[年报]东方精工(002611):2021年年度报告（英文版）

时间：2022年03月22日 22:11:19 中财网

原标题:东方精工:2021年年度报告（英文版）

Guangdong Dongfang Precision Science & Technology Co., Ltd.

图片包含徽标
描述已自动生成
Annual Report 2021

March 2022

Part I Important Notes, Table of Contents and Definitions

The Board of Directors (or the “Board”), the Supervisory Committee as well as the
directors, supervisors and senior management of Guangdong Dongfang Precision Science &
Technology Co., Ltd. (hereinafter referred to as the “Company”) hereby guarantee that the
contents of this Report are true, accurate and complete and free of any misrepresentations,
misleading statements or material omissions, and collectively and individually accept legal
responsibility for such contents.

Tang Zhuolin, the Company’s legal representative, Shao Yongfeng, the Company’s Chief
Financial Officer, and Yao Bin, the Head of the Company’s Accounting Department
(equivalent to Financial Manager) hereby guarantee that the financial statements carried in
this Report are truthful, accurate and complete.

Apart from the following director, other directors of the Company attended in person the
board meeting for the approval of this Report.

The name of director
who did not attend in
person

The post of director who
did not attend in person

Reasons for not
attending the meeting in
person

Consignee’s
name

Peng Xiaowei

Independent Director

Personal Work

He Weifeng

The future development strategies, business plans and other forward-looking statements
mentioned in this Report shall be deemed as uncertain plans instead of promises to investors.
Therefore, investors are reminded to exercise caution when making investment decisions.

For possible risks with respect to the Company, please refer to “(III) Possible Risks and
Countermeasures” in “XI Prospects” of “Part III Management Discussion and Analysis”
herein. And investors are kindly advised to read through the aforesaid contents.

The Company planed not to distribute cash dividends, neither give away bonus shares,
nor capitalize from public reserve.

This Report has been prepared in Chinese and translated into English. Should there be
any discrepancies or misunderstandings between the two versions, the Chinese version shall
prevail.

Table of Contents
Part I Important Notes, Table of Contents and Definitions ........................................................... 2
Part II Corporate Information and Key Financial Information ................................................... 6
Part III Management Discussion and Analysis ............................................................................. 11
Part IV Corporate Governance ...................................................................................................... 75
Part V Environmental and Social Responsibilities ..................................................................... 103
Part VI Significant Events ............................................................................................................. 105
Part VII Share Changes and Shareholder Information ............................................................. 119
Part VIII Preference Shares .......................................................................................................... 129
Part IX Corporate Bonds .............................................................................................................. 130
Part X Corporate Financial Statement ........................................................................................ 131

Definitions

Term

Definition

Dongfang Precision, or the “Company”

Guangdong Dongfang Precision Science & Technology Co., Ltd. and its
consolidated subsidiaries, except where the context otherwise requires

Dongfang Precision (China)

The corrugated box packaging machinery division of Guangdong Dongfang
Precision Science & Technology Co., Ltd.

Fosber Group

Fosber S.p.A.

Fosber Asia

Guangdong Fosber Intelligent Equipment Co., Ltd.

Fosber America

Fosber America, Inc.

Fosber Tianjin

Fosber Machinery (Tianjin) Co., Ltd.

Tiru.a Group

Tiru.a Group Industrial, S.L.

Tiru.a America

Tiru.a America Inc.

QCorr

QuantumCorrugated S.r.l.

Dongfang Precision (Europe)/EDF

EDF Europe S.r.l.

Dongfang Precision (Netherland)

Dong Fang Precision (Netherland) Cooperatief U.A.

Dongfang Precision (HK)

Dong Fang Precision (HK) Limited

Parsun Power

Suzhou Parsun Power Machine Co., Ltd.

Suzhou Jinquan

Suzhou High-Tech Zone Jinquan Business Management Partnership (Limited
Partnership)

Shunyi Investment

Suzhou Shunyi Investment Co., Ltd.

Yinglian Digital

Foshan Yinglian Digital Printing Equipment Co., Ltd.

