system, production scheduling management system, integrated water quality management system and secondary water supply management system), smart pipe network (pipe network geographic information system, DMA leakage analysis system, inspection and maintenance system, pipe network leakage early warning system, pipe network online monitoring system and large user online monitoring system), smart marketing (business charging system, table management system, Registration management system, centralized copy management system), intelligent operation (equipment asset management system, engineering project management system, field work order management system, OA management system), intelligent service (customer service hotline system, WeChat public service system, Xiaoxin Zhishui APP, enterprise information portal), intelligent decision-making (online hydraulic model system, production scheduling optimization system, perception early warning system, emergency command system, KPI analysis system, leading cockpit)

3.1 A picture.

A visual management system of water supply data from the source to the faucet is constructed, which shows a picture of equipment assets, a picture of real-time equipment, a picture of personnel and vehicles, a picture of business processes, a picture of data scenes and a picture of emergency dispatch, which can view the whole picture of all kinds of water information in the city in real time and ensure the convenience, efficiency and refinement of enterprise production and operation.

3.2 Water Internet of Things Platform

The water Internet of Things platform adopts the mature IOT Internet of Things platform, which supports tens of millions of access and millions of concurrent connections. Covering the whole process from water source, water plant, pumping station, pipe network to users, multi-form three-dimensional monitoring network, 24-hour uninterrupted, continuous monitoring and remote monitoring, to achieve a thorough perception of the operation status of the whole water supply link, to achieve the purpose of timely grasping the online operation status of the pipe network and early warning and forecasting major pipe network accidents. In the event of an incident, it can quickly control the situation of the pipe network, start the corresponding emergency plan, effectively solve the impact of unexpected accidents, ensure the safety of urban water supply, and do a good job of security prevention afterwards.

3.3 Data center

By building a data center platform, a general platform suitable for information sharing between different systems is established, so that customers’ business processes, public data, application software, hardware and various standards can be United and seamless integration can be realized between different application systems, thus providing a foundation for big data analysis.

3.4 Production Scheduling Optimization System

On the basis of ensuring the quality of water supply service, the production scheduling optimization system collects all kinds of water supply data combined with the hydraulic model of pipe network, simulates various water supply conditions, studies and analyzes all aspects of water supply system management and operation, and selects the best scheduling strategy to meet the established objectives and constraints, so as to maximize economic and social benefits.

3.5 pipe network geographic information system

Combining the two-dimensional integration technology, internet technology and big data mining technology, it can meet the application needs of different scenarios of pipe network GIS, such as the input and editing of pipe network spatial data and attribute data; Conduct attribute query, spatial positioning, qualitative and quantitative statistics and analysis of pipelines and various facilities; Display and output all kinds of graphs (including cross-sectional and longitudinal views of pipelines) and statistical analysis reports; It provides a brake-closing scheme for the emergency repair and maintenance of pipe explosion and water leakage accidents, dispatches work orders and notices of water cut by users, thus realizing the information management of the pipe network, providing a strong scientific decision-making basis for water supply planning, design, scheduling, emergency repair and file management of library materials, and laying a good foundation for the optimal scheduling of the pipe network.

3.6 DMA leakage analysis system

Combined with the international water conservancy association and national industry standards, the water balance calculation method is mainly used to calculate the regional leakage water, regional production and sales difference water and water balance table, and analyze the leakage and production and sales difference status of the whole pipe network and all levels of statistical analysis zones from different spatial scales and different time scales, and identify the main influencing factors of leakage and production and sales difference; Comparative analysis of regional leakage and the difference between production and sales, and identification of key leakage areas; At the same time, with the cooperation of DMA partition leakage supervision, active leakage detection, pressure control and pipe network reconstruction technology, the monitoring and management level and ability of leakage and production difference are evaluated, and the leakage supervision of water supply pipe network and differential management of production and sales difference final accounts are realized.

3.7 Business Charge Management System

The business charge system is a comprehensive charge management system that integrates customer management, meter management (mechanical meter, IC card meter, remote transmission meter and large-caliber meter), financial management, meter reading and settlement, report analysis and report management. The system records, compares and analyzes all data from multiple angles and levels to support management decision-making. On the basis of accumulated industry knowledge and business experience for many years, the related business scenarios are sorted out in detail, and a powerful and flexible management system of water business charges is built by drawing lessons from the most advanced marketing design concepts in China.

