In the previous annual results announcement, the Group had predicted a complex external situation and expected that its business would inevitably be impacted during the period. A number of negative factors duly emerged during the period. However, the US Federal Reserve’s interest rate hike cycle has gradually peaked. The situation in Russia and Ukraine has stabilised, as have international oil prices and plastic raw material prices. Supply chains in various regions have slowly recovered. We believe that the external environment will become stable over time. With the relaxation of domestic COVID-19 prevention and control measures, domestic production lines are anticipated to resume operations in an orderly manner after the Chinese New Year holiday. Although it will take time for market demand to recover, the central government is likely to issue a series of policies to stimulate demand or support industrial development, thereby accelerating the pace of economic recovery. Therefore, the management is cautiously optimistic about future developments.
In response to the challenges posed by the tough market conditions, the Group has leveraged its experience to actively seize various business opportunities and achieved quite satisfactory results in the past two years despite the difficult environment, striking while the iron was hot. Over the past two years, in addition to maintaining relations with customers such as traditional home appliances and large toy manufacturers, the Group has made efforts to drum up new customers and have secured orders with high value-added potential and higher gross profit margins from new end-user customers, such as those for high-end sanitary products, premium kitchenware, and smart appliances. The Group also noticed that customers have continued to look for alternatives. The Group believe that engineering plastics will replace more types of raw materials in the future. Although market conditions weakened in the second half of 2022, the Group has built solid business ties with its customer base. We believe that when the market picks up, customer orders will recover.
In terms of cost control, the Group continued to implement stringent measures, including reducing administrative expenses, distribution costs and manufacturing costs, and enhancing overall administrative efficiency by sharing internal resources to achieve greater synergies. The Group will also continue to uphold its corporate ethos of focusing on the business, keeping abreast of the market, preparing for and managing risks, including implementing rigorous inventory control and maintaining capital strength to meet the challenges and opportunities that may arise in more testing circumstances.
Having been in this industry for over 50 years, the Group has experienced numerous turbulences in the market but has still forged ahead, hence the management team is confident that it can lead all employees forward and set the Group apart in the market. During the period, the Group has overcome many difficulties and achieved sustainable development, due to the diligence of its professional management team over the years and the dedication of all employees; and therefore, we would like to express our sincere gratitude to all of them. The Group, as always, will adopt a prudent business strategy and, with decades of industry experience and the leadership of a professional management team, will achieve long-term stable development as well as deliver returns to shareholders over the long term.