Jaten Robot

Guangdong Jaten Robot & Automation Co., Ltd.

Hainan Yineng

Hainan Yineng Investment Co., Ltd.

Dongfang Digicom

Dongfang Digicom Technology Co., Ltd.

Dongfang Digicom (Guangdong)

Dongfang Digicom Technology (Guangdong) Co., Ltd.

Corrugated board

Corrugated board is a multi-layer paper-bonding object composed of at least one
sandwich layer of wavy medium (commonly known as "corrugated paper",
"corrugated medium paper", "corrugated paper medium" and "corrugated base
paper") and one layer of cardboard (also known as "liner board").

Corrugated box

Corrugated box is a rigid paper container made of corrugated boards through die
cutting, indenting, nailing or gluing. Corrugated box is one of the most widely
used packaging containers in modern business and trade.

Corrugated box printing and packaging machinery

Corrugated box printing and packaging machinery include corrugated box
printing and packaging line and stand-alone products that integrates pre-feeding,
printing, grooving, die cutting, forming and packaging functions in whole or in
part, which is highly functionally integrated, highly automated and highly
technical, can save the capital and manpower investment, reduce workers'
workload and improve the production efficiency of box manufacturers, and
requires equipment manufacturers to be highly competent in design,
technological innovation, assembly and finishing of parts.

Corrugator lines

Corrugator lines are assembly lines comprising corrugating, gluing,
agglutinating, bundle breaking, dimension board cutting and output processes,
which are used to produce and process corrugated boards.

A corrugator line has two independent process sections as the wet section and
the dry section. The wet section, composed of the base paper stand, auto splicer,
preheat pre-regulator, single-face corrugator, feeding bridge, glue machine and
double facer, is used to make corrugated based paper into three-layer, five-layer
and seven-layer corrugated boards of different corrugated combinations. The dry
section, composed of the rotary shear, slitter indenter, cut-off knife and stacker,
is used to slit, indent, cut off and stack corrugated boards as ordered.

Corrugator lines are key production equipment for corrugated board and box
manufacturers.

Pre-printing and post-printing intelligent automatic
packaging machinery

Pre-printing and post-printing intelligent automatic packaging machinery refers
to equipment that is compatible with the corrugated box printing line or
stand-alone products and can provide functions related to pre-printing and
post-printing processes of corrugated box printing and packaging. It includes the
pre-feeder, stripper conveyor, intelligent stacker and folder gluer.

Outboard motors

Outboard motors are a kind of detachable power units that are mounted on the
stern plate of a boat to drive the boat to sail.

General utility small gasoline motors

General utility small gasoline motors are a kind of thermo-dynamic machinery
of 20kW power or less with a wide range of applicability. It is characterized by
small size, light weight and easy operation, and is usually used as a power
engine for a variety of terminal products. By the structure of engine and
principle of work, general utility small gasoline motors can be divided into
two-stroke general utility small gasoline motors and four-stroke general utility
small gasoline motors.

CSRC

China Securities Regulatory Commission

SZSE, or the “Stock Exchange”

Shenzhen Stock Exchange

RMB yuan, RMB’0,000

Expressed in the Chinese currency of Renminbi, expressed in tens of thousands
of Renminbi

The “Reporting Period” or “Current Period”

The period from 1 January 2021 to 31 December 2021

Part II Corporate Information and Key Financial Information

I Corporate Information

Stock name

Dongfang Precision

Stock code

002611

Stock exchange

Shenzhen Stock Exchange

Company name in Chinese

广东东方精工科技股份有限公司

Abbr.