3.8 Xiaoxin Zhishui APP

"Xiaoxin Zhishui" APP is a digital mobile office platform based on mobile industrial Internet and cloud computing technology, which provides rapid deployment for the water industry. Around the mobile office scene of water enterprises, APP has created a brand-new mobile smart water platform management and control mode. The platform is based on openness and micro-service, and integrates 6 application centers and 200 water applications, which can help users quickly establish an integrated water mobile application ecosystem.

3.9 Online Hydraulic Model System

The hydraulic model system integrates the static information of GIS with the dynamic information such as SCADA and revenue, and combines with the prediction, estimation and distribution of water consumption. According to the hydraulic theory, it carries out hydraulic modeling and simulation calculation for the urban water supply network, tracks the hydraulic operation state of the water supply system online, and calculates and simulates the hydraulic information such as the flow, pressure drop, velocity of all pipelines and the pressure of water plants and user nodes in real time, which provides a basis for scientific dispatching and management of the water supply system, and automatically verifies the model according to the real-time data to realize model analysis and analysis.

4. Smart gas

Xintian Science and Technology Smart Gas integrates cloud computing, big data, GIS geographic information and Internet of Things technology to realize real-time perception and metropolitan centralized management of gas stations, pressure, gas volume, combustible gas, energy consumption and gas supply equipment. With the new generation of information technology as a means, it integrates the advanced management mode of the industry, fully taps the data value, and realizes intelligent control, data resource utilization, accurate management and intelligent decision-making of gas business systems, so as to ensure the safe operation of gas facilities and create "wisdom"

Xintian Smart Gas includes six modules: smart station, smart pipe network, smart marketing, smart operation, smart service and smart decision.

Wisdom station

It is to supervise all aspects of daily operation and maintenance of gas supply station, which can comprehensively monitor the operation of the station, improve the operation and maintenance efficiency and control level, and reduce the cost of personnel control.

Smart pipe network

Intelligent operation and maintenance management and scientific scheduling are carried out for the core asset "pipe network" of gas enterprises, so as to realize early warning of abnormal events, real-time monitoring and early warning of major problems such as leakage, intuitively control the gas supply situation of pipe network, ensure safe gas supply and improve gas supply efficiency.

Smart marketing

Based on the business charging system, all the data of gas users are organically related, analyzed and managed, so as to provide customers with safer and more convenient charging services and make gas supply customers feel the convenience and more efficient services brought by smart gas.

Smart operation

There will be various unexpected situations in gas operation. How to prevent these production problems, deal with unexpected accidents in time, reduce the negative social impact and reduce property losses; Strengthening gas supply safety is the guarantee of safe production for gas enterprises.

Wisdom service

Today, with the accelerated construction of "smart city", the communication relationship between gas enterprises and users is strengthened, the service system is optimized, and the smart service bridges the communication between enterprises and users through various channels, greatly improving the efficiency of "solving problems" for the people.

Intelligent decision-making

It provides decision-making basis for gas supply managers to grasp the overall situation and strategize. Intuitive interface, showing the business data of each link of the enterprise, gaining insight into the operation status of the enterprise, and helping the gas enterprise to transform the operation () into high-value accessible information.

5. Wisdom and heat

Xintian Science and Technology Wisdom Thermal Power integrates cloud computing, big data, GIS geographic information and Internet of Things technologies around the strategic development goal of thermal power enterprises to realize real-time perception and metropolitan centralized management of heating equipment in all links of heating system. Through modeling and analysis of heating data, spatial analysis of pipe network and simulation model of pipe network, it manages the whole production, operation and service process of heating system in a more refined and dynamic way, and makes corresponding processing results to assist thermal power companies in management and management.

Based on the idea of heating integration, the top-level design of "one platform, two centers and six business sectors" is constructed, and the "six ones" development goal of heating intelligent management informatization construction is realized through the construction mode of "platform+application": "one network is fully aware, one map is overview of the overall situation, one platform is collaborative application, one library is shared by many parties, one set of standards leads the construction and one portal is unified service".

The platform includes six modules, including heating network monitoring, network-wide balance, energy-saving control, customer service marketing, metering and centralized reading, and operation management, and 28 subsystems, which provide strong support for the transformation and upgrading of information, digitalization, intelligence and intelligence of thermal enterprises.

