HUATAI SECURITIES

Huatai Securities Co., Ltd.

March 30, 2023

RESULTS ANNOUNCEMENT FOR

THE YEAR ENDED DECEMBER 31, 2022

The Board

hereby announces the audited results of

December 31, 2022. This announcement

the Company and its subsidiaries for the

year ended

contains the full text of the annual results

announcement of the Company for 2022.

PUBLISHMENT OF THE ANNUAL RESULTS ANNOUNCEMENT AND THE ANNUAL

REPORT

This results announcement of the Company will be available on the website of London Stock Exchange

(www.londonstockexchange.com), the website of National Storage Mechanism (data.fca.org.uk/#/nsm/

nationalstoragemechanism), and the website of the Company (www.htsc.com.cn), respectively.

The annual report of the Company for 2022 will be available on the website of London Stock Exchange

(www.londonstockexchange.com), the website of the National Storage Mechanism (data.fca.org.uk/#/nsm

/nationalstoragemechanism) and the website of the Company in due course on or before April 30, 2023.

DEFINITIONS

Unless the context otherwise requires, capitalized terms used in this announcement shall have the

same meanings as those defined in the section headed “Definitions” in this announcement.

(GDR under the symbol "HTSC")

CONTENTS

Important Notice

.......................................................

Definitions

...........................................................

CEO’s Letter

..........................................................

Company Profile and Key Financial Indicators

................................

Management Discussion and Analysis and Report of the Board

...................

Corporate Governance

...................................................

125

Environmental and Social Responsibilities

...................................

231

Major Events

..........................................................

248

Changes in Shares and Shareholders

........................................

269

Bonds

...............................................................

284

Index of Documents for Inspection

.........................................

298

Information Disclosure of Securities Companies

...............................

298

Appendix I

Main Business Qualifications

...................................

299

Appendix II

List of Branch Offices and Securities Branches

....................

304

Appendix III

Information Disclosures Index

................................

338

Financial Report

IMPORTANT NOTICE

The Board of Directors, the Supervisory Committee, Directors, Supervisors and senior

management of the Company undertake that the information in this annual report is true,

accurate and complete and contains no false record, misleading statement or material

omission, and assume individual and joint legal liabilities to the information in this report.

This report was considered and approved at the second meeting of the sixth session of the

Board of the Company.

Director absent from the meeting

Position of

absent Director

Name of

absent Director

Reasons for

absence

Name of proxy

Director

Ke Xiang

Business engagement

Chen Zhongyang

None of the Directors and Supervisors had objections towards this report.

The annual financial report prepared in accordance with the CASBE and the IFRS was

audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP and Deloitte Touche

Tohmatsu, respectively, which issued a standard unqualified audit report to the Company.

Zhang Wei, the person in charge of the Company, Jiao Xiaoning, the person in charge of

accounting, and Fei Lei, the officer in charge of the accounting office of the Company (head

of accounting department), hereby warrant and guarantee that the financial report contained

in the annual report is true, accurate and complete.

The profit distribution proposal or the reserve capitalization proposal for the Reporting

Period have been considered and approved by the Board.

According to the 2022 annual financial statements of the Company, the net profit of the Parent

Company for 2022 reached RMB12,209,871,037.74. According to relevant provisions of the

Company Law, Securities Law, Financial Rules for Financial Enterprises (

《金融企業財務規則》

)

and the Articles of Association, the Company had appropriated 10% statutory surplus reserve, 10%

general risk reserve and 10% trading risk reserve of RMB3,662,961,311.32 in total, after which the

profit available for distribution for the year was RMB8,546,909,726.42. Taking into account the

balance of undistributed profit in previous years, the accumulated profit available for distribution

to investors as at the end of 2022 was RMB24,000,453,156.70.

According to relevant requirements of the CSRC, the gains arising from the fair value changes in

distributable profit of securities companies shall not be used for cash distribution to shareholders.

As at the end of December 2022, the accumulated fair value changes in distributable profit

of the Parent Company were RMB1,750,948,700.27, after deduction of which as required,

the profit of the Parent Company available for distribution to investors in cash amounted to

RMB22,249,504,456.43.

After comprehensive consideration of factors such as the interests of shareholders and the

development of the Company, the 2022 profit distribution proposal of the Company is as follows:

The Company will distribute cash dividend of RMB4.50 (tax inclusive) per 10 shares based

on the Company’s existing total share capital of 9,075,589,027 shares after deducting

45,278,495 shares deposited in the special account for securities repurchase and 925,692 A

Shares to be repurchased and cancelled (i.e. on the basis of 9,029,384,840 shares), with the

total cash dividend of RMB4,063,223,178.00 (tax inclusive), representing 36.76% of net

profit attributable to the shareholders of the Parent Company on a consolidated basis for

2022.

If the total share capital of the Company changes as a result of repurchase and cancellation

of shares granted in the equity incentive during the period from the disclosure date of this

proposal to the record date of the implementation of the dividend distribution, the Company

intends to maintain the distribution ratio per share unchanged and adjust the total distribution

accordingly. The remaining profits available for distribution to investors will be carried

forward to the next year.

Cash dividend is denominated and declared in RMB and paid to holders of A Shares

(including the depositary of GDRs) and the investors of Southbound Trading in RMB and

to holders of H Shares (excluding the investors of Southbound Trading) in HKD. The actual

distribution amount in HKD shall be calculated at the rate of average basic exchange rate

of RMB against HKD issued by the PBOC five business days prior to the date of the 2022

Annual General Meeting of the Company.

Forward-looking statements including future plans and development strategies involved in

this annual report do not constitute the Company’s substantive commitments to investors.

The investors are advised to pay attention to investment risks.

There is no non-operating misappropriation of funds of the Company by any controlling

shareholders and their related parties during the Reporting Period.

The Company has not provided any external guarantees in violation of the stipulated

decision-making procedures during the Reporting Period.

During the Reporting Period, there exists no such circumstance that more than half of the

Directors could not guarantee the authenticity, accuracy and integrity of the annual report

disclosed by the Company.

The report is prepared by the Company in both Chinese and English. In the event of any

inconsistency, the Chinese version shall prevail.

Warning on Major Risks

General economic and political conditions such as macroeconomy and monetary policies, laws and

regulations influencing financial and securities industries, rising and falling trends in commercial

and financial industries, inflation, exchange rate fluctuations, availability of long and short-term

market capital sources, financing costs and interest rate levels and fluctuations may have an impact

on the Company’s business. Besides, like other companies in the securities industry, inherent

risks in the securities market, such as market volatility and trading volume, may also affect the

Company’s business. The Company cannot guarantee the sustainability of favorable politics,

economy and market conditions.

Main risks in business operation faced by the Company include: policy risks from national

macro-control measures, changes in laws, regulations, relevant regulatory policies and transaction

rules in securities industry, which will adversely influence the business of securities companies;

compliance risks from business management or professional activities violating laws, regulations

or codes, which cause the Company being punished by laws, being taken regulatory measures,

suffering from property or reputation loss; legal risks from failure to abide by provisions and

requirements in laws and regulations, which make the Company face litigations, compensation, and

fines and suffer from loss; market risks from fluctuations in market prices (interest rates, exchange

rates, stock prices and commodity prices, etc.), which make the Company suffer from loss in

assets; credit risks from default of product issuers, bond issuers or counterparties (customers),

which make the Company suffer from loss in assets; liquidity risks from inability to obtain

sufficient funds at reasonable cost in time to pay matured debts, fulfil other payment obligations

and satisfy the capital needs for normal business; information and technology risks such as various

technical failure or data leakage of the Company’s information system from internal and external

reasons, which consequently cause loss by incapacitating the information system from guaranteeing

the stability, high-efficiency and safety of transactions and business management in business

realization, response speed, processing capacity, data encryption and so on; operational risks

from incomplete or problematic internal procedures, personnel or systems or external incidents,

which cause loss; reputation risks from business operation, management and other behaviors or

external incidents which lead to negative judgement on the Company from relevant media; money

laundering risk from the utilization of the Company’s products or services by criminals to engage

in money laundering activities which lead to negative effects on the Company’s legal, reputation,

compliance, operation and other aspects. Besides, with the advancement of the Company’s

internationalization strategy, the Company’s business will enter the United States, the United

Kingdom, Hong Kong and other countries and regions, and the Company will face more complex

market environment and regulatory requirements.

DEFINITIONS

In this report, unless the context otherwise requires, the following terms and expressions have the

meanings set forth below:

DEFINITIONS OF CAPITALIZED TERMS AND EXPRESSIONS

A Share(s)

domestic share(s) in the share capital of the Company with

nominal value of RMB1.00 each, which are listed on the Shanghai

Stock Exchange and traded in RMB

AoP

Assets on Platform

APP

Application

Articles of Association

the articles of association of the Company, as amended,

supplemented or otherwise modified from time to time

AssetMark

AssetMark Financial Holdings, Inc., a wholly-owned subsidiary

of Huatai International

Bank of Jiangsu

Bank of Jiangsu Co., Ltd. (

江蘇銀行股份有限公司

)

Beijing Stock Exchange

the Beijing Stock Exchange (

北京證券交易所

)

Board or Board of Directors

the board of Directors of the Company

CAGR

compound annual growth rate

CASBE

the China Accounting Standards for Business Enterprises (

中國企

業會計準則

)

China or the PRC

the People’s Republic of China

China Southern Asset

Management

China Southern Asset Management Co., Ltd. (

南方基金管理股份

有限公司

)

Communications Holding

Jiangsu Communications Holding Co., Ltd. (

江蘇交通控股有限

公司

)

Company Law

Company Law of the People’s Republic of China (

《中華人民共和

國公司法》

), as amended from time to time

CSI 300 Index

an index consisting of 300 index sample stocks which are most

representative, selected by the Shanghai Stock Exchange and the

Shenzhen Stock Exchange jointly with the scale and liquidity as

the basic standards

CSRC

the China Securities Regulatory Commission (

中國證券監督管理

委員會

)

Director(s)

director(s) of the Company

FICC

fixed income, currency and commodity

FINTECH

financial technology

Futures IB Business

a business activity in which securities firms, as commissioned

by futures companies, introduce clients to participate in futures

transactions of futures companies and provide other related

services

GDR

global depository receipt

Govtor Capital

Govtor Capital Group Co., Ltd. (

江蘇高科技投資集團有限公司

)

Group, Our Group, we or us

the Company and its subsidiaries, and their respective

predecessors

Guoxin Group

Jiangsu Guoxin Investment Group Limited (

江蘇省國信集團有

限公司

, formerly known as Jiangsu Guoxin Asset Management

Group Limited (

江蘇省國信資產管理集團有限公司

))

H Share(s)

foreign share(s) in the share capital of the Company with nominal

value of RMB1.00 each, which are listed on the Hong Kong Stock

Exchange and traded in HK dollars

HKEX

Hong Kong Exchanges and Clearing Limited (

香港交易及結算所

有限公司

)

HK$, HKD or HK dollars

the lawful currency of Hong Kong

Hong Kong

the Hong Kong Special Administrative Region of the PRC

Hong Kong Stock Exchange

The Stock Exchange of Hong Kong Limited (

香港聯合交易所有

限公司

)

HTSC, Huatai Securities,

our Company, Company or

Parent Company

a joint stock company incorporated in the PRC with limited

liability under the corporate name

華泰證券股份有限公司

(Huatai

Securities Co., Ltd.), converted from our predecessor

華泰證券

有限責任公司

(Huatai Securities Limited Liability Company)

on December 7, 2007, carrying on business in Hong Kong as

“HTSC”, and was registered as a registered non-Hong Kong

company under Part 16 of the Companies Ordinance under the

Chinese approved name of “

華泰六八八六股份有限公司

” and

English name of “Huatai Securities Co., Ltd.”; the H Shares of

which have been listed on the main board of Hong Kong Stock

Exchange since June 1, 2015 (Stock Code: 6886); the A Shares of

which have been listed on the SSE since February 26, 2010 (Stock

Code: 601688); and the global depository receipts of which have

been listed on the London Stock Exchange plc since June 2019

(Symbol: HTSC), unless the context otherwise requires, including

its predecessor

Huatai Asset Management

Huatai Securities (Shanghai) Asset Management Co., Ltd. (

華泰

證券

(

上海

)

資產管理有限公司

), a wholly-owned subsidiary of the

Company

Huatai Financial Holdings

(Hong Kong)

Huatai Financial Holdings (Hong Kong) Limited (

華泰金融

控股

(

香港

)