东方精工

Company name in English (if
any)

Guangdong Dongfang Precision Science & Technology Co., Ltd

Abbr. (if any)

Dongfang Precision

Legal representative

Tang Zhuolin

Registered address

(Office Building, Plant A, Plant B) 2 Qiangshi Road, Shishan Town, Nanhai District, Foshan City,
Guangdong Province, China

Zip code

528225

Office address

25/F, Hisense Southern Building, 1777 Chuangye Road, Nanshan District, Shenzhen City,
Guangdong Province, China

Zip code

518000

Company website

http://www.df-global.cn/

Email address

ir@vmtdf.com

II Contact Information

Board Secretary

Securities Representative

Name

Feng Jia

Zhu Hongyu

Office address

25/F, Hisense Southern Building, 1777
Chuangye Road, Nanshan District,
Shenzhen City, Guangdong Province,
China

25/F, Hisense Southern Building, 1777
Chuangye Road, Nanshan District,
Shenzhen City, Guangdong Province,
China

Tel.

0755-36889712

0755-36889712

Fax

0755-36889822

0755-36889822

Email address

ir@vmtdf.com

ir@vmtdf.com

III Media for Information Disclosure and Place where this Report Is Lodged

Newspapers designated by the Company for

China Securities Journal, Shanghai Securities News, and Securities Times

information disclosure

Website designated by the CSRC for publication of
this Report

http://www.cninfo.com.cn

Place where this Report is lodged

Securities Department of the Company, 25/F, Hisense Southern Building,
1777 Chuangye Road, Nanshan District, Shenzhen City, Guangdong
Province, China

IV Change to Company Registered Information

Organization code

914406002318313119

Change to the principal activities of the
Company since its listing (if any)

Unchanged

Every change of controlling shareholder
since incorporation (if any)

Unchanged

V Other Information

The independent auditor hired by the Company:

Name of independent auditor

Ernst & Young Hua Ming LLP

Office address

18/F, Ernst & Young Tower, 13 Pearl River East Road, Tianhe District, Guangzhou City, China
(the Headquarters: Rooms 01-12, 17/F, Ernst & Young Tower, Oriental Plaza, 1 East Chang An
Avenue, Dongcheng District, Beijing, China)

Accountants writing signatures

Feng Xingzhi and Lin Hongyan

The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:

□ Applicable √ Not applicable

The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:

□ Applicable √ Not applicable

VI Key Financial Information

Indicate whether there is any retrospectively restated datum in the table below.

□ Yes √ No

2021

2020

2021-over-2020
change (%)

2019

Operating revenue (RMB)

3,524,734,783.94

2,916,270,143.13

20.86%

9,973,503,602.19

Net profit attributable to the listed
company’s shareholders (RMB)

467,333,661.79

389,180,624.08

20.08%

1,838,018,805.50

Net profit attributable to the listed
company’s shareholders before
exceptional gains and losses
(RMB)

380,806,233.00

263,426,429.87

44.56%

438,715,870.86

Net cash generated from/used in
operating activities (RMB)

306,659,276.02

550,996,031.75

-44.34%

281,297,787.01

Basic earnings per share
(RMB/share)

0.35

0.26

34.62%

1.01

Diluted earnings per share
(RMB/share)

0.35

0.26

34.62%

1.01

Weighted average return on equity
(%)

11.72%

6.20%

5.52%

36.87%

31 December 2021

31 December 2020

Change of 31
December 2021 over
31 December 2020
(%)

31 December 2019

Total assets (RMB)

6,357,168,835.19

6,323,236,687.05

0.54%

6,273,516,157.31

Equity attributable to the listed
company’s shareholders (RMB)

3,681,970,298.39

4,158,538,499.75

-11.46%

4,337,064,607.87

Indicate whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptional gains and
losses was negative for the last three accounting years, and the latest independent auditor’s report indicated that there was uncertainty
about the Company’s ability to continue as a going concern.

□ Yes √ No

Indicate whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptional gains and
losses was negative.

□ Yes √ No

VII Accounting Data Differences under China’s Accounting Standards for Business
Enterprises (CAS) and International Financial Reporting Standards (IFRS) and Foreign
Accounting Standards

1. Net Profit and Equity under CAS and IFRS

□ Applicable √ Not applicable

No difference for the Reporting Period.

2. Net Profit and Equity under CAS and Foreign Accounting Standards

□ Applicable √ Not applicable

No difference for the Reporting Period.