Heating network monitoring: unify the monitoring, scheduling, data analysis model and business management of heating production into a comprehensive system platform, and combine the business work of enterprise production scheduling, pipe network emergency repair, business copy, pipe network asset management, etc., so as to realize the collection and storage of production and operation data, visual display of operation situation, scheduling analysis and decision-making, business process management, abnormal monitoring and early warning, operation energy efficiency analysis and report management in the whole process of heating network.

Balance of the whole network: integrating the problems of uneven cold and hot and high complaint rate in the second network of heating enterprises at present, taking the Internet of Things, cloud computing, big data analysis and automatic compensation algorithm as the core, and combining with products such as unit balance valve, household balance valve, room temperature collector and wireless temperature sensor, the collected data are analyzed in the background, and constant temperature (difference) control, constant flow control, quality-flow adjustment (quality parallel adjustment) and so on are adopted.

Energy-saving control: through collecting operation data and energy consumption data including heat source, heat exchange station and user metering equipment, real-time monitoring, data analysis, data diagnosis and processing, and diagnosis and evaluation of operation parameters of energy-consuming equipment, an index assessment system and a cost target system with complete energy efficiency information of heating system are established, and heating energy consumption problems are excavated and analyzed through "hydropower heat" big data, so that managers can see the energy consumption data of all links in the heating pipe network at a glance, grasp the energy consumption data in time, and supervise energy conservation and emission reduction.

Customer service marketing: adopting the integrated concept of platform-based unified management, integrating business modules such as registration, charging, hotline, maintenance and inspection, comprehensively opening up systems such as charging, customer service, finance, production and operation and maintenance, and starting from "collaborative work" and "agile response", innovating and reshaping the traditional management model, business model and service model, promoting business process reengineering and efficient development of operation management.

Metering centralized reading: to build an integrated metering platform for terminal heat users, heating enterprises and metering manufacturers, which is compatible with multi-manufacturer heat meters and concentrator communication protocols, so as to realize heating metering, heating data collection and remote transmission, remote intelligent charge management and control, hydraulic balance adjustment and data information remote transmission, so as to achieve measurability, adjustability, controllability and informationization.

Operation management: Establish the whole process supervision and evaluation system of "source-network-station-household" for heating enterprises, so that enterprises can clearly understand the overall situation of operation, optimize management strategies, accurately formulate a decision-making system supported by data, and help heating enterprises dig the value behind the data and realize value realization in combination with actual business.

6. Smart agriculture saves water

The company’s intelligent agricultural water-saving system is mainly developed to solve the problems of large water consumption, low irrigation efficiency and serious water waste. The system adopts technologies such as mobile Internet, cloud computing and wireless communication to realize intelligent water dispatching, water monitoring, information collection, information transmission and automatic control of equipment in irrigation areas and farmland, and can realize remote equipment control, flow monitoring and quantitative and accurate irrigation according to collected meteorological data, soil moisture, agricultural information and regional characteristics. At the same time, through computers, mobile phones, display screens and other means, managers can control the information of irrigation area water consumption, soil moisture, crop growth, meteorological environment and so on at any time without leaving home, so as to create an intelligent, water-saving, ecological and efficient "E irrigation area", build an information supervision platform for water conservancy and water network and a big data system for agricultural irrigation areas, break the traditional farmland irrigation mode of "feeling+experience" and make farmland irrigation information. Meet the requirements of high-quality and high-standard farmland construction, improve the irrigation utilization rate of water resources, and realize efficient water-saving irrigation.

The system mainly includes: head automation system, intelligent irrigation system for well, intelligent irrigation system for field, agricultural four-situation monitoring system, river gate control monitoring system, open channel measurement and control metering system, valve-controlled water intake metering system, water conservancy four-situation monitoring system, etc.

7. Application management software and cloud platform services

While providing users with data acquisition terminals, the company has customized and developed a management software system. The system can realize the functions of remote data acquisition, remote billing and settlement, valve control, missed measurement analysis, abnormal alarm monitoring, etc. Through multi-dimensional data collection, the data is automatically cleaned, summarized and analyzed by using the data center system, and business data is presented to managers at all levels in the form of charts to meet the daily management needs of energy management departments. In addition, in order to make it easier for water enterprises to connect customers and realize electronic and online business, the company has built a lightweight unified business support platform for smart water based on SAAS cloud platform system, which is based on SAAS cloud deployment, modularization and lightweight design principles, providing a variety of online business processing channels and automatic service terminal equipment channels. Realize cloud services such as "cloud payment", "cloud meter reading", "cloud inspection", "cloud data", "cloud work order" and "cloud installation". At the same time, with the help of intensive management mode, connect customers, employees, online equipment and partners externally, and form enterprise data assets internally to help water supply services benefit the people and facilitate the people.

