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Summary of Guanghui Energy Co., Ltd.’s First Quarter Report 2022 Author/Source: Date: 2022-04-15 Clicks: 14 In the first quarter, the company’s performance was significantly better than that of similar enterprises, enabling it to start the year on a strong note. In the first quarter of 2022, the company achieved operating revenue of 9,397,586,791.67 yuan, a year-on-year increase of 70.10% ； The net profit attributable to the shareholders of the listed company was 2,213,358,232.51 yuan, representing a year-on-year increase of 175.67%. This figure exceeded the upper limit estimated for the first quarter, which was 2.06 billion yuan, by 153 million yuan, representing a 7.43% overshoot of that estimate ； Among them: in March, the net profit reached 928 million yuan, setting a new record for any single month since the company’s listing ； As of the end of the reporting period, the net cash flow from operating activities amounted to 1,982,559,660.12 yuan, representing a year-on-year increase of 29.24%. (1) Natural gas segment: In terms of domestic gas production, during the first quarter of 2022, Hami New Energy Company continued to adhere to strict safety and environmental protection standards, ensuring the safe and stable operation of its existing facilities. By exploring various ways to improve efficiency, the company was able to see an increase in product prices. Equipment maintenance is being carried out at the Jimunai plant, and every effort is being made to ensure a steady supply of gas from the Zaisan oil and gas field to meet the local demand in Zaisan County, Kazakhstan. During the reporting period, the new energy company produced 192.9905 million cubic meters of LNG domestically (equivalent to 137,800 tons), representing a year-on-year increase of 2.49%. (II) Coal chemical sector 1. Hami New Energy Company: The company continues to focus closely on the management of production operations, ensuring that the plants operate at high capacity; on average, 12 gasification units are in operation daily, with an operational rate of 97.44% ； By actively addressing bottleneck issues, strengthening process management, improving the quality of equipment maintenance, and optimizing production capacity, the total product output, operating revenue, and net profit all reached their best levels for the same period in history during the first quarter. The consumption of water, coal, and electricity also hit new lows since the plant began operations ； The work on \"dual innovation\" continues to be carried out in depth, with key technical improvement projects progressing steadily. Among them, the 670t/h coal-fired boiler project has been designated as a key project in Yiwu County. In the first quarter, the production volume of methanol and coal chemical by-products was 405,100 tons, while the sales volume was 400,000 tons, showing growth even when compared to full-production levels in the same period last year. 2. Clean Refining and Chemicals Company: The company continues to improve its standardized systems as well as its dual-prevention control systems, and strictly fulfills its responsibilities in terms of safety and environmental protection ； Continuously carry out drills for specialized emergency plans and on-site response procedures, strengthen process training, and ensure the long-term stable operation of the facilities ； Strictly control the indicators for raw coal, optimize and adjust the production and consumption metrics, and continuously increase the output and efficiency of high-quality products ； Key technical improvement projects such as the carbonization furnace renovation project, the drying line maintenance, and the 35KV substation expansion project are being carried out continuously. In the first quarter, the production of coal-based oil products amounted to 162,200 tons, while sales reached 183,000 tons, representing a year-on-year increase of 15.87%. 3. Sulfur Chemical Company: The company continues to strengthen the management of production operations, strictly controls process parameters, and effectively implements various maintenance plans to improve the efficiency of plant operations. As a result, the consumption of key raw materials such as sulfur and methanol has decreased significantly, while product output has increased markedly ； Continue to drive technological innovation, and carry out research and development on new products and projects in an orderly manner ； The by-product thioether purification project has entered the trial operation phase; the samples have undergone external testing and trial use, with the purity of the produced dimethyldisulfide remaining above 99.95%. In the first quarter, 3,100 tons of dimethyldisulfide were produced, representing a year-on-year increase of 10.71%. (III) Ongoing projects: Hami Guanghui Environmental Protection Technology Co., Ltd.’s project for the comprehensive utilization of waste gas to produce 400,000 tons of ethylene glycol per year. The company adheres to a risk-prevention mindset, strengthens its safety and environmental management systems, and makes active preparations for relevant inspections such as the environmental impact assessment and safety audits ； Continue to focus on technical research and problem resolution for equipment, and constantly optimize and improve performance assessments ； Currently, qualified ethylene glycol has been produced; efforts are underway to increase the load on a single production line, with the load rate reaching 60%. In accordance with the annual maintenance plan, the system is started up, then shut down for maintenance before being brought back online. Through continuous tuning and defect resolution, it will gradually enter a stable operating phase, laying the foundation for the device to operate stably under high loads over extended periods of time. Developing green energy businesses: (1) Carbon dioxide capture and oil displacement projects. Leveraging its own corporate strengths and taking advantage of Xinjiang’s geographical advantages, the company established a wholly-owned subsidiary named Guanghui Carbon Technology Company. It plans to develop an integrated project for carbon dioxide capture, transportation, and oil displacement with an annual capacity of 3 million tons in the Namao Lake area of Hami. The project will be built in phases, with the first phase focusing on a demonstration project for carbon dioxide capture and utilization with an annual capacity of 100,000 tons. The project has completed the preparation of its feasibility study report, and has obtained the \"Registration and Filing Certificate for Enterprise Investment Projects in Yiwu County\" as well as completed the filing process for the \"Environmental Impact Registration Form for Construction Projects\". Additionally, a \"Framework Agreement on CO2 Product Cooperation\" has been signed with oilfield companies in Xinjiang that have a need for CO2 for oil displacement purposes. (For details, please refer to the company’s announcements numbered 2021-046, 106, and 121.) During the reporting period, construction of this project officially commenced, marking the start of the first CCUS project in the Dongjiang area of our region. (For detailed information, please refer to the company’s announcement No. 2022-014.) (2) Hydrogen energy projects: On January 25, 2022, the company released the \"Strategic Development Plan for the Hydrogen Energy Industry Chain of Guanghui Energy Co., Ltd. (2022–2030)\". This outline covers the period from 2022 to 2030; it serves as a guiding document for the company’s transition toward green new energy in the coming years, and it forms the basis for formulating specific action plans for the company’s hydrogen energy industry chain projects. Guanghui’s hydrogen energy industry chain plan will take full advantage of the fact that hydrogen possesses both energy and storage capabilities. By addressing the need for carbon reduction among energy-consuming enterprises in the Naomaohu area of Yiwu County, it will build on existing chemical methods for hydrogen production (gray hydrogen), while using renewable energy sources such as wind and solar power to generate electricity for water electrolysis in order to produce hydrogen (green hydrogen). This approach aims to foster rapid development in hydrogen production, transportation, storage, utilization, as well as related industries. The application side is gradually implementing three alternatives in the Naomaohu area: replacing the heavy trucks in use there with hydrogen-powered ones, thereby achieving a substitution of energy sources for transportation purposes. Replace the electricity used for production by enterprises in industrial parks with green electricity, thereby achieving a transition to green power. Replace the gray hydrogen used in chemical projects in the Naomaohu area with green hydrogen, thereby achieving a substitution of hydrogen for use in chemical processes. The company achieves its energy conservation and carbon reduction goals through three approaches: replacing energy used in transportation, replacing it with green electricity, and replacing hydrogen used in the chemical industry. In line with the principles of overall planning and phased development, the Guanghui Hydrogen Energy demonstration project will be constructed first in 2022; the development of hydrogen production and refueling infrastructure will be advanced in a scientific manner, so as to gradually foster a hydrogen energy industry cluster with Guanghui’s unique characteristics and promote the efficient growth of clean, low-carbon industries in the Xinjiang region.