VIII Key Financial Information by Quarter

Unit: RMB

Q1

Q2

Q3

Q4

Operating revenue

636,432,223.23

764,126,740.95

1,071,169,589.35

1,053,006,230.41

Net profit attributable to the listed company’s
shareholders

64,628,103.90

126,489,416.56

129,754,201.64

146,461,939.69

Net profit attributable to the listed company’s
shareholders before exceptional gains and losses

51,969,185.59

104,053,646.97

119,708,244.58

105,075,155.86

Net cash generated from/used in operating
activities

57,536,376.72

148,487,451.53

-82,307,806.29

182,943,254.06

Indicate whether any of the quarterly financial data in the table above or their summations differs materially from what have been
disclosed in the Company’s quarterly or interim reports.

□ Yes √ No

IX Exceptional Gains and Losses

√ Applicable □ Not applicable

Unit: RMB

Item

2021

2020

2019

Note

Gain or loss on disposal of non-current
assets (inclusive of impairment allowance
write-offs)

-65,995.13

-52,742.69

-95,745,648.97

Government grants through profit or loss
(exclusive of government grants given in the
Company’s ordinary course of business at
fixed quotas or amounts as per the

14,700,007.84

10,749,683.55

22,854,061.39

government’s uniform standards)

Gain equal to the amount by which
investment costs for the Company to acquire
subsidiaries, associates and joint ventures
are lower than the Company’s enjoyable fair
value of identifiable net assets of investees
when making investments

866,489.40

Gain or loss on fair-value changes on
held-for-trading and derivative financial
assets and liabilities & income from disposal
of held-for-trading and derivative financial
assets and liabilities and other debt
investments (exclusive of the effective
portion of hedges that arise in the
Company’s ordinary course of business)

73,435,063.51

96,118,955.74

1,473,114,508.83

Non-operating income and expenses other
than the above

4,779,490.65

33,173,454.66

9,007,522.57

Other gains and losses that meet the
definition of exceptional gain/loss

0.00

1,229,987.66

Less: Income tax effects

6,017,410.70

15,906,631.40

9,881,032.32

Non-controlling interests effects (net
of tax)

303,727.38

425,002.71

46,476.86

Total

86,527,428.79

125,754,194.21

1,399,302,934.64

--

Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss
Items:

□ Applicable √ Not applicable

No such cases for the Reporting Period.

Part III Management Discussion and Analysis

I Industry Overview for the Reporting Period

Dongfang Precision operates in the "corrugated packaging machinery" industry. With the strategic vision of
"intelligent manufacturing", the Company is committed to the R&D, design and production of corrugated packaging
machinery, and provides customers in the industry with production lines, equipment, software and supporting services
necessary for the production and processing of corrugated packaging products.

According to the Guidelines for the Industry Classification of Listed Companies of the CSRC, the Company is
assigned to "Manufacturing Industry - Specialised Equipment Manufacturing Industry". According to the SWS Industry
Classification Version 2021, the Company is assigned to "Machinery Equipment - Specialised Equipment - Printing and
Packaging Machinery".

(I) Industry overview

1. Corrugated packaging machinery is closely related to the downstream corrugated packaging industry

Corrugated packages are very common and widely-used packaging products in food and beverage, clothing, shoes
and hats, home appliance and furniture, pharmaceutical and daily chemicals, e-commerce and express and logistics
industries. The consumption and production of corrugated packages are closely related to the "big consumption"
industry. As consumer goods are in rigid demand in the national economy, higher economic and social development
levels, better quality of life of people and higher public consumption level are the fundamental driving forces for greater
demand for corrugated packages, as well as the fundamental driving forces for higher capacity of corrugated packages
and greater demand for corrugated packaging machinery.

Nowadays, carbon emission reduction and carbon neutrality are the necessary solutions for global climate
problems, and green circular economy is an important way to implement it. Corrugated packages are degradable,
recyclable and more environmentally friendly than plastic packages. Since 2020, when China enforced the "most strict
plastic ban in history", governments at all levels have introduced specific measures to reduce the use of plastic products
in the packaging industry, which is expected to further promote the growth of the domestic market's demand for
corrugated packages.