有限公司

), a wholly-owned subsidiary of Huatai

International

Huatai Foundation

Jiangsu Huatai Foundation (

江蘇省華泰公益基金會

)

Huatai Futures

Huatai Futures Co., Ltd. (

華泰期貨有限公司

), a wholly-owned

subsidiary of the Company

Huatai Innovative Investment

Huatai Innovative Investment Co., Ltd. (

華泰創新投資有限公司

a wholly-owned subsidiary of the Company

Huatai International

Huatai International Financial Holdings Company Limited (

華

泰國際金融控股有限公司

), a wholly-owned subsidiary of the

Company

Huatai-PineBridge

Huatai-PineBridge Fund Management Co., Ltd. (

華泰柏瑞基金管

理有限公司

)

Huatai Purple Gold Investment

Huatai Purple Gold Investment Co., Ltd. (

華泰紫金投資有限責任

公司

), a wholly-owned subsidiary of the Company

Huatai Securities (USA)

Huatai Securities (USA), Inc. (

華泰證券

(

美國

)

有限公司

), a

wholly-owned subsidiary of Huatai International

Huatai United Securities

Huatai United Securities Co., Ltd. (

華泰聯合證券有限責任公司

a holding subsidiary of the Company

IFRS

the International Financial Reporting Standards

IPO

the initial public offering

information technology

Jiangsu Equity Exchange

Jiangsu Equity Exchange Co., Ltd. (

江蘇股權交易中心有限責任

公司

), a holding subsidiary of the Company

Jiangsu SASAC

State-owned Assets Supervision and Administration Commission

of Jiangsu Provincial Government (

江蘇省政府國有資產監督管

理委員會

)

Jiangsu Securities

Regulatory Bureau

Jiangsu Securities Regulatory Bureau of the CSRC (

中國證監會

江蘇監管局

)

Listing Rules or Hong Kong

Listing Rules

the Rules Governing the Listing of Securities on The Stock

Exchange of Hong Kong Limited (as amended, supplemented or

otherwise modified from time to time)

London Stock Exchange or

LSE

the London Stock Exchange plc (

倫敦證券交易所

)

Model Code

the Model Code for Securities Transactions by Directors of Listed

Issuers as set out in Appendix 10 to the Hong Kong Listing Rules

MSCI

Morgan Stanley Capital International Index

NEEQ

the National Equities Exchange and Quotations for small and

medium-sized enterprises

NMAU

the number of monthly active users

OTC

over-the-counter

PBOC

the People’s Bank of China

QDII

qualified domestic institutional investor

QFII

qualified foreign institutional investor

Reporting Period

the year ended December 31, 2022

Securities Law

Securities Law of the People’s Republic of China (

《中華人民共

和國證券法》

), as amended from time to time

Securities and Futures

Ordinance or SFO

the Securities and Futures Ordinance (Chapter 571 of the Laws

of Hong Kong), as amended, supplemented or otherwise modified

from time to time

SFC

the Securities and Futures Commission of Hong Kong (

香港證券

及期貨事務監察委員會

)

Shanghai Brilliance

Shanghai Brilliance Credit Rating & Investors Service Co., Ltd.

(

上海新世紀資信評估投資服務有限公司

)

Shanghai Clearing House

the Interbank Market Clearing House Co., Ltd. (

銀行間市場清算

所股份有限公司

)

Shanghai Stock Exchange or

SSE

the Shanghai Stock Exchange (

上海證券交易所

)

Shenzhen Stock Exchange

the Shenzhen Stock Exchange (

深圳證券交易所

)

Singapore Subsidiary

Huatai Securities (Singapore) Pte. Limited, a wholly-owned

subsidiary of Huatai International

SSE 50 Index

an index consisting of 50 index sample stocks with large scale

and good liquidity, which are most representative in the securities

market of Shanghai selected by the Shanghai Stock Exchange

SSF

the National Council for Social Security Fund of the PRC (

全國

社會保障基金理事會

)

STAR Market

science and technology innovation board of SSE

Supervisor(s)

supervisor(s) of the Company

Supervisory Committee

the supervisory committee of the Company

TAMP

Turn-key Asset Management Platform, a technological platform

providing services such as investment products and strategies,

assets portfolio management, customer relationship management

and asset custody, as well as corporate operation

USD or US dollar

the lawful currency of the United States of America

VAR

value at risk

Wind Information

Wind Information Co., Ltd. (

萬得信息技術股份有限公司

), a

service provider of financial data, information and software in

Mainland China

per cent.

In the 2022 Annual Report, any discrepancies between the total shown and the sum of the amounts

listed are due to rounding; and any discrepancies in the change percentages of an item are due to

the difference of currency unit of the item.

CEO’S LETTER

Dear Shareholders:

Facing arduous tasks and heavy responsibilities, we forged ahead with fortitude. The past year

was an extremely extraordinary and important year. Under the impacts of geopolitical conflicts,

the inflation pressures, the challenges in supply chains and other factors, the global economy

faced the threat of stagflation and the international financial market experienced intensified

fluctuations. In face of the complicated and ever-changing external environment, we have never

been more confident about the endogenous resilience and huge potential of the PRC economy.

High-quality development has been elevated to the primary task in building China into a modern

socialist country in all respects. Standing at the crucial time of the domestic economic stabilization

and recovery, we embraced the full implementation of the registration-based IPO system. The

milestone reform has far-reaching influence and we felt more responsibilities and missions on our

shoulders.

As a participant and builder of the capital market, we also adhere to professionalism and bottom

thinking and strive to create long-term value for shareholders, customers, the society and other

stakeholders. Such belief enables us to see through the mist of various challenges, clearly seize

true opportunities, more resolutely empower wealth management and institutional services with

technology and continuously unleash the development momentum. In 2022, the Company’s

comprehensive strength soundly ranked in the forefront of the industry. As of the end of 2022, total

assets of the Group amounted to RMB846,567 million and total equity attributable to shareholders

of the Company amounted to RMB165,087 million. In 2022, the Group recorded total revenue,

other income and gains of RMB46,824 million and a profit for the year attributable to shareholders

of the Company of RMB11,053 million.

Being always concerned about customer demands

Despite market fluctuations, we always adhere to the orientation of customer demand

and build a full-chain service system through platform-based development and integrated

operation. We promote “One Customer” internally and “One Huatai” externally to build

market brands with influence and recognition.

In the field of wealth management, we firmly conveyed long-term and scientific investment

concepts to over 20 million customers and accompanied customers to understand the

market, seize opportunities and reduce anxiety in face of market fluctuations. We developed

professional and open content ecosystems from the perspective of customers and connected

online and offline services to create more practical and tangible results with differentiated

value. We optimized the hierarchy of customer demands and the corresponding investment

advisory and service hierarchy, iterated and upgraded professional transaction services

and wealth management services and allowed customers to obtain attentive and well-

thought services when they need most through the accurate output of the “ZhangLe Fortune

Path” (

漲樂財富通

) platform and the investment advisory cloud platform. We adhered to

the integration of investment advisory with priority on advisory and built the purchaser

investment advisory model with customers’ profit experience as the core, resulting in positive

changes in customer behaviors and longer holding period and higher reinvestment rate in

funds. Only through the continuous accumulation of the sense of trust and accomplishment

can the “quantity of flow” convert into “quantity of retention”. In 2022, the NMAU of

“ZhangLe Fortune Path” (

漲樂財富通

) and the equity and fund trading volume continued to

maintain the first in the securities industry while the scale of public funds in the non-money

market edged into top 10 in the whole market for the first time.

In the field of institutional services, we continued to refine the customer service model and

service system and developed the core competitiveness of platform-based and integrated

institutional businesses. We continuously optimized the global customer operation system,

gradually implemented the prime brokerage service model driven by the headquarters with

cross-border integration and the coordination of the headquarters and branches and better

achieved the unified hierarchy and grading of customers, the integrated operation of accounts

and the reasonable releasing of service resources. We adhered to the business orientation

and technology empowerment, further improved the fundamental functions and efficiency

of various trading platforms, achieved the full coverage of the digital business model over

the whole process of meeting customer demands, asset pricing and market making, and

continuously consolidated the leading advantages in the equity derivatives and on-exchange

market making businesses. The research platforms continuously integrated fundamental data,

iterated valuation models, portrayed industry mapping, unleashed business value and sped

up in the transformation of research viewpoints towards investment banking and trading

products. The “Xing Zhi” (

行知

) platform of the institutional business covered research,

investment banking and trading services. The key construction of versions for corporate

customers and private placement customers allowed that the demands of different types of

institutional customers in different stages can get efficient response in our service systems.

II.

Creating long-term value by serving the real economy

As a bridge connecting real economies and the capital market, we had our sights set on

professional capabilities and the origin of investment banking by providing professional

financial services based on the customer’s full lifecycle, and we achieved common growth

with industrial leaders, promoted the achievement of the entrepreneurial spirit and value,

and actively exerted its power of finance to facilitate the real economy, thus contributing to

the high circulation among technology, capital and the real economy. In 2022, the Company

ranked the fourth in the industry in terms of the equity lead-underwriting quantity and

amount, ranked the third in the industry in terms of the lead-underwriting amount of bonds

and ranked the second in the industry in terms of the number and amount of M&A and

restructuring projects approved and registered.

The new cycle of science and technology revolution and industrial evolution is picking up

pace and reshaping the global innovation landscape and economic structure. Accelerating

the strategic development of emerging industries, building a modern industrial system, and

achieving a high degree of self-reliance and self-improvement in science and technology are

essential to capture the upper hand in future industrial development. Over the years, we have

continued to cultivate strategic emerging industries such as TMT, energy and environmental

protection, and big health, among others. With our professional financial services capabilities

and in-depth industrial logic serving the integrated whole business chain service resources

for research, investment, investment banking and trading, we provided enterprises with a full

range of services from initial private financing, listing, refinancing, M&A and restructuring to

asset securitization, helping enterprises seek suitable investment and financing and business

expansion opportunities in the global capital market, thus to effectively solve the problems

of enterprises and contribute its efforts on the enterprises’ growth, industrial transformation

and real economic development. Since 2012, we have served more than 210 technology and

innovation enterprises with a total market value of RMB8.52 trillion.

The semiconductor industry is the core of the new generation of information technology.

Over years of technical build-up, China’s semiconductor industry is expected to embark on a

new cycle of localization. We have a deep footprint in semiconductor design, semiconductor

materials and equipment, optical chips and other segments, providing innovative capital

support for enterprises to expand their R&D investment, actively serving the resource

matching of upstream and downstream enterprises in the industry and business expansion

thereof, helping the global resource integration and allocation for leading enterprises, and

deeply participating in the innovation and development process of the semiconductor industry.

With the deeply advancing of “carbon peaking and carbon neutrality” strategies, the third

energy revolution with renewable energy as its main core has brought up new development

opportunities for many industries. We have achieved relatively comprehensive coverage in

the major segments of the new energy industry, including photovoltaic, lithium battery and

wind power industries, and have assisted new energy companies in further raising their funds

both onshore and offshore, contributing to industrial upgrading, technology breakthroughs

and international-mode development, and contributing its strength to the implementation

of the “carbon peaking and carbon neutrality” strategy. We continuously contributed to the

construction of “Healthy China” in the new era with financial strength, and have formed a

complete business layout in the fields of biopharmaceuticals, medical devices and medical

services. Over the years, we have assisted leading companies in organizing their development

strategies, actively connecting with their industrial resources and investors both at home and

abroad, continuously helping innovative drug and innovative medical device enterprises to

advance their R&D pipelines, and promoting the transformation and upgrading of large-sized

pharmaceutical companies with professional and international features.

Adhering to long-term value, we achieved steady progresses in business amid various

challenges and stepped up in performing social responsibilities while practicing the

sustainable development concept. Through sponsoring the establishment of Huatai

Foundation, we carried out long-term cooperation with more professional public welfare

partners and committed to making more professional and in-depth efforts in rural

revitalization, education and medical treatment, ecological protection and other public

welfare sectors. In terms of rural revitalization, we continuously and solidly implemented

projects on industry, medical treatment, education and disaster prevention and mitigation. We

also paid attention to the end of social governance and assisted underdeveloped regions in

building the capability of service institutes on social work. The results of the “One Yangtze

River” public welfare program on ecological and environmental protection accumulated for

years have been displayed during the official activities of the UN Conference of the Parties to

the Convention on Biological Diversity and the Convention on Wetlands, demonstrating the

active undertakings of Chinese enterprises in modern environmental governance systems to

the international community.

III.