Third, the core competitiveness analysis

As a large-scale listed company in the smart energy industry of the Internet of Things, the company has been deeply involved in the field of smart energy management for 23 years. The company is a national high-tech enterprise, a national specialized and innovative enterprise, and a top 100 enterprise of the Internet of Things in China. Since its establishment, the company has always adhered to the core competitiveness of "mastering core technologies and constantly innovating", focusing on intelligent management of water, gas and heat, providing public utilities with integrated energy solutions of the Internet of Things from data perception, data collection, data monitoring, data analysis to data management, and fulfilling the mission of "realizing energy conservation and creating a smart life". Through continuous R&D innovation, profound technical accumulation and years of experience in industry application, the company has established a unique core competitive advantage in the industry.

(A) technological research and development advantages

The company attaches great importance to the research and development of products, technologies and processes, and has established a national enterprise technology center and Post-Doctoral Research Center, with a research and development technical team of more than 500 people. Among them, the core technicians have more than 15 years of industry experience, and the R&D personnel have a deep understanding of the core technologies of the Internet of Things such as information technology, network communication technology, cloud computing, big data, artificial intelligence, digital twinning, automatic control technology, and combination of software and hardware. The company has obtained many patented technologies. Since its establishment, the company has accumulated hundreds of patents and software copyrights, and many products and core technologies have been included in major national and local special projects and scientific and technological plans. In addition, the company led or participated in the formulation of nearly 50 standards, which promoted the standardization of the industry. With its technological innovation strength, the company has been rated as a national high-tech enterprise, a national technological innovation demonstration enterprise, a top 100 enterprise in China Internet of Things, a national benchmark enterprise in the electronic industry, etc., and has obtained the laboratory certification recognized by China National Accreditation Committee for Conformity Assessment (CNAS) and the highest level CMMI5 evaluation certification in the software field.

During the reporting period, the company added 49 patented technologies (including 7 invention patents, 27 utility model patents and 15 design patents) and 26 computer software copyrights.

(1) New patents of the company and its subsidiaries

(2) The company and its subsidiaries have added software copyrights.

(2) Product advantages

The company has a complete product and service system, and its products cover intelligent management integrated solutions of energy management departments such as water companies, gas companies and heating companies. At present, the company is only one of the few comprehensive energy management service providers in the industry that can provide consulting planning, software and hardware products, project management and pipeline network health examination. According to the industry characteristics of customers, the company has developed technical solutions suitable for different business application scenarios. The product technologies include NB-IoT communication technology, LORA wireless spread spectrum technology, ultrasonic technology, non-magnetic sensing technology, electromagnetic measurement technology, photoelectric direct reading technology and so on. In addition, combined with all aspects of water management, the company has carefully built an intelligent management and control integration platform covering the water industry, such as intelligent production, intelligent pipe network, intelligent marketing, intelligent operation, intelligent service and intelligent decision-making. Through water supply data modeling analysis, pipe network space analysis, hydraulic model and DMA leakage analysis, the whole process decision-making analysis and real-time monitoring of water supply facilities such as pressure, flow, water quality, secondary water supply and residents are realized. After years of technical precipitation, the comprehensive strength of the company’s products has formed an obvious competitive advantage.

(C) Customer resource advantages

The company is an early enterprise in China to develop smart meters, and has been deeply involved in the field of intelligent energy management for 23 years. The company has established a strong customer service system, which can quickly respond to customer needs according to market feedback information, and product sales strategies and new product promotion can quickly penetrate the market terminals, providing more innovative products and services to end customers in time. At present, the company’s products are sold to more than 30 provinces, municipalities and autonomous regions in China and exported to the United States, India, Nigeria, United Arab Emirates, Turkey, Kenya, Mongolia, Indonesia, Malaysia, Pakistan, Ghana, Ecuador and other countries and regions. With the reliable product quality and sound service network, the company has provided smart energy management solutions for more than 2,000 public utilities. It has served large group customers such as China Water Group, Beijing Water Group, Shanghai Chengtou Group, Tianjin Water Group, Beijing Water Group, Beijing Capital Group, Guangzhou Water Company, Chongqing Water Company, Hangzhou Water Group, Zhengzhou Water Company, China Resources Gas Group, Ganghua Gas Group, () Group, Kunlun Energy, etc. The high-quality and stable customer resources have laid the foundation for the company’s sustainable development.