Compared with mature markets in Europe and the United States, the packaging industry market in China is more
scattered. With the continuous improvement of concentration, continuous aggregation of market shares to medium- and
large-sized enterprises and continuous improvement of the comprehensive strength of leading packaging enterprises, the
demand for middle- and high-end capacity and machinery of the corrugated packaging industry market will soon grow
rapidly. For economic, environmental and policy considerations, primary and secondary plants in the corrugated
packaging industry prefer production lines and machinery with higher production efficiency, stability and reliability and
degree of intelligence.

2. The corrugated packaging machinery industry gradually marches toward digitalization and intelligence

The development of the corrugated packaging machinery industry experienced mechanization, electrification and

automation stages, and is now heading intelligence and digitalization. After years of rises in labor price, land price and
other production factor prices, as well as tightening environmental regulations and labor shortage and the epidemic
shock over the past two years, the printing and packaging industry is facing the change of packaging and printing
demand of terminal customers toward "small size of single batches + multiple batches + customization", and it has
become a consensus that the production capacity is upgrading toward "intelligence, digitalization and automation". In
the post-epidemic era, practitioners in the industry have perceived more deeply the importance of "intelligent plants"
and "industrial interconnection". Leading medium- and large-sized enterprises have taken positive measures to
accelerate digital and intelligent production.

As estimated, there are over 6,000 corrugator lines in the domestic market, and more corrugated box printing and
packaging machinery. In the next five to ten years, these production lines and machinery will be replaced by more
intelligent ones with higher production efficiency, stability and reliability.

(II) The Company’s position in the industry

Medium- and high-end corrugated packaging machinery integrates servo CNC, mechanical-electrical design,
machine finishing and information-based production management, and is highly technological and valuable, falling
under the technology-intensive and capital-intensive industry. Since its establishment, Dongfang Precision has been
targeting middle- and high-end markets. Always pursuing high product quality and excellent customer service, it has
been a reliable partner for large- and medium-sized enterprises in the global corrugated packaging industry over the
years.

It is estimated that the global market size of the corrugated packaging machinery industry is about RMB30 billion
to RMB40 billion. Most of the first-tier manufacturers are from the United States and developed countries in Europe,
including BHS (Germany) and Fosber Group (a wholly-owned subsidiary of Dongfang Precision) engaging in
corrugator lines and Bobst (Switzerland), Gopfert (Germany), Dongfang Precision (China) and Dongfang Precision
(Europe) engaging in corrugated box printing and packaging lines. By the size of revenue, Dongfang Precision has the
overall market share of its corrugated packaging machinery business is about 10% in the global industry market,
ranking first among domestic enterprises of the same type and second in the global market of the same type in
corrugated packaging machinery sector.

II Principal Activities of the Company in the Reporting Period

(I) Overview

The Company's principal businesses in 2021 are as follows:

[Table 1: Principal Businesses of Dongfang Precision]

Principal
business/product

Main functions and application fields

Intelligent corrugated
packaging machinery

. Corrugator lines. It is used for the production of corrugated boards of different specifications, and is the
core and key machinery for corrugated packaging production. They are widely used in large- and
medium-sized enterprises (primary and secondary plants) producing corrugated boards in the industrial
chain.

A corrugator line is composed of two process sections, namely wet-end equipment and dry-end equipment,
independent of each other. The former makes corrugated base paper into three-layer, five-layer and
seven-layer corrugated boards, and the latter longitudinally cuts, presses, transversely cuts and stacks
corrugated boards as required by orders.