Advancing in international development amid high-level opening

In face of global changes, the high-level opening injected strong certainties in global

economic development. Under the new development pattern, Chinese assets offered

significant investment opportunities to global investors and Chinese companies should

go out to explore new markets and new potentials. Based on our profound understanding

about Chinese companies, assets and investors, we strived to continuously recommend

Chinese featured assets to overseas investors, output first-class research services on the

Chinese market, provide efficient transaction execution and risk management services and

guide international capitals to enter the Chinese market. Meanwhile, we will serve Chinese

companies to go global, enhance the pricing power of Chinese assets in the global market and

more actively participate in high-level opening.

In recent years, the international business of the Company has always maintained the

strategy main line of enhancing cross-border linkage, and has been forging ahead despite

the challenging overseas market environment. In 2022, the overall performance of the

international business ranked among the top Chinese securities firms in Hong Kong, with

its revenue share of the Group exceeding 20%; the cross-border institutional business, such

as FICC and stock derivatives, had significant market advantages, and continued to provide

cross-border asset allocation services featuring with integration and diversification for

northbound and southbound customers. The share of sponsorship and underwriting of IPOs

in Hong Kong stocks ranks the second in the market, which better catered to the needs of

Chinese enterprises in overseas financing and mergers and acquisitions, and has achieved

multi-market coverage in mainland China, Hong Kong, Europe and the United States. The

application for the establishment of the subsidiary in Singapore was approved, making further

breakthroughs in its international layout. In the future, we will continue to exert our efforts

in participating interconnection, deeply deploying our roles in key international markets and

regions with a view to better serving the high-level opening up.

Despite changes in the environment, we will stay true to our original aspirations in the long

journey. In the face of the combination and evolving of new patterns and new changes,

we resolutely take the rough but correct path. With a stronger sense of missions, a broader

strategic horizon and more practical operation measures, we will seize historical opportunities

in the new round of opening and reform and advance towards high-quality growth with all

parties to create sustainable value together.

CEO

Zhou Yi

March 30, 2023

COMPANY PROFILE AND KEY FINANCIAL INDICATORS

COMPANY INFORMATION

Chinese name of the Company

華泰證券股份有限公司

Abbreviation of Chinese name of the Company

華泰證券

English name of the Company

HUATAI SECURITIES CO., LTD.

Abbreviation of English name of the Company

HTSC

Legal representative of the Company

Zhang Wei

Chief Executive Officer and chairman of the

Executive Committee of the Company

Zhou Yi

Authorized representatives of the Company

Zhou Yi, Zhang Hui

Registered capital and net capital of the Company

Unit: Yuan

Currency: RMB

As at the end of

the Reporting Period

As at the end of

the previous year

Registered capital

9,075,589,027.00

9,076,650,000.00

Net capital

92,969,666,665.31

82,314,070,326.70

Qualifications of each business line of the Company

As of the end of the Reporting Period, according to the business license issued by Jiangsu

Provincial Market Regulation Administration, the business scope of the Company includes:

securities brokerage, proprietary trading of securities, securities underwriting (limited to

underwriting of national bonds, debt financing instruments of non-financial enterprises and

financial bonds (including policy financial bonds) only), securities investment consulting,

intermediary introduction business for futures companies, margin financing and securities

lending business, agency sale of financial products, agency sale of securities investment

funds, custodian for securities investment funds, agency services for gold and other precious

metals spot contracts and proprietary business for spot gold contracts, stock options

market-making business and other business activities approved by the CSRC. (Projects that

need to be approved by law shall be carried out upon approval by relevant authorities)

Subsequent to the Reporting Period, according to the business license issued by Jiangsu

Provincial Market Regulation Administration, the business scope of the Company includes:

licensed items: securities business; securities investment consultancies; sales of public

offering securities investment funds; custody of securities investment fund (Projects that

need to be approved by law shall be carried out upon approval by relevant authorities, and

the specific business projects are subject to the approval results) general items: providing

intermediary referrals by securities company for futures companies (Except for projects that

need to be approved by law, business activities can be conducted independently with the

business license in accordance with the laws)

Please refer to “Appendix I: Main Business Qualifications” in this report for the main

business qualifications of the Company.

II.

CONTACT

Secretary of the Board

Name

Zhang Hui

Address

11/F, Building 1, No. 228 Middle Jiangdong Road, Nanjing, Jiangsu

Province, the PRC

Tel.

025-83387272, 83387780, 83389157

Fax

025-83387784

zhanghui@htsc.com

Joint company secretary

Name

Zhang Hui

Kwong Yin Ping Yvonne

Address

11/F, Building 1, No. 228 Middle

Jiangdong Road, Nanjing, Jiangsu

Province, the PRC

40th Floor, Dah Sing Financial Centre,

No. 248 Queen’s Road East, Wanchai,

Hong Kong, the PRC

III. BASIC INFORMATION

Registered address of the Company

No. 228 Middle Jiangdong Road, Nanjing,

Jiangsu Province, the PRC

Historical changes in registered

address of the Company

In July 2015, the Company has completed the change

in business registration, and its registered address

was changed from “No. 90 East Zhongshan Road,

Nanjing, Jiangsu Province, the PRC” to “No. 228

Middle Jiangdong Road, Nanjing, Jiangsu Province,

the PRC”

Office address of the Company

No. 228 Middle Jiangdong Road, Nanjing,

Jiangsu Province, the PRC

Postal code of office address of

the Company

210019

Principal place of business in

Hong Kong

62/F, The Center, 99 Queen’s Road Central,

Hong Kong, the PRC

Company website

http://www.htsc.com.cn

boardoffice@htsc.com

Main exchange

025-83389999

Customer service hotline

95597 or 4008895597

Company fax

025-83387784

Business License Unified Social

Credit Code

91320000704041011J

Brief of Index inclusion

SSE 50 Index, CSI 300 Index, MSCI China Share Index

Index of changes during the

Reporting Period

No change during the Reporting Period

IV.

INFORMATION DISCLOSURE AND LOCATION FOR INSPECTION OF

DOCUMENTS

Names and websites of newspapers

for disclosure of annual report

of the Company

China Securities Journal (https://www.cs.com.cn),

Shanghai Securities News (https://www.cnstock.com),

Securities Times (http://www.stcn.com),

Securities Daily (http://www.zqrb.cn)

Websites of the stock exchanges

for disclosure of annual report

of the Company

Shanghai Stock Exchange (http://www.sse.com.cn),

Hong Kong Stock Exchange (http://www.hkexnews.hk),

London Stock Exchange (https://www.londonstockexchange.com)

Location for inspection of annual

report of the Company (A Share)

No. 228 Middle Jiangdong Road, Nanjing, Jiangsu Province,

the PRC; Shanghai Stock Exchange

Location for inspection of annual

report of the Company (H Share)

No. 228 Middle Jiangdong Road, Nanjing, Jiangsu Province,

the PRC;

62/F, The Center, 99 Queen’s Road Central, Hong Kong, the PRC

Index of changes during

the Reporting Period

No change during the Reporting Period

SHARES/DEPOSITORY RECEIPTS OF THE COMPANY

Type of shares/

depository receipts

Stock exchange for listing

Stock name

Stock code

A Share

Shanghai Stock Exchange

華泰證券

601688

H Share

Hong Kong Stock Exchange

HTSC

6886

GDR

London Stock Exchange

Huatai Securities Co., Ltd.

HTSC

The Company did not change the stock name.

VI.

OTHER INFORMATION OF THE COMPANY

(I)

Historical development of the Company, mainly including the reorganization and

capital increases in the previous years

The predecessor of the Company was Jiangsu Securities Company (

江蘇省證券公司

which was established in December 1990 as approved by the headquarters of the PBOC,

obtained the business license on April 9, 1991, and officially opened for business

on May 26, 1991. In 1994, the Economic Reform Commission of Jiangsu Province

approved the conversion of the Company to be a directional stock raising company.

In June 1997, the Company changed its name to “

江蘇證券有限責任公司

” (Jiangsu

Securities Co., Ltd.). In March 1999, the Company changed its name to “

華泰證券

有限責任公司

” (Huatai Securities Limited Liability Company), and approved by the

CSRC, the Company was converted into “

華泰證券股份有限公司

” (Huatai Securities

Co., Ltd.) in its entirety on November 29, 2007. On December 7, 2007, the Company

completed the business registration for such changes. In July 2009, the Company

acquired Xintai Securities Co., Ltd. (

信泰證券有限責任公司

). In February 2010, the

Company was successfully listed on the Shanghai Stock Exchange. In June 2015, the

Company was listed on the Main Board of the Hong Kong Stock Exchange. In June

2019, the GDR issued by the Company was listed and traded on the Main Market of the

London Stock Exchange.

Major capital changes of the Company:

When it was established on April 9, 1991, the registered capital of the Company was

RMB10,000,000.

The registered capital of the Company increased to RMB202,000,000 in June 1994.

The registered capital of the Company increased to RMB404,000,000 in June 1997.

The registered capital of the Company increased to RMB828,000,000 in May 1998.

The registered capital of the Company increased to RMB850,320,000 in December

1999.

The registered capital of the Company increased to RMB2,200,000,000 in April 2001.

The registered capital of the Company increased to RMB4,500,000,000 in November

2007.

The registered capital of the Company increased to RMB4,815,438,725 on July 30,

2009.

In February 2010, the Company completed its initial public offering of 784,561,275

RMB-denominated ordinary shares (A Shares) on the Shanghai Stock Exchange, after

which the Company’s registered capital was RMB5,600,000,000.

In June 2015, the Company completed its listing on the Main Board of the Hong Kong

Stock Exchange and commenced trading. After the exercise of the over-allotment

option, the Company issued 1,562,768,800 H Shares in total, and the total share capital

of the Company changed to 7,162,768,800 shares. Due to the issuance and listing of

H Shares, the relevant state-owned shareholders transferred 156,276,880 state-owned

shares (A Shares) of the Company held by them to SSF in the form of H Shares, on the

basis of 10% of the number of H Shares issued this time. The changes in share capital

structure of the Company were as follows: 5,443,723,120 A Shares, which accounted

for 76% of the total number of shares; and 1,719,045,680 H Shares, which accounted

for 24% of the total number of shares.

In August 2018, the Company completed the non-public issuance of 1,088,731,200

RMB-denominated ordinary shares (A Shares) by way of “Non-Public Issuance

to Specific Investors”, after which the Company’s registered capital was

RMB8,251,500,000. The changes in share capital structure of the Company were as

follows: 6,532,454,320 A Shares, which accounted for 79% of the total number of

shares; and 1,719,045,680 H Shares, which accounted for 21% of the total number of

shares.

In June 2019, the GDR issued by the Company was listed and traded on the Main

Market of the London Stock Exchange. After the exercise of the over-allotment

option, the Company issued 82,515,000 GDR in total, representing the underlying

securities of 825,150,000 A Shares, after which the Company’s registered capital was

RMB9,076,650,000. The changes in share capital structure of the Company were as

follows: 7,357,604,320 A Shares, which accounted for 81% of the total number of

shares; and 1,719,045,680 H Shares, which accounted for 19% of the total number of

shares.

In September 2022, the Company completed the repurchase and cancellation of

1,060,973 restricted A shares, after which the Company’s registered capital was

RMB9,075,589,027. The changes in share capital structure of the Company were as

follows: 7,356,543,347 A Shares, which accounted for 81% of the total number of

shares; and 1,719,045,680 H Shares, which accounted for 19% of the total number of

shares.

(II)

Organization Structure of the Company

Organization Structure of HTSC

Office of the Supervisory

Committee

Supervisory Committee

General Meeting

Compliance and Risk

Management Committee

Audit Committee

Development Strategy Committee

Nomination Committee

Remuneration and

Appraisal Committee

Wholly-owned

Subsidiaries

E-Capital Transfer Co., Ltd.

Bank of Jiangsu Co, Ltd.

Huatai-PineBridge Fund Management Co, Ltd.

China Southern Asset Management Co., Ltd.

Jiangsu Equity Exchange Co., Ltd.

Huatai United Securities Co., Ltd.

Shanghai Shengju Asset Operation and

Management Co., Ltd.

Huatai Futures Co., Ltd.

Huatai Innovation Investment Co., Ltd.

Huatai Purple Gold Investment Co., Ltd.

Huatai International Financial

Holdings Company Limited

Huatai Securities (Shanghai) Asset

Management Co., Ltd.