(D) Brand advantage

Since its establishment, the company has been focusing on the smart energy industry. After long-term operation and accumulation, the company has a strong influence in the industry. With the company’s independent R&D strength, high-quality product quality and perfect service network, the company’s products have been trusted and recognized by a large number of customers, which has made Xintian have a high reputation and popularity in the industry and established a good brand image of the company. The company is an AAA-level integrity management demonstration unit and an AAA-level quality-oriented and trustworthy unit in China instrument industry.

In the selection of famous brand products in China, the company’s series of products such as Internet of Things water meter and Internet of Things gas meter were selected as "Famous Brand Products in China", and the company’s trademark was rated as "Famous Trademark in Henan Province" by Henan Administration for Industry and Commerce. In addition, the company was awarded the titles of "National Leading Brand in Instrument Industry", "National Leading Brand in Metrology Industry" and "National Integrity Brand in Product and Service Quality" by China Quality Inspection Association.

(E) Quality advantages

The company takes "seemingly accidental minor problems, if not solved, it will be a catastrophe" as the guiding ideology of quality control, and always attaches great importance to quality problems. It has set up a quality management center, carried out quality control in strict accordance with ISO9001 quality management system standards, and introduced a refined production information management system (MES) to control product quality throughout its life cycle, so that the whole process of the company’s products from design, raw materials, production to delivery is in a strict control state to ensure products. The quality of the company’s products has been highly praised by customers. With its stable product quality, the company won the honors of AAA Credit Enterprise with Quality Credit Rating, National Leading Enterprise in Instrument Industry, Quality Benchmarking Enterprise, National Leading Enterprise in Science and Technology Innovation with Quality, National Excellent Enterprise in Quality and Service Integrity, National Stable Qualified Product in Quality Inspection, National Product with Quality Credit Guarantee, National Advanced Enterprise in Quality Integrity, and National

(VI) Advantages of management team

The company’s management team has been focusing on the smart energy industry for more than 20 years, with rich management experience and pioneering spirit. In many years of operating experience, the company has formulated strict and effective internal control measures, and has formed a set of standardized management system, ensuring the advantages of the company’s operation and management efficiency. At the same time, the company practices the pragmatic measures of "strengthening the enterprise with talents", pays attention to talent introduction and talent training, and constantly expands and upgrades the management team through internal training and external introduction in the process of business development and technology research and development, which provides an important foundation for the company’s sustained and stable development. An efficient management team has become one of the company’s core competitiveness.

(VII) Advantages of intelligent manufacturing

The company advocates technology-oriented, equipment first, and attaches great importance to the investment in automation and intelligence. At present, it has built a large-scale smart chemical plant in the field of smart energy in China, and adopted a large number of advanced automation equipment to build an intelligent, automated and highly flexible production line that fits the company’s product structure. Through continuous technological transformation and equipment iteration, it has reduced the impact of personnel on production and greatly improved efficiency and quality. The company has put into use intelligent mounting system, intelligent detection system, intelligent packaging system, intelligent logistics turnover system, product quality traceability system, CRM customer relationship management system, IPD product R&D management system, BPM business process management system, etc., to strictly control personnel, production equipment, raw materials, production technology, etc., and realize real-time monitoring of data. The application of digital factory and big data not only greatly improves the company’s production efficiency and management level, but also reduces the labor cost. Moreover, the product quality can be traced effectively through the computer networking system to ensure the continuous production of high-quality products that meet customer requirements under stable and controlled conditions.

Fourth, the main business analysis

1. Overview

In 2023, the company closely followed the construction of smart cities, digital villages, water-saving society and related policies of double-carbon goals, adhered to technology-driven as the core, further consolidated R&D and technological innovation, seized industrial development opportunities, sought business breakthroughs with forward-looking layout, and helped the company achieve high-quality development.

In 2023, the company achieved an operating income of 1,086,382,700 yuan, a decrease of 3.15% over the same period of the previous year; The net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses was 220,887,400 yuan, down 11.79% from the same period of last year.