. Corrugated box printing and packaging machinery. It is used to produce and process corrugated boards into
corrugated boxes of different specifications as required by customers, and it includes such processes as
corrugated paper feeding, printing, slotting, die cutting and box stitching. Corrugated box printing and
packaging machinery is composed of the corrugated box printing line, the corrugated box printing machine
and the supporting pre-printing and post-printing machines for the printing unit including the paper feeding
unit, slotting and die cutting unit, waste discharging unit, box pasting and stitching unit and the counting
and stacking unit. The printing and packaging machinery is the core of corrugated box production, and is
widely used by all kinds of enterprises (primary plants, secondary plants and tertiary plants) that process
and produce corrugated boxes in the corrugated packaging industry chain.

Corrugated packaging
industry

Intelligent plant
solutions

The Company has built an enterprise- and industry-level intelligent plant platform for customers in the
corrugated packaging industry to help the customers realise a digital and network-based equipment layer,
connect business, cash, and information flows, and promote comprehensive digitalisation of the production and
operation layer, as well as data-based reasonable management and decision-making, in order to promote
intelligent transformation, and enhance enterprise competitiveness in all respects.

Outboard power
products

Outboard motors are a kind of detachable power units that are mounted on the stern plate of a boat to drive the
boat to sail, and can be applied to boats shorter than 24m in inland rivers, lakes and coastal waters. They are
widely used in water recreation, fishing, water traffic, emergency rescue, shore landing and maritime patrol.

(II) Intelligent corrugated packaging machinery business

1. Overview of the intelligent corrugated packaging machinery business

The Company's core business is intelligent corrugated packaging machinery, in which it provides medium-
and large-sized enterprise customers in the global corrugated packaging industry with core and key production
lines and machines making up the production lines necessary for the corrugated packaging production and
processing.

The Company has become a one-stop production line and machinery supplier with leading comprehensive

strength in the industry for corrugated packaging enterprise customers, and provides machinery products for the
production and printing of corrugated boards and paper feeding/slotting/die cutting/waste discharging/pasting and
stitching/counting/stacking of corrugated boxes of corrugator plants and corrugated box plants.

图示描述已自动生成
[Figure 1 Relationship between Corrugated Packaging Production and Industrial Value Chain and the Company's Intelligent Corrugated Packaging Machinery
Products]

Corrugated base paper

Kraft paper

Corrugated boxes

Intelligent high-speed corrugator lines

High-precision corrugator lines

Corrugated box printing and packaging lines (top printing fixed type)

Corrugated box printing and packaging lines (bottom printing open-close type)

Corrugator

2. Main products in intelligent corrugated packaging machinery business

(1) Corrugator lines

The Company's corrugator line business is mainly operated by the wholly-owned subsidiary Fosber Group
(consisting of Fosber Italy, Fosber America, QCorr, Tiru.a Group, etc.) and the holding subsidiary Fosber Asia.

The subsidiary Fosber Group owns S-Line, C-Line and Quantum-Line products, and its main customer
groups are in Europe, North America and Latin America. The subsidiary Fosber Asia owns Pro-Line and E-Line
products, and its main customer groups are in China, Southeast Asia and South Asia.

The Company's middle- and high-end corrugator line products are ahead of those of domestic brands of
enterprises of the same type in overall performance including velocity, width, intelligence, precision and stability,
and run stably and are provided with good technical support, being greatly competitive in the global industry
market.

(2) Corrugated box printing and packaging lines

The Company's corrugated box printing and packaging line business is mainly operated by Dongfang
Precision (China) and Dongfang Precision (Europe).

Dongfang Precision (China) owns integrated corrugated box printing and packaging line products including
Dongfang Star I top printing fixed type FFG inline, Dongfang Star II top printing open-close type FFG inline,
Super Star I bottom printing die cutter stripper vacuum stacker converting line, Super Star II bottom printing
open-close type FFG inline and Super Star III bottom printing open-close type/FFG & stitcher line, covering
different types and specifications as fixed type/open-close type and top printing/bottom printing. Besides,
Dongfang Precision (China) also sells the main assemblies of the integrated line products up to dozens of different
specifications, as well as corrugated box printing and packaging machinery products of different market
positioning. Its integrated line products and single machine products are marketed in over 30 countries and
regions in Europe, America, Asia, Africa, Latin America and Oceania.