Holding

Subsidiaries

Participating

Subsidiaries

Board of Directors

Senior Management

Office of the Board

of Directors

Branches

Investment Advisory and

Development Department

Platform Operation Department

Financial Products Department

Wealth Management Department

Research Institute

Asset Custody Department

Debt Financing Department

Sales and Trading Department

Margin Financing and

Securities Lending Department

Securities Investment

Department

Financial Innovation

Department

Fixed Income Department

Operating Center

Information Technology

Department

Capital Operation Department

Digital Operation Department

Risk Management Department

Compliance and Legal

Department

Inspection Department

Human Resources Department

Planning and Finance

Department

General Office

Strategy and Development

Department

Party-mass Work Development

General Affairs Department

Securities Branches

(III) The First-level Onshore and Offshore Subsidiaries of the Company

Unit: Ten Thousand Yuan Currency: RMB

Name of the subsidiary

Address

Date of

establishment

Registered

capital

Responsible

person

Telephone No.

Huatai Securities (Shanghai)

Asset Management Co., Ltd.

Room 1222, 6 Jilong Road,

China (Shanghai) Pilot Free

Trade Zone

October 16, 2014

260,000.00

Cui Chun

021-28972188

Huatai International Financial

Holdings Company Limited

62/F, The Center, 99 Queen’s

Road Central, Hong Kong,

the PRC

April 5, 2017

HK$

10,200,000,002.00

Wang Lei

852-36586000

Huatai Purple Gold Investment

Co., Ltd.

No. 180 Hanzhong Road,

Nanjing, Jiangsu Province,

the PRC

August 12, 2008

600,000.00

Cao Qun

025-83389999

Huatai Innovative Investment

Co., Ltd.

Room 701-8 to 701-11, 7/F,

Block 28, Fengsheng Hutong,

Xicheng District, Beijing,

the PRC

November 21,

2013

350,000.00

Sun Ying

010-58034345

Huatai Futures Co., Ltd.

Rooms 1001-1004 and 1011-1016,

10/F, No.1 Mingzhu Third Street,

Hengli Town, Nansha District,

Guangzhou, the PRC

July 10, 1995

393,900.00

Hu Zhi

020-83901155

Shanghai Shengju

Asset Operation and

Management Co., Ltd.

No. 12 Dongfang Road,

China (Shanghai)

Pilot Free Trade Zone

July 14, 2009

12,100.00

Lu Chunguang

021-28972221

Huatai United Securities

Co., Ltd.

Room 401, Building B7,

Qianhai Shenzhen-Hong Kong

Fund Town, No. 128 Guiwan

Fifth Road, Nanshan Street,

Qianhai Shenzhen-Hong Kong

Cooperation Zone,

Shenzhen, the PRC

September 5,

1997

99,748.00

Jiang Yu

010-56839300

Jiangsu Equity Exchange

Co., Ltd.

3/F, Building 10, Financial City,

No. 377 Middle Jiangdong Road,

Jianye District, Nanjing,

Jiangsu Province, the PRC

July 4, 2013

20,000.00

Sun Hanlin

025-89620288

Note: In February 2023, the registered address of Huatai Innovative Investment Co., Ltd. was changed to

“No. 234 Wuyi Road, Changning District, Shanghai City, the PRC”.

(IV) Number and Distribution of Securities Branches and Other Branches of the

Company

As of the end of the Reporting Period, the Company has 28 securities branch offices

and 243 securities branches. For details of the number and distribution of branch offices

and securities branches of the Company, please refer to “Appendix II: List of Branch

Offices and Securities Branches” in this report.

Provinces,

Municipalities

and Regions

Number of

Securities

Branches

Provinces,

Municipalities

and Regions

Number of

Securities

Branches

Provinces,

Municipalities and

Regions

Number of

Securities

Branches

Anhui Province

Beijing

Inner Mongolia

Autonomous Region

Hebei Province

Fujian Province

Guangdong Province

Guangxi Zhuang

Autonomous Region

Hainan Province

Shanxi Province

Henan Province

Heilongjiang

Province

Jilin Province

Hubei Province

Hunan Province

Jiangxi Province

Jiangsu Province

Liaoning Province

Shandong Province

Shanghai

Sichuan Province

Guizhou Province

Chongqing

Tianjin

Gansu Province

Shaanxi Province

Qinghai Province

Xinjiang Uygur

Autonomous Region

Ningxia Hui

Autonomous Region

Zhejiang Province

VII. OTHER INFORMATION

(I)

Accounting Firms

Accounting firm

engaged by the

Company

(domestic)

Name

Deloitte Touche Tohmatsu

Certified Public Accountants LLP

Office address

30/F, 222 Yan An Road East,

Huangpu District, Shanghai, the PRC

Name of the

signatory

accountant

Hu Xiaojun, Han Jian

Accounting firm

engaged by the

Company

(Hong Kong)

Name

Deloitte Touche Tohmatsu Registered

PIE Auditor under the Hong Kong

Financial Reporting Council Ordinance

Office address

35/F, One Pacific Place, 88 Queensway,

Hong Kong, the PRC

Name of the

signatory

accountant

Tang Yequan

Accounting firm

engaged by the

Company

(United Kingdom)

Name

Deloitte Touche Tohmatsu

Certified Public Accountants LLP

Office address

30/F, 222 Yan An Road East,

Huangpu District, Shanghai, the PRC

Name of the

signatory

accountant

Hu Xiaojun

(II) Legal Advisors

Legal advisor engaged

by the Company

(domestic)

Name

King & Wood Mallesons

Office address

18/F, East Tower, World Financial Center

1 Middle East 3rd Ring Road, Chaoyang

District, Beijing, the PRC

Legal advisor engaged

by the Company

(overseas)

Name

Clifford Chance

Office address

27/F, Jardine House, 1 Connaught Place,

Central, Hong Kong, the PRC

(III) Share Registrars

Share registrar

for A Share

Name

China Securities Depository and Clearing

Corporation Limited, Shanghai Branch

Office address

No. 188 South Yanggao Road, Pudong

New Area, Shanghai, the PRC

Share registrar

for H Share

Name

Computershare Hong Kong Investor

Services Limited

Office address

Shops 1712-1716, 17/F, Hopewell Center,

183 Queen’s Road East, Wanchai,

Hong Kong, the PRC

VIII. KEY ACCOUNTING DATA AND FINANCIAL INDICATORS

(I)

Key Accounting Data and Financial Indicators for the Past Three Years

Unit: Thousand Yuan Currency: RMB

Item

2022

2021

Increase/

decrease (%)

2020

Total revenue, other income and gains

46,824,372

51,926,404

(9.83)

40,534,436

Profit before income tax

12,228,038

16,272,562

(24.85)

13,504,376

Profit of this year-attributable to

shareholders of the Company

11,052,696

13,346,106

(17.18)

10,822,497

Net cash generated from/(used in)

operating activities

70,290,567

(65,337,094)

N/A

(13,868,924)

Total amount of other comprehensive

income after tax this year

1,195,949

(626,084)

N/A

(539,317)

Unit: Thousand Yuan Currency: RMB

Item

At the end

of 2022

At the end

of 2021

Increase/

decrease (%)

At the end

of 2020

Total assets

846,567,016

806,650,833

4.95

716,751,235

Total liabilities

678,718,307

654,615,049

3.68

584,439,200

Total equity attributable to shareholders of

the Company

165,087,201

148,422,810

11.23

129,071,500

Total shareholders’ equity

167,848,709

152,035,784

10.40

132,312,035

Total share capital (shares)

9,075,589,027

9,076,650,000

(0.01)

9,076,650,000

Key Financial Indicators

Key financial indicators

2022

2021

Increase/

decrease (%)

2020

Basic earnings per share (RMB/share)

1.18

1.47

(19.73)

1.20

Diluted earnings per share (RMB/share)

1.16

1.46

(20.55)

1.19

ROE (%)

7.49

9.84

Decrease of

2.35 percentage

points

8.61

Debt-to-assets ratio (%)

75.81

76.93

Decrease of

1.12 percentage

points

77.20

Net assets attributable to the Company’s

ordinary shareholders

per share (RMB/share)

16.24

15.25

6.49

14.22

Note 1: Debt-to-assets ratio = (total liabilities – accounts payable to brokerage clients)/(total assets –

accounts payable to brokerage clients).

Note 2: Net assets attributable to the Company’s ordinary shareholders per share were net of the effect of

perpetual bonds.

Net Capital of the Parent Company and Risk Control Indicators

Unit: Yuan Currency: RMB

Item

As of the end of the

Reporting Period

As of the end of the

previous year

Net capital

92,969,666,665.31

82,314,070,326.70

Net assets

143,634,206,572.73

126,702,081,824.87

Risk coverage ratio (%)

240.12

246.45

Net capital/net assets (%)

64.73

64.97

Net capital/liabilities (%)

23.14

21.42

Net assets/liabilities (%)

35.75

32.97

Value of proprietary equity securities and

derivatives/net capital (%)

45.73

49.80

Value of proprietary non-equity securities and

derivatives/net capital (%)

316.82

291.29

Core net capital

61,979,777,776.88

58,314,070,326.70

Supplementary net capital

30,989,888,888.44

24,000,000,000.00

Total risk capital provision

38,717,728,473.17

33,399,876,683.34

Total on-balance and off-balance assets

483,308,624,857.94

422,846,924,915.98

Capital leverage ratio (%)

14.10

15.99

Liquidity coverage ratio (%)

166.57

169.68

Net stable funding ratio (%)

129.33

126.98

(II)

Key Accounting Data and Financial Indicators for the Past Five Years

The financial conditions for the past five years are as follows:

Profitability

Unit: Thousand Yuan Currency: RMB

Item

2022

2021

2020

2019

2018

Total revenue, other income

and gains

46,824,372

51,926,404

40,534,436

32,436,781

24,506,734

Total expenses

35,815,380

38,283,823

31,233,707

23,577,265

19,017,372

Share of profits of associates and

joint ventures

1,219,046

2,629,981

4,203,647

2,726,449

959,309

Profit before income tax

12,228,038

16,272,562

13,504,376

11,585,965

6,448,671

Profit of this year-attributable to

shareholders of the Company

11,052,696

13,346,106

10,822,497

9,001,644

5,032,738

Assets

Unit: Thousand Yuan Currency: RMB

Item

December 31,

2022

December 31,

2021

December 31,

2020

December 31,

2019

December 31,

2018

Total assets

846,567,016

806,650,833

716,751,235

562,180,638

368,665,874

Total liabilities

678,718,307

654,615,049

584,439,200

436,525,930

263,916,270

Accounts payable to

brokerage clients

152,551,723

147,501,833

136,387,634

89,817,920

59,492,176

Total equity attributable

to shareholders of

the Company

165,087,201

148,422,810

129,071,500

122,537,479

103,393,577

Total equity

167,848,709

152,035,784

132,312,035

125,654,708

104,749,604

Total share capital

(shares)

9,075,589,027

9,076,650,000

8,251,500,000

Key Financial Indicators

Item

2022

2021

2020

2019

2018

Dividend per share (RMB)

0.45

0.40

0.30

0.60

Note 1

Basic earnings per share

(RMB/share)

1.18

1.47

1.20

1.04

0.66

Dilutive earnings per share

(RMB/share)

1.16

1.46

1.19

1.03

0.66

ROE (%)

7.49

9.84

8.61

7.94

5.32

Debt-to-assets ratio (%)

Note 2

75.81

76.93

77.20

73.40

66.12

Net assets attributable to

ordinary shareholders

of the Company per

share (RMB/share)

Note 3

16.24

15.25

14.22

13.50

12.53

Note 1:

According to the resolution passed at the 2018 first extraordinary general meeting

of the Company, the Company has implemented the 2018 interim profit distribution

plan by distributing a cash dividend of RMB3.00 (tax inclusive) per 10 shares based

on the total share capital of 8,251,500,000 shares, with a total cash dividend of

RMB2,475,450,000.00. Meanwhile, according to the resolution passed at the 2018

Annual General Meeting of the Company, the Company has implemented the 2018

annual profit distribution plan by distributing a cash dividend of RMB3.00 (tax inclusive)

per 10 shares based on the total share capital of 9,076,650,000 shares, with a total cash

dividend of RMB2,722,995,000.00.

Note 2:

Debt-to-assets ratio = (total liabilities – accounts payable to brokerage clients)/(total

assets – accounts payable to brokerage clients).

Note 3:

Net assets attributable to the Company’s ordinary shareholders per share were net of the

effect of perpetual bonds.

IX.

DIFFERENCES IN FINANCIAL DATA PREPARED IN ACCORDANCE WITH

DOMESTIC AND FOREIGN ACCOUNTING STANDARDS

There is no difference between the net profit attributable to shareholders of the Company for

2022 and 2021 and the net assets attributable to shareholders of the Company as of December

31, 2022 and December 31, 2021 set out in the consolidated financial statements prepared

in accordance with the CASBE and in the consolidated financial statements prepared in

accordance with the IFRSs.