During the reporting period, the Company focused on the following tasks:

(1) Strengthen core technologies and enhance the market competitiveness of products.

During the reporting period, guided by market demand, the company took advantage of R&D platform, enhanced its independent innovation capability and R&D strength, continued to carry out technical research and project reserve, and focused on research and development of key projects, so as to enhance its development momentum and overall R&D level, and further enhance its core competitiveness.

During the reporting period, the company added 49 patented technologies, including 7 invention patents and 26 computer software copyrights. The acquisition of the above-mentioned independent intellectual property rights strengthened the company’s moat in the field of smart energy management.

(2) Seize market opportunities and enhance brand influence and market coverage.

During the reporting period, the company actively grasped the market opportunities, gained a deep insight into the needs of core customers, took focusing on strategic customers, cultivating high-quality customers and tapping potential customers as marketing strategies, and constantly optimized the customer marketing system. On the one hand, it enhanced the stickiness and cooperation depth with major customers, at the same time, it increased the development of new customers and the business layout in overseas markets, expanded the market share of international business, and improved the international market share and brand influence of the company’s products.

(3) Strengthen the construction of talent echelon to help the company develop healthily in the long run.

During the reporting period, the company adhered to the people-oriented principle and guided by the strategic development of enterprises, continuously deepened organizational changes, optimized the personnel structure, strengthened the construction of talent echelon and the "talent reserve" mechanism, strengthened the introduction and training of outstanding talents with the mechanism of cultivating, attracting, retaining and making good use of talents, and provided a development platform for outstanding talents. At the same time, we will further increase the incentive mechanism, stimulate organizational vitality, retain core talents, and help the company develop healthily in the long run through special incentives and job promotion.

(4) Strengthen scientific management, reduce costs and increase efficiency.

During the reporting period, the company focused on improving quality and efficiency, optimizing management structure, strengthening process management, and deepening and promoting the reform of supply chain, production system and delivery system. Actively promote the construction of lean production system and the digital management of CRM customers, take business objectives as the guide, take empowerment business as the basis, strengthen all staff to reduce costs and increase efficiency, and help the company develop continuously, stably and healthily.

(5) Improve the construction of credit management system and strengthen the risk control of accounts receivable.

During the reporting period, the company strengthened the construction of customers’ credit management system and made a good risk assessment. Conduct corresponding credit analysis and credit rating evaluation for customers, and reasonably control the scale of accounts receivable. Standardize contract signing, attach importance to contract performance, track performance procedures, and strengthen performance management. Strengthen the analysis and monitoring of accounts receivable, maintain effective communication with customers, track the recovery progress of accounts receivable in time, and ensure that the business risks of enterprises are under control.

(6) Improve the level of governance and protect the legitimate rights and interests of investors.

During the reporting period, the company further enhanced its awareness of standardized operation, effectively strengthened the construction of internal control system, and enhanced its management level of compliance operation. In order to further improve the transparency and information disclosure quality of the company, the company established a good communication mechanism with the capital market by regularly reporting performance briefings, Shenzhen Stock Exchange interaction, on-site investor surveys, daily telephone calls and emails, and conveyed the actual production and operation of the company to investors from all directions and angles, effectively safeguarding the legitimate rights and interests of the majority of small and medium-sized investors.

V. Prospect of the Company’s Future Development

(A) the company’s future development strategy

With the construction of smart cities, digital villages, water-saving society and the promotion of the dual-carbon goal in China, with the vigorous development of new generation information technologies such as artificial intelligence, digital twins, big data and cloud computing, it has provided greater development space and market opportunities for smart water services, smart agriculture, smart gas and smart thermal industries.

As the head enterprise of intelligent energy management comprehensive solutions, the company will continue to rely on the advantages of technology and resources accumulated in the industry for many years, take lean management, technological innovation and talent empowerment as development strategies, take market strategic marketing as guidance, take "realizing energy conservation and creating a smart life" as its mission, and further consolidate R&D and technological innovation around its main business. Through internationalization strategy and scientific and technological innovation layout, To provide customers with efficient Internet of Things solutions from data perception, data transmission, data analysis, data application to overall digital intelligence transformation, and strive to become the world leader in smart meters and smart energy industry.

(II) The company’s business plan for 2024.