Dongfang Precision (Europe) owns high-end integrated corrugated box printing and packaging lines
including FD quickset top printing FFG inline and HGL quickset bottom printing FFG inline and quickset bottom
printing FFG/die cutter stripper line, and sells them in the European market. These lines can feed paper without
crushing and be separately controlled by the servo, is fully automatic, and is capable of high-resolution printing.
Besides, it also sells pre-printing and post-printing machines of different specifications that are applicable to
integrated line products, including paper feeders, waste dischargers, intelligent stackers and folder gluer.

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[Table 2 Main Product Matrix of the Intelligent Corrugated Packaging Machinery Business of Dongfang Precision - Corrugator Lines]

Product type

Brand

Product image

Main characteristics

Corrugator lines

Width: 2.5m to 2.8m;
Velocity: 250 to 470m/min

Pro/Care, Pro/Quality, etc.
Industrial Production
Information System 4.0

Width: 1.8m to 2.5m;

Innovation

Compact body and high
flexibility

More suitable for the production
of light corrugated boards

Width: 2.2m to 2.8m;

Velocity: 180 to 320m/min

The world's top three
professional suppliers of
corrugating rolls and pressure
rolls, with leading processing
and tungsten carbide processing

徽标描述已自动生成
technologies

[Table 3 Main Product Matrix of the Intelligent Corrugated Packaging Machinery Business of Dongfang Precision - Corrugated Box Printing and Packaging
Lines]

Product type

Brand

Product image

Main characteristics

Integrated

Top printing fixed type

Full servo control

Model change without
suspension

2min quick order change

Energy-saving, efficient and
intelligent

Top printing open-close type

Servo motor control

Require only 2 to 3 operators
for one integrated line

Dongfang Star I top printing fixed type FFG inline

Dongfang Star II top printing open-close type FFG inline

Product type

Brand

Product image

Main characteristics

corrugated box
printing and
packaging lines

Efficient, stable, thorough
cleaning

Accurate counting and
automatic stacking

Suitable for special-shaped
boxes, machine-packed boxes
and pre-printed boxes, and
can cut dies by continuous
clicks once after being
powered on, which solves the
industry pain point

Require only 2 to 3 operators
for one integrated line

A professional die cutter FFG
line

Suitable for efficient
production of boxes requiring
slotting or die cutting

Servo motor control

Require only 2 to 3 operators
for one integrated line

Super Star I bottom printing die cutter stripper vacuum stacker converting line

Super Star II bottom printing open-close type FFG inline

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Product type

Brand

Product image

Main characteristics

Integrated
corrugated box
printing and
packaging lines

A well-established bottom
printing FFG & stitcher

All-in-one control and easy
operation

One machine for multiple
purposes supporting order
changes

Fewer processes and lower
labor costs

High-end bottom printing
fixed type line

Driven by spindle servo

Quick order change

Complete pre-printing and
post-printing supporting units

High-end bottom printing
open-close type line

Servo motor control

Require only 2 to 3 operators
for one integrated line

Super Star III bottom printing open-close type/FFG & stitcher line

3. Business model of intelligent corrugated packaging machinery business

A. R&D model

Both the corrugator line business represented by the subsidiaries Fosber Group and Fosber Asia and the
corrugated box printing and packaging machinery business represented by Dongfang Precision (China) and
Dongfang Precision (Europe) are equipped work industry-leading independent design and R&D capabilities.

The Company keeps building a high-level R&D innovation management mechanism, and has an R&D team
composed of industry-leading experts, and secure the leading position of its technology in the industry with
long-term and short-term product R&D plans, market-oriented R&D mechanism and refined R&D talent incentive
policies.

B. Procurement and production model

The Company purchases steel plates, metal components and electric components from external suppliers,
while producing core machining components and corrugating rolls by itself.

It produces most of the machinery products according to orders, and purchases raw materials from suppliers,
compiles annual, quarterly and monthly production plans and reasonably arranges production according to sales
contracts and raw materials on hand only after receiving customers' orders and requiring customers to pay part of
the down payment. In production and operation management, the Company promotes "lean production" to
accurately control BOM costs and manufacturing costs and continuously improve operational efficiency.