ITEMS MEASURED UNDER FAIR VALUE

Unit: Thousand Yuan Currency: RMB

Name of items

Balance at

the end of

last year

Balance at

the end of

the year

Change in

the current

period

Effect on the

profit of the

current period

in amount

Financial assets at fair value through profit

or loss

355,259,172

350,804,545

(4,454,627)

(13,037,891)

Equity instruments at fair value through

other comprehensive income

163,138

241,587

78,449

–

Debt instruments at fair value through

other comprehensive income

9,314,699

10,504,379

1,189,680

139,239

Derivative financial instruments

4,604,583

6,150,176

1,545,593

18,974,293

Financial liabilities at fair value through

profit or loss

31,122,918

48,575,559

17,452,641

288,411

MANAGEMENT DISCUSSION AND ANALYSIS AND REPORT OF THE BOARD

DESCRIPTIONS OF OUR INDUSTRY DURING THE REPORTING PERIOD

Our Group conducts business operations in the securities industry of which the operating

income and profit levels are highly dependent on the securities market trend and

characterized by strong periodicity and fluctuations. Our Group’s securities related

businesses are dependent on and also benefit from the economic growth and the development

and performance of the capital market in the PRC, and are also influenced by various

factors including economic environment, regulatory environment, investor sentiment and

international market. The Group has maintained strong overall competitiveness with capital

scale, profitability, business strength and risk management capabilities ranking the top in the

industry. Details of industry position of the Group’s principal businesses during the Reporting

Period, please refer to “Management Discussion and Analysis and Report of the Board” in

the section headed “Operation Discussion and Analysis” of this report.

With the reshaping of rules on the capital market as a result of the promulgation and

implementation of the new Securities Law in recent years, the establishment of a more

mature and steady capital market infrastructure system is speeding up. With the profound

reform of the development ecology of the capital market and the profitability base of the

securities industry, the landscape of the industry is advancing towards advanced levels

under the competitions on providing customers with comprehensive and platform-based

services covering the entire business chain and the full lifecycle. The securities industry will

embrace historical opportunities for comprehensive development. Under the background

of building a more systematic modern capital market with more Chinese characteristics

and with the continuous advancing of the deep reform of the capital market led by the full

implementation of registration system, the in-depth development of the high-level two-

way institutional opening as well as the in-depth integration of FINTECH and businesses

of securities companies, the capabilities of the capital market on serving national strategies

and the transformation and development of real economies are increasingly enhanced, which

implies that securities companies equipped with truly core capabilities of modern investment

banks will win the initiative in future development and transformation through worldwide

resources allocation, customer services and risk management. At the same time, the

increasing improvement of the strategic positioning and the continuous enhancement of the

pivotal functions of the capital market have brought new opportunities for the development

of the securities industry while presenting new challenges for the high-quality development

of the securities industry, the comprehensive service capability and risk control of securities

companies.

II.

DESCRIPTIONS OF OUR BUSINESS DURING THE REPORTING PERIOD

The Group is a leading technology-driven securities group in China, with a highly

collaborative business model, a cutting-edge digital platform and an extensive and engaging

customer base. Our principal businesses comprise wealth management business, institutional

services business, investment management business and international business. The Group

constructs a client-oriented organizational structure and mechanism, provides comprehensive

securities and financial services for individual and institutional clients through an organic

online-offline synergy, and aims to become a leading investment bank with strong domestic

advantages and global influence.

Wealth management business

We provide customers with diversified wealth management services, including

securities, futures and options brokerage, financial products sales, fund investment

advisory business, and capital-based intermediary business through mobile APP,

professional PC platforms, subsidiaries and securities and futures branch offices,

Huatai International and its affiliated overseas subsidiaries, in online and offline

modes, domestic and overseas linkage. For securities, futures and options brokerage,

we mainly execute trades on behalf of our clients in stocks, funds, bonds, futures and

options, etc. to provide trading services. For financial products sales business, we

mainly provide customers with a variety of financial products sales services and asset

allocation services, and the related financial products are managed by the Group and

other financial institutions. Our fund investment advisory business mainly entails upon

acceptance of clients’ engagement, selecting specific category, amount and timing

of trading of investment funds on behalf of our clients within the scope of clients’

authorization in accordance with terms of agreement and submitting trading applications

including, among others, subscription, redemption and conversion. In respect of capital-

based intermediary business, we provide diversified financing services including margin

financing and securities lending as well as stock pledged repurchase. Key performance

drivers to wealth management business include fee and commission income, interest

income, etc.

Institutional services business

With institutional sales serving as a link, we integrate investment banking, institutional

investor services and investment trading business resources to provide various types

of corporate and institutional clients with all-round comprehensive financial services,

which mainly include investment banking business, prime brokerage business, research

and institutional sales business and investment and trading business.

(1)

Investment banking business primarily consists of domestic and overseas equity

financing, bond financing, financial advisory, OTC business, etc. For equity

financing business, we provide issuance and underwriting domestic and overseas

IPO, equity refinancing and depository receipts for our clients. For bond financing

business, we provide services including various types of domestic and overseas

bond financing and asset securitization for our clients. For financial advisory

business, we provide services including reform of State-owned enterprises,

industrial merger and acquisition, share acquisition, financing advisory, corporate

restructure and public offering REITs for our clients. For OTC business, we

provide clients with NEEQ listing and follow-on financing services, and relevant

OTC businesses engaged in by Jiangsu Equity Exchange. Key performance

drivers to investment banking business include underwriting and sponsorship fees,

financial advisory fees, etc.

(2)

Prime brokerage business mainly includes the provision of asset custody and

fund services for various types of asset management institutions, such as private

and public funds, including settlement, liquidation, reporting and valuation. In

addition, it also provides margin trading, sales of financial products and other

value-added services for clients of prime brokerage. Key performance drivers to

prime brokerage business include fees for fund custody and service business.

(3)

Research and institutional sales business mainly consists of research business and

institutional sales business. For research business, we provide various professional

research and advisory services for clients. For institutional sales business, we

promote and sell securities products and services to clients. Key performance

drivers to research and institutional sales business include incomes from services

concerning various research and financial products.

(4)

Investment and trading business mainly includes equity trading, FICC trading and

OTC derivative transaction. The Group conducts equity, FICC and other financial

instruments transactions with its own funds, and reduces investment risks and

increases returns through various trading strategies and techniques. At the same

time, in order to meet customers’ needs for investment and financing as well as

risk management, we also engage in market making business and OTC derivatives

business. In terms of equity trading, we invest and trade stocks, ETFs and

derivatives, and engage in market making services for stocks in the STAR Market

and financial products. In terms of FICC trading, we invest and trade all kinds of

FICC and derivatives in the interbank and exchange bond markets, and engage in

the inter-bank bond market and bond connect market making services. In terms

of OTC derivative transactions, we develop and trade OTC financial products

for customers, mainly including equity return swaps, OTC options and structured

notes. Key performance drivers to investment and trading business include various

investment incomes from equity, FICC products and derivatives, business income,

etc.

Investment management business

We accept fund entrustments from clients, develop and provide various financial

products for our clients and manage their assets through our professional investment

and research platform as well as our substantial client base, effectively satisfying

their investment and financing needs. Our investment management business mainly

consists of securities firm asset management, private equity fund management and

asset management for fund companies, etc. For securities firm asset management, we

participate in the operation of securities firm asset management business through our

wholly-owned subsidiary Huatai Asset Management; such business includes collective

asset management business, single asset management business, specialized asset

management business and public offering fund management business (which is operated

on a differentiated basis from our public offering fund management business for fund

companies under the Group). For private equity fund management business, we operate

private equity funds business, which includes investment and management of private

equity funds, through our wholly-owned subsidiary Huatai Purple Gold Investment.

For asset management business for fund companies, the Group holds non-controlling

interests in two public offering fund management companies, namely China Southern

Asset Management and Huatai-PineBridge, through which we participate in the

operation of asset management business for fund companies. Key performance drivers

to asset management business include management fee, performance fee, investment

income, etc.

International business

The Group operates international business covering various countries and regions

including Hong Kong and the United States through its wholly-owned subsidiary Huatai

International, and the wholly-owned subsidiaries of Huatai International including

Huatai Financial Holdings (Hong Kong), AssetMark and Huatai Securities (USA).

In September 2022, Huatai International established a wholly-owned subsidiary in

Singapore, and the application for relevant business licenses is under stable progress.

The operations of the Group in Hong Kong are mainly conducted by Huatai Financial

Holdings (Hong Kong), a wholly-owned subsidiary of Huatai International, primarily

including equity business platform, fixed-income business platform, wealth management

platform, fund platform and flagship investment banking business. Through the

equity business platform, we conduct trading, design and sales of cross-border equity

derivatives, providing capital-based intermediary services in respect of various equity

capital for our clients, and provide universal integrated financial services covering both

domestic and overseas markets and various industries for institutional clients around

the globe. Through the fix-income business platform, we carry out investment and

trading of a variety of FICC and derivative instruments and provide FICC solutions

for all product categories, such as sales, trading and market making services to various

institutional clients. Through the wealth management platform, we provide brokerage,

margin financing and wealth management services in respect of different categories of

assets around the globe for our clients, satisfying their multi-level and comprehensive

financial needs. In respect of the fund platform, we provide customized solutions in

fields such as leveraged buyout, strategic M&A, prelisting financing and business

expansion for our clients through the Greater Bay Area Fund under our management;

the China Concept Stock Return Fund focuses on mid to late-stage investment, cross-

border M&A and split and privatization investment opportunities in industries with

growth potential. For flagship investment banking business, aiming to establish a full-

service and cross-border investment banking platform system, we provide both Chinese

and international customers with equity and bond underwriting and sponsoring services,

as well as financial advisory services. In September 2019, Huatai Financial Holdings

(Hong Kong) obtained its membership of the London Stock Exchange and completed

the registration as a UK Cross-border Conversion Agency for Shanghai-London Stock

Connect GDRs on the Shanghai Stock Exchange, thus is capable of providing clients

with the whole-process services of the issuance and trade of GDRs. In December 2020,

Huatai Financial Holdings (Hong Kong) became the first financial institution in Asia

that obtained the qualification as market maker of the London Stock Exchange. In

December 2021, Huatai Financial Holdings (Hong Kong) was formally admitted as

the member of Turquoise under the London Stock Exchange Group. In 2022, Huatai

Financial Holdings (Hong Kong) officially obtained the qualification as a participant

of the Special Purpose Acquisition Companies (SPAC) Exchange of the Hong Kong

Stock Exchange, making it one of the first Chinese securities companies in Hong

Kong obtaining such qualification; and it obtained the registration as a cross-border

conversion agency for stock connect global depository receipts granted by the Shenzhen

Stock Exchange, making it one of the first agencies registered with the Shenzhen Stock

Exchange to carry out cross-border conversion business following the revision of the

rules of Shanghai-London Stock Connect and the dual expansion of the applicability in

2022.

The Group completed the acquisition of AssetMark in 2016. AssetMark is a leading

turn-key asset management platform in the United States and a third-party financial

service institution that provides a series of services and an advanced and convenient

technology platform for investment advisors in respect of investment strategies and

asset portfolios management, customer relations management and asset custody. In

July 2019, AssetMark completed its listing on the New York Stock Exchange in the

United States. In July 2021, AssetMark completed the acquisition of Voyant to further

optimize its technology platform and operating environment and thus maintain its

leading position among the turn-key asset management platforms. In December 2022,

AssetMark completed the acquisition of Adhesion Wealth to continue to construct a

leading business model and an advanced technology platform.

In September 2018, Huatai Securities (USA) was registered in Delaware, USA as

a foreign wholly-owned subsidiary of Huatai International, aiming to promote the

development of international business. In June 2019, upon approval from the US

Financial Industry Regulatory Authority, Huatai Securities (USA) obtained the US

broker-dealer license. In 2020, it obtained the US proprietary trading license. In 2021,

it obtained the business qualification for securities trading with institutional investors in

Canada. In 2022, it obtained market access to major stock exchanges in Europe.

Key performance drivers to international business include brokerage commission,

underwriting sponsorship fee, advisory fee, interest income, asset management fee, etc.