In 2024, the company will closely focus on the overall development strategy, take technological innovation as the core development driving force, take "high-quality development" as the theme, and take the general tone of "striving for progress in stability and promoting stability through progress" to maintain its strategic strength, continuously promote product technological innovation and improve service quality, fully grasp the new development opportunities of global digital economy, "Belt and Road" construction and digital China construction, broaden the product application track and enhance the company’s new development momentum. The specific business plan is as follows:

1. Continue to strengthen scientific and technological innovation and empower products and services to improve quality and efficiency.

In 2024, with the core concept of "customer first, technology first", the company will focus on the three major areas of products, technology and scientific research, continuously increase R&D investment, enrich product lines and broaden the boundaries of application scenarios. At the same time, the company will actively promote the exploration and research of cutting-edge technologies, especially in the fields of big data analysis, blockchain, artificial intelligence and edge computing, aiming at consolidating and strengthening the company’s core competitive advantage, thus further improving the quality and efficiency of products and services, and injecting a steady stream of power into the company’s high-quality development.

2. Further promote the industrial layout and explore new market opportunities.

In product promotion, the company will closely follow the industry trends, gain insight into customer needs, improve marketing strategies, further promote the market layout of smart water, smart agriculture, smart heat, smart gas and other products, innovate the competition mechanism, focus on strategic customers, tap incremental customers, and do a good job in marketing and promotion of high-end and high-priced products. Enrich marketable products in overseas markets, tap new market opportunities, broaden the coverage of the company’s products in the global market and enhance the company’s competitiveness in the international market.

3. Deepen the construction of digital factories and improve operational efficiency in all directions.

In 2024, the company will accelerate the construction of the new park, deepen the digital construction of the whole module of the new park, and optimize the intelligent systems such as R&D management system, production management system, logistics turnover system, warehouse management system, quality traceability management system and data management center platform around the whole manufacturing process of product development, production, quality control, warehousing and logistics, so as to improve the digital management efficiency of the whole manufacturing process such as production planning, production technology, site management and quality control management. At the same time, actively promote the optimization and upgrading of management systems such as marketing, office and finance, and comprehensively drive the company’s sustainable development and market competitiveness with data.

4. Optimize supply chain management and strengthen cost reduction and efficiency improvement.

In 2024, the company will continue to optimize supply chain management, promote procurement channels and procurement cost control, and enhance its ability to actively negotiate prices and quality control for core components and main raw materials. In addition, by optimizing the production process, upgrading the global intelligence and digitalization level, strengthening cost reduction and efficiency improvement, the company’s operating efficiency is improved.

5, improve the system process, strengthen personnel training.

The company will constantly improve the internal system, strengthen internal control management, optimize organization and process design, and enhance the company’s lean management ability; In addition, the company will increase the innovative mechanism of talent training, talent introduction and talent incentive, cultivate and reserve outstanding talents, and through more effective incentive measures, let the officers have a platform and those who succeed will be rewarded.

6. Improve corporate governance and enhance shareholder returns.

The company attaches great importance to the construction of governance mechanism, continuously improves the internal control standard system, strengthens compliance empowerment, continuously improves corporate governance ability and risk prevention awareness, and promotes the stable and healthy development of the company. At the same time, the company adheres to the concept of sustainable development, actively returns the society and investors, and realizes a virtuous circle of the company’s development.

(3) Possible risks and countermeasures

1. The risk that the fundraising project cannot realize the expected income.

In September, 2016, the company completed the non-public offering of shares. This non-public offering project company conducted a careful feasibility study and demonstration, but it does not rule out that due to the influence of national industry development policies, project organization and implementation, cost management, intensified market competition and other factors, the profit-making time and profit level of the project are different from the results of analysis and demonstration, and there is a risk that the return on investment of the raised funds will be lower than expected, which will affect the profitability and growth of the company.

Countermeasures: The company will keep abreast of the relevant national industry development policies, continue to carry out technological innovation, strengthen the construction of human resources system, improve the talent incentive and restraint mechanism, and strengthen the company’s core competitiveness. In addition, the company will also strengthen strategic cooperation with upstream and downstream customers by integrating high-quality resources in the industry, constantly explore new market areas, and consolidate the company’s leading position in the industry as a whole.

2. Risk of impairment of goodwill

In the process of industrial integration, the company carefully selected the target enterprises with industrial synergy to cooperate, and made a reasonable prediction on the future development and profit forecast of the transaction target. However, due to the influence of various factors such as industry development, management and intensified market competition, if the acquisition target fails to meet expectations in the later period, the company will have the risk of goodwill impairment.