In general cases, orders of corrugator lines will be delivered in 4 to 6 months, and orders of corrugated box
printing and packaging machinery will be delivered in 2 to 3 months.

C. Marketing model

In terms of the marketing method, the Company sells products through direct selling and distribution. In
the domestic market, the Company sells products through direct selling. In overseas markets, the subsidiaries
Fosber Group and Fosber Asia sell through direct selling and Dongfang Precision (China) and Dongfang Precision
(Europe) sell through agency distribution in some overseas markets.

Direct selling allows the Company to directly face customers to ensure accurate demand information, prompt
information transmission and information feedback to the Company's R&D and production departments, so that
customers can be timely provided with overall solutions. Due to the complexity of products, the Company has an
outstanding after sales service team that is responsible for on-site installation, commissioning, training and after
sales services, which can provide 7*24h prompt response and support as required by customers.

In terms of the types of products being sold, the Company sells production lines, single machines,
accessories, software and services. Integrated lines and single machines are sold only once, and the amount of
each sale is large. Accessories, software and services are sold multiple times during the lifecycle of machines.

In the industry market, the continuously increasing holding of the Company's machinery boosts ceaseless
sales of the Company's accessories, software and services, and high-quality technical support and services drives
the sales of production lines and machines, which is fully evidenced by the high re-purchase rate of the
Company's middle- and high-end machinery products, so the two support and facilitate each other.

In terms of the settlement method of sales payment, the Company enjoys a high brand awareness and
superior bargain power in the industry, so it collects down payment in advance and payment by stages for the
sales of corrugator lines and corrugated box printing and packaging machinery products. In general cases, 80% to
90% of the sales payment can be collected upon the delivery of products.

(III) Overall solution business for intelligent plants in the corrugated packaging industry

Dongfang Digicom, established in 2020, is the key carrier of the implementation of the Group's
"digitalisation and intellectualisation strategy". Adhering to the purpose and mission of "making the industry more
intelligent and manufacturing simpler" and with the vision of "to become a world-leading supplier of overall
solutions of intelligent plants and industrial Internet services in the packaging industry", it is specialized in
building an enterprise-level and industry-level industrial Internet platform for the corrugated packaging industry
that integrates new information technologies including IoT, cloud computing, big data, 5G and AI.

Aiming at the current situation that most domestic corrugated packaging enterprises are poorly capable of
production resources integration and in labor shortage, have unreasonable workshop layout and have a large room
for production efficiency improvement, the intelligent logistics business team of Dongfang Digicom provides
corrugated packaging enterprises in China with tailor-made intelligent logistics solutions for intelligent plants
based on years of profound experience in global and domestic industry markets and ERP, APS, WMS/WC and
MES technologies and in combination with advanced international technical concepts and the distinctive
characteristics of the carton packaging market in China.

The Company enjoys a whole-industrial-chain layout in the corrugated packaging machinery sector, and the
most complete and rich product base in the industry. With nearly 30 years of profound experience in Know-How
in the corrugated packaging machinery sector, it is the firm foundation and solid support for Dongfang Digicom.
With an unswerving strategic focus, the Company continues resources input and import of talents specialized in

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industrial Internet, and has developed the unique and core technical R&D force of Dongfang Digicom to output
solutions with completely independent intellectual property rights.

Figure 2 Dongfang Digicom's Overall Solutions for Intelligent Plants in the Corrugated Packaging Industry

Intelligent
operation

Intelligent
plant

Intelligent
manufacturing

Data
middle
office

Tool
platform

Supply chain
finance

Online mall

Business
synergy

Business
operation

Second-hand
machinery market

Decision-making
analysis

Abnormality monitoring
and handling

Visualized (Web/app...)

Energy monitoring

Operation analysis

Design and manufacturing integration

Network-based synergetic manufacturing

Quality control

Cost management

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