III. AWARDS AND HONORS

(I)

Key awards and honors of the Group

The selection of “2022 Golden Bull Award” (2022

金牛獎

) held by China Securities

Journal:

The Company was awarded “Golden Bull Securities Company” (

金牛證券公司

“Golden Bull Award for Cultural Construction of Securities Companies” (

證券公

司文化建設金牛獎

), “Golden Bull Award for Social Responsibilities of Securities

Companies” (

證券公司社會責任金牛獎

) and other awards

The selection of “Best Practice of Office of Board of Directors of Public Companies

2022” (2022

年度上市公司董辦最佳實踐

) organized by China Association for Public

Companies:

The Company was awarded “Best Practice of Office of Board of Directors of

Public Companies 2022”

(II)

Key awards and honors of the business segments of the Company

Wealth

management

business

Shanghai Stock Exchange:

The Company was awarded “2021 Top 10

Options Brokers” (2021

年度十佳期權經紀商

)

and “2021 Outstanding Options Market Maker”

(2021

年度優秀期權做市商

)

Shenzhen Stock Exchange:

The Company was awarded “2021

Outstanding Stock Options Brokers” (2021

年度優秀股票期權經紀商

), “Top 10 Stock

Options Market Expansion Brokers for 2021”

(2021

年度股票期權市場拓展十佳經紀商

) and

“2021 Excellent Stock Options Market Maker”

(2021

年度優秀股票期權做市商

)

HKEX:

The Company was awarded “2021

Outstanding Broker Award of Southbound

Trading” (2021

年港股通卓越券商獎

) and

“2021 Investor Education Active Broker Award

of Southbound Trading” (2021

年港股通投資

者教育積極券商獎

)

The selection of “2022 Junding Award in

China’s Securities Industry” (2022

中國證券業

君鼎獎

) organized by Securities Times:

The Company was awarded “2022 Junding

Award for All-round Wealth Management

Broker in China’s Securities Industry” (2022

中國證券業全能財富經紀商君鼎獎

), “2022

Junding Award for Fund Investment Advisor in

China’s Securities Industry” (2022

中國證券業

基金投顧君鼎獎

) and other awards

“ZhangLe Fortune Path” (

漲樂財富

通

) was awarded “2022 Junding Award for

Wealth Management Service Brand in China’s

Securities Industry” (2022

中國證券業財富服

務品牌君鼎獎

)

The data from Analysys:

“ZhangLe Fortune Path” (

漲樂財富通

)

ranked the first in terms of average NMAU in

2022

The selection of the “Seventh Session of Broker

APP List” (

第七屆券商

APP

風雲榜

) organized

by Sina Finance:

“ZhangLe Fortune Path” (

漲樂財富通

)

was recognized as “Top 10 APP Award of

the Year” (

年度十佳

APP), “Best Functional

Innovation APP” (

最佳功能創新

APP) and

“Users’ Favorite APP” (

最受用戶喜愛

APP)

The selection of “2021-2022 FINTECH Award”

(2021-2022

年度金融科技獎

) organized by The

Asset:

“ZhangLe Global” (

漲樂全球通

) was

recognized as “Best Mobile Brokerage

Application (Hong Kong Area)” (

香港地區最

佳手機券商

APP)

The selection of “2021 FINTECH Awards”

(2021

年金融科技大獎

) organized by ETnet, a

professional financial information platform:

“ZhangLe Global” (

漲樂全球通

) was

awarded “Trading System – Outstanding

Comprehensive Wealth Management Platform”

(

交易系統－傑出全方位財富管理平台

)

The selection of the “First Session of Golden

Advisory Award for Fund Investment

Advisors” (

第一屆金諮獎基金投顧

) organized

by Xinhua Finance:

The Company was awarded “Golden

Advisory Award for Fund Investment

Advisors” (

基金投顧金諮獎

), “First Prize

in the Golden Advisory List for Advisory

Services” (

顧問服務金諮榜第一名

), “First

Prize in the Golden Advisory List for System

Operation” (

系統營運金諮榜第一名

“Third Prize in the Golden Advisory List

for Investment Research (First Prize among

Brokers)” (

投資研究金諮榜第三名

(

券商

第一

)), etc.

Institutional

services

business

Shanghai Stock Exchange:

Huatai United Securities was awarded

“2021 Outstanding Underwriter of Corporate

Bonds” (2021

年度公司債券優秀承銷商

“2021 Credit Bond High Quality Development

Promotion Award” (2021

年度信用債高質

量發展推進獎

) and “2021 Excellent Trust

Manager” (2021

年度優秀受託管理人

)

Shenzhen Stock Exchange:

Huatai United Securities was awarded “2021

Outstanding Bond Duration Management

Institution” (2021

年度優秀債券存續期管理

機構

), “2021 Outstanding Corporate Bond

Underwriter” (2021

年度優秀公司債券承銷

商

), “2021 Outstanding Intermediary Agencies

of Infrastructure Public Offering REITs” (2021

年度優秀基礎設施公募

REITs

中介機構

), etc.

The selection of “2022 Junding Award in

China’s Securities Industry” (2022

中國證券業

君鼎獎

) organized by Securities Times:

Huatai United Securities was awarded “2022

Junding Award for All-round Investment Bank

in China’s Securities Industry” (2022

年中國證

券業全能投行君鼎獎

),“2022 Junding Award

for Financial Advisor in China’s Securities

Industry” (2022

年中國證券業財務顧問

君鼎獎

), “2022 Junding Award for STAR

Market Investment Bank in China’s Securities

Industry”(2022

年中國證券業科創板投行君鼎

獎

), etc.

The selection of the “Fifteenth Session of

Best Investment Bank” (

第十五屆最佳投行

)

organized by New Fortune (

《新財富》

Huatai United Securities was awarded “Best

Domestic Investment Bank” (

本土最佳投

行

), “Most Innovative Investment Bank” (

最

具創新能力投行

), “Best Investment Bank in

Equity Underwriting” (

最佳股權承銷投行

“Best Investment Bank in Bond Underwriting”

(

最佳債權承銷投行

), “Best Refinancing

Investment Bank” (

最佳再融資投行

), “Best

IPO Investment Bank” (

最佳

IPO

投行

), “Best

Investment Bank in Mergers and Acquisitions”

(

最佳併購投行

), “Best Investment Bank in

Serving Overseas Markets” (

海外市場能力最

佳投行

), etc.

The selection of “Institutional Investor • Caixin

All – China Research Team Awards” (

機構投

資者

•

財新資本市場分析師成就獎

) in 2022:

The Company was awarded “Best Analyst

Team (Mainland China) No. 3” (

最佳分析

師團隊

(

大陸

)

第三名

), “Best Analyst Team

(Overseas) No. 7” (

最佳分析師團隊

(

海

外

)

第七名

), “Best Sales Teams (Mainland

China) No. 1” (

最佳銷售團隊

(

大陸

)

第一名

“Best Sales Teams (Overseas) No. 10” (

最佳

銷售團隊

(

海外

)

第十名

), “Best Enterprise

Relationship Teams (Mainland China) No. 1”

(

最佳企業關係團隊

(

大陸

)

第一名

), “Best

Enterprise Relationship Teams (Overseas) No.

7” (

最佳企業關係團隊

(

海外

)

第七名

), etc.

Investment

management

business

Shanghai Stock Exchange:

Huatai Asset Management was awarded

“Outstanding Manager for Asset Securitization

Business for 2021” (2021

年度資產證券化業務

優秀管理人

) and “Excellent Manager for Asset

Securitization Innovative Business for 2021”

(2021

年度資產證券化創新業務優秀管理人

)

China Southern Asset Management was

awarded “2021 Outstanding Bond Investment

Institution” (2021

年度優秀債券投資機構

) and

“2021 Outstanding Bond Dealer” (2021

年度債

券優秀交易商

)

The selection of “2022 Junding Award in

China’s Securities Industry” (2022

中國證券業

君鼎獎

) organized by Securities Times:

Huatai Asset Management was awarded

“2022 Junding Award for All-round Asset

Management Agency in China’s Securities

Industry” (2022

中國證券業全能資管機構君鼎

獎

)

The selection of “ChinaVenture Awards

for 2021” (

投中

2021

年度榜

) held by

ChinaVenture Investment:

Huatai Purple Gold Investment was awarded

“Best Chinese Private Equity Investment

Institutions TOP 20” (

中國最佳中資私募股權

投資機構

TOP 20), “Best China Private Equity

Investment Institutions TOP 50” (

中國最佳

私募股權投資機構

TOP 50), “Best Chinese

Subsidiaries of Brokers for Private Funds TOP

10” (

中國最佳券商私募基金子公司

TOP 10),

“Best Chinese Limited Partners TOP 30” (

中

國最佳有限合夥人

TOP 30), “Best Institutions

for Investment in Biomedical Fields TOP 30 in

China’s Medical and Health Service Industry”

(

中國醫療及健康服務產業最佳生物醫藥領域

投資機構

TOP 30), etc.

Shenzhen Stock Exchange:

Huatai Asset Management was awarded

“Outstanding Manager for Special

Asset-backed Plans for 2021” (2021

年度優秀

資產支持專項計劃管理人

)

China Southern Asset Management was

awarded “Outstanding ETF Fund Manager for

2021” (2021

年度優秀

ETF

基金管理人

) and

“2021 Fund Market Investor Service Award”

(2021

年度基金市場投資者服務獎

)

Shanghai Securities News:

China Southern Asset Management was

awarded “Golden Fund • Fund Management

Company for Passive Investment Award” (

金基

金

•

被動投資基金管理公司獎

)

Huatai-PineBridge was awarded “Golden

Fund • Fund Management Company for Passive

Investment Award” (

金基金

•

被動投資基金管

理公司獎

)

China Securities Journal:

Huatai Purple Gold Investment was awarded

“Golden Bull Outstanding Brokers for Equity

Investment” (

金牛券商股權投資卓越機構

)

China Southern Asset Management was

awarded “Golden Bull Fund Company for

Passive Investment”(

被動投資金牛基金公司

獎

)

Huatai-PineBridge was awarded “Golden

Bull Fund Company for Passive Investment”

(

被動投資金牛基金公司獎

)

International

business

The selection of “2021 Annual Awards” (2021

年度獎項

) organized by PDI (Private Debt

Investor), an internationally renowned private

debt industry magazine:

Huatai International was awarded “Best

Private Debt Investor (Asia-Pacific Region)”

(

最佳私募債投資機構

(

亞太區

)), “Best

Real Estate Private Debt Investment Fund

Manager (Asia-Pacific Region)” (

最佳地產私

募債投資基金經理

(

亞太區

)), “Best Project

(Asia-Pacific Region)” (

最佳項目

(

亞太

區

)) and “Best PE Corporate Finance Project

(Global)” (

最佳

機構融資項目

(

全球

))

The selection of “2021 AAA National Awards

(China)” (2021

年度

AAA

國家獎

(

中國區

))

organized by The Asset:

Huatai International was awarded “Best

Local Corporate and Institutional Advisor

Award (Broker)” (

最佳本地企業及機構顧問

獎

(

券商類

)) and “Best Private Bond Advisor

Award” (

最佳私募債券顧問獎

)

The Selection of “Financial Institution Awards”

(

金融機構大獎

) organized by Bloomberg

Businessweek:

Huatai International was awarded

“Annual Outstanding FINTECH Securities

Company Award” (

年度金融科技證券公司

卓越大獎

), “Annual Outstanding Securities

Company Award” (

年度證券公司傑出大

獎

), “Risk Management Excellence Award”

(

風險管理傑出大獎

), “Excellence Award

for Digital Innovation” (

數碼創新卓越

大獎

), “Outstanding Wealth Management

Platform Award” (

財富管理平台傑出大獎

“Outstanding Initial Public Offering Project

Award” (

首次公開招股項目卓越大獎

) and

“Corporate Financing Excellence Award (the

Greater Bay Area of the PRC)” (

企業融資卓越

大獎

(

中國大灣區

))

The selection of “China Securities Golden

Bauhinia Award” (

中國證券金紫荊獎

)

organized by Hong Kong Ta Kung Wen Wei

Media Group:

Huatai International was awarded

“Outstanding Securities Services Agency” (

卓

越證券服務機構

)

The selection of “2022 Junding Award in

China’s Securities Industry” (2022

中國證券業

君鼎獎

) organized by Securities Times:

Huatai International was awarded “2022

Junding Award for the Best Hong Kong Stock

Broker in China’s Securities Industry” (2022

中國證券業最佳港股經紀商君鼎獎

)

The selection of “2022 Outstanding Bank

Award” (2022

年卓越銀行大獎

) organized by

Asiamoney, an international reputable financial

magazine:

Huatai International was awarded

“Investment Bank with the Most Improvement”

(

最具飛躍表現投行

)

The selection of “Hong Kong FinTech

Impetus Awards for 2022” (

香港金融科技發

展大獎

2022) organized by Metro Finance, a

mainstream financial broadcasting media in

Hong Kong:

Huatai International was awarded

“Investment and Wealth Management –

Securities and Foreign Exchange Investment

Finance Awards” (

投資理財－證券及外匯投

資金融大獎

)

Cerulli Associates and other public

information:

As of the end of the third quarter of 2022,

AssetMark ranked third in the U.S. TAMP

industry with a market share of 11.2%

IV.