Countermeasures: The company will pay close attention to the risks encountered by the target enterprises in the development process, strengthen business coordination and financial control, and reduce the risk of goodwill impairment.

3. Risk of falling gross profit margin

Due to the promotion of national industrial policies and the application of new technologies, the market demand for smart watches is growing strongly. Smart watch products are not only expensive, but also have a much higher gross profit margin than ordinary mechanical watches. The high gross profit margin of smart watch products will attract more manufacturers to enter the industry in the future, and the market competition will be more intense in the future. Although the company has strong market competitiveness in terms of technology, brand, quality, marketing and cost control, if the company fails to continuously improve its technical level, enhance its innovation ability, strengthen cost control and improve the bargaining power of its products in the later period, it will lead to the risk that the gross profit margin of its products may decline.

Countermeasures: on the one hand, the company should continuously improve the technical level of product research and development, improve the stability and reliability of product quality, and at the same time, the company should develop new products with higher cost performance to improve the company’s product chain to meet the needs of different users and improve the company’s profitability; On the other hand, it is necessary to further strengthen the brand building of the company’s products, enhance the marketing ability of the company, enhance the bargaining power of the company’s products, and at the same time strengthen the cost control of the company’s products, reduce the unit cost of the company’s products, and improve the gross profit margin of the company’s products.

4, raw material price fluctuation risk

The company’s main raw materials are integrated circuits, electronic devices, metal watchcases, etc., and the material cost accounts for a high proportion of the main business cost. If the price of the company’s main raw materials rises sharply in the future, or the price of new raw materials rises sharply compared with the price of existing raw materials due to technological innovation of products, and the company fails to continue to take effective measures to deal with it, the company will face the risk of falling gross profit margin due to rising raw material costs.

Countermeasures: On the premise of ensuring product quality, the company will increase R&D investment and scientific and technological innovation, improve the added value of products, pay close attention to the price trend of major raw materials, adjust raw material procurement plans in time, broaden procurement channels, enhance bargaining power and reduce raw material procurement costs.

5. Investment risks and control measures

In order to improve the efficiency of the use of the company’s own funds and increase the company’s investment income, under the condition of ensuring the company’s daily production and operation capital demand, the company uses some idle self-owned funds to make moderate securities investment. Because the financial market is greatly affected by the macro economy, there are many uncertainties in the investment, and its actual income is unpredictable. At the same time, it does not rule out that the investment is affected by market fluctuations.

Countermeasures: The company has formulated the corresponding investment management system, and made detailed provisions on the principles, scope, authority and audit of investment. At the same time, the company will strengthen market analysis and research, and intervene in a timely and appropriate manner according to the economic situation and changes in the financial market to strictly control investment risks.

6, technology development and product development risks

The field of smart energy informatization has the characteristics of rapid overall development and rapid technology innovation. The products need to integrate technologies such as Internet, cloud computing, big data mining and automatic control, and at the same time meet the increasing differentiated needs of customers, which puts forward higher technical development requirements for the company. If the company can’t accurately judge the development trend of technology and products, or can’t effectively invest enough in scientific research and development, can’t continuously improve its technical level and innovation ability, and actively adapt to new changes in the market, resulting in problems in the development of new technologies and new products, it may affect the company’s profitability.

Countermeasures: The company will persist in independent innovation, continuously optimize the R&D process, further improve the R&D organization and R&D team building, actively introduce high-end and compound talents and strengthen internal talent training, continuously optimize the R&D and market information feedback mechanism, improve the ability of independent innovation and enhance the company’s core competitiveness.

7. Managing risks

In recent years, the company’s business scale and business scope are constantly expanding, and the company’s organizational structure and management system are becoming increasingly complex, which puts forward higher requirements for the management level and the ability to control business risks of the company’s management. If the management level of the company can’t be improved in time, the organizational model and management system can’t be adjusted and improved in time with the expansion of the company’s scale, and all kinds of professionals can’t be in place and competent in time, there will be management risks arising from the rapid growth of the company.

Countermeasures: The company will strengthen the mechanism of selecting, appointing, training, learning and improving managers, enhance their comprehensive management ability, further improve the scientific decision-making mechanism, optimize business processes and promote the company to achieve higher quality development.