ANALYSIS OF CORE COMPETITIVENESSES DURING THE REPORTING PERIOD

(I)

A technology-driven pioneer in China

’

s securities industry transformation

The Group is committed to building technology as its core competitiveness, and

comprehensively promoting the Group’s digital transformation, focusing on the

overall target of “client’s success, business innovation, operation optimization and

employee empowering”, actively transforming its business and management model with

digital thinking and platforms. It strove to build a leading self-developed system for

information technology research and development to achieve co-creation of technology

and business through all-round technology empowerment, and create business model

innovation driven by digitalization and advantages of the whole business chain with

platform-based support. In the field of wealth management, the Group launched

“ZhangLe Fortune Path 8.0” (

漲樂財富通

8.0) and continuously built personalized

wealth management platforms through personalized posting of diversified contents

and refined operation. In the field of institutional services, the launching of the 3.0

version of “Xing Zhi” (

行知

), our self-developed digital platform serving institutional

customers, facilitated enterprises and institutional investors to effectively enhance the

productivity and explore new open ecological models. It continued to empower front-

line employees and leveraged the “AORTA” (

聊

TA), QingCloud (

青雲

), Investment

Banking Cloud (

投行雲

) and other business and working platforms to effectively

improve the efficiency of employees and promote the increase in customer scale and

activity. The Group sped up in advancing towards the goal of deep platformization of

businesses and continuously promoted the development of the FICC Elephant Trading

Platform (FICC

大象交易平台

) and distributed fast trading platforms, significantly

improving the efficiency of core trading platforms. Relying on the credit analysis

management system (CAMS system), Securities Lending Path 4.0 (

融券通

4.0) and

other platforms, it continued to empower innovation in business models. It focused

on building and upgrading the Data Intelligence Middle Platform 3.0 (

數智中台

3.0)

and the RIS investment research platform to develop the supporting capability of

the Group’s integrated middle office. The technical competency and talent team the

Group developed through independent research and development over the years have

laid a solid foundation for the building of platform-based and systematic competitive

advantages. Meanwhile, with equity investment serving as a link, the Group focused on

outstanding technological innovation companies to accelerate the construction of the

FINTECH ecosystem and actively established presence in cutting-edge sectors, such as

big data, artificial intelligence, blockchain, cloud computing and RPA security, to build

future-oriented technological capacity reserves.

(II) The open digital wealth management platform provides efficient and professional

services to mass customers

The Group has established one of the most dynamic wealth management platforms

in China’s securities industry with more than 20.00 million customers. The Group

is committed to building an integrated operation system of “people + platform”,

establishing a wealth management operation system driven by the headquarters and

linked with the headquarters and branches, creating a professional and open platform

development ecology, continuously gathering professional financial service capabilities

and professional financial service information, so as to continuously expand the scale

of customers and ecological partners, and to actively expand the brand influence. The

Group launched “ZhangLe Fortune Path” (

漲樂財富通

), a mobile service platform, for

our clients, and “AORTA” (

聊

TA), a cloud-based working platform, for investment

advisors. Through iterative upgrades, we strengthened their functions, deepened their

coordination, with which, the two platforms efficiently and accurately empowered

front-line investment advisors. As of the end of the Reporting Period, the cumulative

download volume of “ZhangLe Fortune Path” (

漲樂財富通

) was 70.0602 million.

According to the statistics of Analysys, the average NMAU of “ZhangLe Fortune Path”

(

漲樂財富通

) amounted to 9.2683 million during the Reporting Period, ranking the first

among all APPs of securities companies. Since 2014, the Group has ranked the first in

the industry in terms of equity and fund trading volume for nine consecutive years. The

Group further promoted the development of investment advisory business for buyers,

built an integrated investment research system and digital platform covering assets,

strategies and products, as well as an accompanying service system based on customers’

profitability experience, and created the “Worry-free Series (

省心系列

)” investment

advisory brand for buyers. During the Reporting Period, the asset size of the Group’s

fund investment advisory business remained at the top of the industry, and our asset

allocation, product research, strategic operation and companion service systems have

been continuously improving. According to the statistics from the Asset Management

Association of China (

中國證券投資基金業協會

) in the fourth quarter of 2022, the

size of the Company’s equity and hybrid public fund holdings amounted to RMB122.6

billion and the size of non-money market public fund holdings amounted to RMB136.7

billion, both ranking the second in the industry.

(III) First-class investment banking business with systematic services for clients and

high-quality development

The Group firmly grasped significant opportunities of the deepening reform of the

capital market. Adhering to the “customer-oriented” operation philosophy and towards

the direction of industry focus, regional layout and customer demand exploration,

the Group strengthened domestic and overseas, on-exchange and OTC cross-market

synergy, comprehensively improved the full-range product service ability and the

comprehensive service quick response ability. In 2022, the Group maintained the

leading market position for its investment banking business and further enhanced its

business strength. As a pioneer in GDR programs, the Group is the only securities

company that has both GDR issuer and underwriter experience as well as execution

experience in the whole business chain. In 2022, the Group maintained and continuously

expanded its advantages in the GDR sector. As of the end of the Reporting Period, the

Group ranked the first in the industry in terms of the number and scale of the GDR

programs underwritten. The Group achieved outstanding results in the onshore and

offshore integrated layout and ranked the second among Chinese investment banks

in terms of the weighted amount of IPOs sponsored in the Hong Kong stock market

in 2022. During the Reporting Period, the Group’s lead-underwriting scale of full

variety bonds was further expanded, ranking the third in the industry. For the M&A

and restructuring business, the Group focused on advancing benchmark large-scale and

innovative projects and actively explored continuous services for customers, maintaining

its leading position in the industry. It has been ranking the first in the industry in terms

of the total number of transactions on licensing M&A and restructuring programs since

2012. The Group continuously enhanced the construction of the compliance risk control

system and further improved the quality of projects. The approval rate of the Group’s

IPO programs reached 100% in 2022.

(IV) Comprehensive asset management platform with both scale and innovation

advantages

Relying on the large customer base and advantage in the whole business chain resources,

the Group has established one of the leading asset management platforms in the industry

by giving full play to its abilities in exploring investment bank assets, risk pricing and

product design. The total amount of assets under asset management business ranked

the forefront of the industry. As of the end of the Reporting Period, the scale of asset

management was RMB479.614 billion. Focusing on the characteristics of brokers and

with the investment asset management and the asset management services of investment

banks based on the entire business chain of securities companies as drivers, the Group

provided one-stop top-ranking investment products, asset allocation and overall

financial service solutions to empower the process of the asset management service for

customers. It strengthened the two-way driving of the Group, leveraged on the genetic

advantages of investment banking, displayed the digital application capabilities and

continuously enhanced the active management capability to develop differentiated core

competitiveness. Meanwhile, through customized services featuring multiple assets and

multiple strategies, the Group provided a basket of customized comprehensive financial

services for institutional customers, which met customers’ different needs for product

forms, liquidity and risk return through competitive fixed-income products as well

as featured products such as FOF and MOM. The Group is a leader of ABS product

designs in the industry, and has set a benchmark for the industry through constant

innovation in underlying assets, transaction structure and other aspects. It has issued

multiple notes in areas such as epidemic control and prevention, and green finance to

support real economy projects, with the business scale continuously ranking the top in

the industry. In 2022, the Group ranked the second and the third in the industry in terms

of the issuance number and the issuance scale of enterprises’ ABS, respectively. The

ATOMS released the business support capability and generally established the ABS

analysis system and professional standards of the Group, making it the first platform for

the creation, professional analysis and appraisal of ABS products in China. During the

Reporting Period, the Huatai Purple Gold Jiangsu Communications Holding Expressway

Closed-end Infrastructure Securities Investment Fund, for which the Group acted as the

fund manager and asset-backed securities manager, was officially listed for trading on

the Shanghai Stock Exchange, making it the first public REITs program on expressways

in Jiangsu Province.

(V)

Acceleration in global layout and creation of cross-border ecology to march toward

a new stage of high-quality development

The Group always adheres to the strategy of constantly expanding its international

business layout along with the international development of customers, and offers

global resources to its customers through continuous deepening of integrated cross-

border linkage and enhancing the comprehensive cross-border financial services

platform system, to better serve the overseas expansion of Chinese customers and

the domestic investment of international investors. During the Reporting Period, the

international rating agency Standard & Poor’s kept the credit rating of “BBB+” with

stable prospect for the Company and its subsidiary Huatai International, which was the

highest level among Chinese securities companies. Leveraging on the Group’s domestic

resources and taking cross border as the starting point, Huatai International returned to

the origin of brokers and focused on the development of capital-based intermediary. It

deeply cultivated the integrated platform-based and cross-border service ecosystem with

customer-oriented business concept through effective domestic and overseas linkage,

business synergy, strengthened risk control and platform operations, so as to promote

the healthy development of various businesses. During the Reporting Period, Huatai

Financial Holdings (Hong Kong) continued to deepen its “4+1” business platform

system with the equity business platform, fixed-income business platform, wealth

management platform, fund platform and flagship investment banking business, which

facilitated its differentiated competitive advantages. As of the end of the Reporting

Period, Huatai International recorded a stable growth against the market. The asset scale

was nearly HK$200 billion with continual improvement of comprehensive strength,

ranking at the forefront of Chinese securities companies in Hong Kong. During the

Reporting Period, Huatai Financial Holdings (Hong Kong) officially obtained the

qualification as a participant of the Special Purpose Acquisition Companies (SPAC)

Exchange of the Hong Kong Stock Exchange and the registration as a cross-border

conversion agency for stock connect global depository receipts granted by the Shenzhen

Stock Exchange, which enhanced its ability to conduct international development and

participate in mainstream international capital markets. Huatai Financial Holdings

(Hong Kong) participated in and completed 5 IPO sponsored-projects and 1 listing

by way of introduction in the Hong Kong stock market, ranking the second among

Chinese investment banks in terms of the weighted amount of IPOs sponsored in the

Hong Kong stock market. Huatai International completed the first international carbon

emission reduction transaction on the Core Climate platform of the Hong Kong Stock

Exchange, making it one of the first Chinese securities companies entered the platform

and completed international carbon emission reduction transactions. The subsidiary of

Huatai International in Singapore was officially established during the Reporting Period

and the application for relevant business licenses is under stable progress, which will

further deepen its international business layout. In addition, AssetMark has always

maintained independence in operation and completed the acquisition of Adhesion

Wealth during the Reporting Period. It maintained its leading position in the industry

with its leading business model and advanced technology platform, and constantly

increased its business revenue.

(VI) Comprehensive risk management featuring professional and platform advantages

Adhering to the prudent risk management culture and with controlling risks, improving

quality and efficiency and promoting development as risk management targets, the

Group is committed to enhancing the core competitiveness in risk management with

adhering to the core risk management philosophy of high engagement, full coverage and

deep penetration and taking collectivization, specialization and platformization as the

main approach. The Group established and improved a comprehensive risk management

system that is adapted to the integrated and international development of the entire

business chain of the Company, continuously perfected the risk governance structure,

constantly boosted risk management mechanisms and control measures, vigorously

conducted the R&D and iteration of risk management instruments and attached great

importance to the application of information technology in risk management. During

the Reporting Period, the Group sped up in promoting the construction of the onshore

and offshore integrated risk management system, deepened the integrated penetration

and coverage across markets, businesses and products to resonate with businesses,

intensified risk control on key businesses, continued to deeply advance the construction

of the risk management platform and consolidated the foundation of the integrated, real-

time, measurable and controllable risk management capabilities to facilitate the strategic

advancement of the Group towards professional and international development.

(VII) Establishment of a development platform continuously empowering the growth of

first-class professional talents

Sticking to the cultural connotation of “openness, inclusiveness, innovation, struggle

and responsibility”, the Group continuously stimulates the power and vitality of all

staff of Huatai for “advancing towards new and high growth”, constantly improve

the value of talents and empower their growth. In 2022, with the focus on optimizing

talent structure, improving talent effectiveness and speeding up in talent training, the

Group is committed to building a platform-based talent development model towards

the professional and international talents, in bid to promote the growth of talents

together with the organization and transform its talent advantage into a core competitive

advantage, thereby further improving the contribution rate of talents. It reasonably

planned on the demand for human resources in the medium-to-long term, focused on

the reserve of scarce talents on wealth management, institutional business, FINTECH

and international business segments and continuously recruited high-quality and

outstanding college graduates to further optimize the talent structure and boost the

talent reserve of the Company. It advanced the training of outstanding young staff in

practice and developed the management backup talent team towards the future. Always

considering practice as the main battlefield for the growth and accomplishment of

outstanding young staff, the Group promoted communications, on-the-job training, work

rotation and other practical exercises and trained and selected talents in practice. With

comprehensive capabilities and performance contribution as the basis, it expanded the

occupational development space, facilitated the best matching of talents with positions

and improved the creativity of the talent team. On the basis of the implementation

of the restricted share incentive scheme, it explored diversified long-term incentive

frameworks, gradually improved the long-term incentive and restrictive mechanism,

achieved benefits and risks sharing between employees and the Company as well as

common development, focused on enhancing the enthusiasm, cohesiveness and core

competitiveness of the employees of the Company and facilitated the sustainable and

steady development of the Company in the long term.

OPERATION DISCUSSION AND ANALYSIS

Unit: Thousand Yuan

Currency: RMB

Segment

revenue

and other

income

and gains

Segment

expenses

Segment

results

Segment

profit

margin

(%)

Year-on-

year

change of

segment

revenue

and other

income

and gains

(%)

Year-on-

year

change of

segment

expenses

(%)

Year-on-year

change of

segment

profit margin

Wealth management business

23,482,561

(15,063,586)

8,418,975

35.85

(10.23)

(18.79)

Increase of 6.76

percentage points

Institutional services business

8,133,656

(7,434,388)

697,370

8.57

(34.91)

(1.85)

Decrease of 30.89

percentage points

Investment management business

2,270,428

(1,210,570)

(47,946)

(2.11)

(45.45)

(6.21)

Decrease of 84.28

percentage points

International business

9,413,986

(7,521,339)

1,892,647

20.10

19.28

16.36

Increase of 1.98

percentage points

Others (including offset)

3,523,741

(4,585,497)

1,266,992

35.96

189.62

4.10

Increase of 127.89

percentage points

Segment total

46,824,372

(35,815,380)

12,228,038

26.11

(9.83)

(6.45)

Decrease of 5.23

percentage points

(I)

Wealth management business

Market environment and industry trend of wealth management business

(1)

The in-depth development of the wealth management market in China

driving business transformation and upgrading, wealth management service

capabilities were continuously enhanced

With the recovery and development of China’s real economy, the continuous

improvement of a multi-level capital market, the increasing supply of

financial investment products, the continuous growth of total social wealth

and the optimization and improvement of regulation measures on the

property market, the wealth management market in China is under the stage

with long-term reform and rapid development and the demand of residents

for high-quality equity assets and professional investment advisory has

been increasing. Establishing the comprehensive customer hierarchical

and grading service system based on complete business chains, customer-

oriented organizational structures, comprehensive service platforms and

business synergy mechanisms will become the key to the development

of the wealth management business of securities companies. Under the

background of the construction of a new “dual circulation” development

pattern, the continuous progress in the construction of modern capital

market with Chinese characteristics, the increase in the penetration rate of

the wealth management industry, and the increase in demand for specialized

business, etc., the wealth management market in China will transform to an

integrated financial service pattern covering customers’ full-lifecycle, and

securities companies shall continue to strengthen the investment research

capabilities and the construction of investment advisory capabilities, and

shall continue to improve the quality of wealth management services

to proactively build a sustainable wealth management business model.

In the future, wealth management institutions that focus on building an

innovation-driven wealth management business ecosystem, forge wealth

management service capabilities on the whole business chain, enhance the

customer-centric service concept, deeply understand diversified customer

needs, and pay attention to providing full life cycle, all-round and full

category comprehensive financial services for customers will gain extensive

development space.

(2)

Changes in clients’ asset allocation demands and market competition trends

continuously promoted the transformation of wealth management, and

professional wealth management institutions will usher in development

opportunities

Currently, the PRC wealth management market is increasingly standardized;

the pattern of wealth management channels is continuously diversified;

wealth management instruments and product supply are constantly expanded;

and the complexity of asset allocation services is increasing. High-quality

wealth management services have become the core competitiveness of

wealth management institutions. Building a more comprehensive, deeper,

highly three-dimensional, greener and more reciprocal wealth management

service model, continuously improving the wealth management business

system, increasingly enhancing the wealth management service capability

and providing customers with professional and personalized comprehensive

financial service solutions will become important directions for the strategic

transformation of securities companies. During the Reporting Period,

the domestic stock market tumbled down with the Wind All China Index

dropped by 18.66%, the Shanghai Composite Index dropped by 15.13%

and the Shenzhen Component Index dropped by 25.85%; in terms of major

international indexes, the S&P 500 dropped by 19.44%, the Nasdaq dropped

by 33.10% and the Dow Jones Industrial Average dropped by 8.78%. Against

increasingly complex internal and external market environment, and the

accelerated deepening in the reform and opening up of the capital market

led by the full implementation of registration system, wealth management

institutions are exposed to greater challenges and higher requirements in

core professional capabilities and value creation capability on accompanying

customers. In the context of continuously professional and complicated

customer demand for wealth management services, financial institutions

which constantly improve multi-level, personalized and all-asset synergistic

product supply, continuously establish standardized, ecological and refined

all-process customer operation systems, have advanced financial service

platforms, competitive financial product systems and professional talent

teams, and transform towards the overall high-quality development of the

wealth management business will gain advantages in future competition.

(3)

FINTECH empowered the reshaping of operation and management models

to comprehensively promote the digital transformation and high-quality

development of the wealth management industry

In recent years, a new round of technological revolution and industrial

evolution is accelerating, and the frontier technology is deeply integrated

with traditional financial business, which continues to enrich the application

scenario and has a comprehensive impact on the business model and

operational efficiency of securities companies. Securities companies should

actively embrace and practice the digital transformation strategy, develop

innovative FINTECH ecosystems, constantly enhance the capabilities

of empowering all links of the wealth management business value chain

through FINTECH application innovation and build a new digital, platform-

based and ecological wealth management service model, so as to promote

and lead business and management innovation, realize synergy, integration

and share between internal and external resources, and facilitate the high-

quality development of the wealth management industry. FINTECH and

digital transformation have become fundamental forces driving the evolution

of the financial ecosystem and strategic high grounds for the competitiveness

of securities companies, which will profoundly change the business model,

business structure and operation systems of securities companies and will

be the core driving force to the development of the securities industry in the

next strategic cycle. The construction of a digitalized wealth management

ecology featured with co-construction, co-governance and co-utilization,

the business transformation led by leading digital technologies, and the

promotion of comprehensive digitalization, precision and intelligence of

products, operation, management and services to provide customers with all-

round, itinerary and digitalized wealth management services, will become

the inevitable choices of a large domestic securities company to build

differentiated competitive advantages and achieve continuous innovation in

business models.

Operational measures and achievements of wealth management business

(1)

Securities, futures and options brokerage business

During the Reporting Period, the Group, with the focus on the digital,

platform-based and ecological concept and with intelligent interactions,

algorithm engine, digital decision-making and other application technologies

and product systems as cores, actively established customer trading systems

and growth systems covering the full life cycle, continuously improved the

financial service and marketing platform with online and offline integration

and the combination of centralized operation and ecosystem operation,

continuously explored new business models and constantly improved

the coverage of and the satisfaction on the wealth management business.

It continued to build the advantage in the integrated operation of dual

platforms, namely the “ZhangLe Fortune Path” (

漲樂財富通

) platform and

the “AORTA” (

聊

TA) platform, and constantly promoted the iteration and

optimization of platforms to practically strengthen the capability of platforms

in empowering customers and investment advisors and enhanced the

customer stickiness of and the activeness on platforms. The Group actively

facilitated the upgrading of the customer service model and the innovation

of the user operation model and built a content-driven centralized service

operation model to continuously enrich the supply in the content ecosystem

and constantly enhance the in-depth operation capability and the service

quality. It continued to explore the development route for the professional

division of work on the investment advisory team, continuously improved

the classified and hierarchical position system of the investment advisory

business line, actively established an investment advisory service system

to meet customers’ diversified demands and comprehensively improved the

efficiency of investment advisory services.

The Group continuously promoted innovation in products and services of

the “ZhangLe Fortune Path” (

漲樂財富通

) platform, constantly optimized

content operation model, developed featured market transactions and wealth

management services, and devoted to effectively enhancing the customer

stickiness and activeness with better customer experience, more product

instruments and more extensive in-depth services. During the Reporting

Period, “ZhangLe Fortune Path” (

漲樂財富通

) had a download volume of

4.7407 million, with a cumulative download volume of 70.0602 million since

its launch; 96.74% of trading customers used “ZhangLe Fortune Path” (

漲

樂財富通

) to conduct transactions. According to the statistics of Analysys

Think Tanks (

易觀智庫

), during the Reporting Period, the average NMAU of

“ZhangLe Fortune Path” (

漲樂財富通

) was 9.2683 million, ranking the first

among securities company APPs. At the same time, the Group continuously

consolidated the basic trading service capability of “ZhangLe Global” (

漲

樂全球通

) platform, continued to enhance user stickiness with professional

platform services, and be committed to providing customers with one-stop

investment management services for global assets. The cumulative download

volume of “ZhangLe Global” (

漲樂全球通

) was 1.9829 million since its

launch. During the Reporting Period, the average NMAU was 184,200.

The Group further strengthened its advantages in trading services based on

advanced platforms. According to the statistics of members of the Shanghai

and Shenzhen Stock Exchanges, the Group’s stock and fund trading volume

totaled RMB38.76 trillion, ranking the first place in the industry. As of the

end of the Reporting Period, according to internal statistics, the total assets

of client accounts reached RMB4.99 trillion.

Data of agency transaction amount

Currency: RMB

2022

2021

Type of

securities

Agency transaction

amount

(in RMB100 million)

Type of

securities

Agency transaction

amount

(in RMB100 million)

Stocks

323,960.42

Stocks

392,026.40

Funds

63,627.23

Funds

30,889.85

Debentures

418,032.44

Debentures

386,057.90

Total

805,620.09

Total

808,974.15

Note: The data of agency transaction amount in 2021 and 2022 are cited from the Shanghai

and Shenzhen Stock Exchange members’ statistics, in which the fund data in 2021 do

not include trading volume of money market funds on the Shanghai Stock Exchange;

in view of the adjustment to the calibers of the Shanghai Stock Exchange members’

statistics, the fund data in 2022 include trading volume of ETFs, monetary ETFs,

LOFs and publicly offered REITs on the Shanghai Stock Exchange.

During the Reporting Period, the Southbound Trading business went steadily,

with trading types continuing to be diversified and customers’ experience

continuing to be optimized. For the Southbound Trading business under

Shanghai-Hong Kong Stock Connect, there were 30.7 thousand authorized

users in total. For the Southbound Trading business under Shenzhen-Hong

Kong Stock Connect, there were 32.0 thousand authorized users in total. In

terms of stock options brokerage business, the Group continued to improve

the multi-level trading platform system, enhanced technological support

to customers’ trading, constantly strengthened operation and risk control

capabilities, and therefore the business has continued to maintain its market

leading edge. According to the statistics of the Shanghai Stock Exchange, the

Company’s stock option brokerage business at the Shanghai Stock Exchange

ranked the first in the industry in terms of trading volume and market share

during the Reporting Period.

For the futures brokerage business, Huatai Futures continued to optimize its

outlet layout. As of the end of the Reporting Period, there were 9 branches

and 42 futures branches in total covering 4 municipalities directly under

the Central Government and 17 provinces in China, being the agent of 110

types of futures. During the Reporting Period, Huatai Futures realized an

agency trading volume of 530.5520 million lots with a transaction amount

of RMB55,502,705 million. The Group continuously deepened the synergy

between its securities and futures businesses and accelerated the integration

of platforms, with 234 securities branches permitted to be engaged in futures

IB business and the total number of futures IB business customers reaching

56,957 as of the end of the Reporting Period.

(2)

Financial product sales and fund investment advisory business

During the Reporting Period, the Group promoted the development of

financial products sales and fund investment advisory business centered

on customer needs from multiple perspectives. With platformization and

specialization as the traction, the Group proactively constructed an integrated

asset allocation service system based on buyers’ perspective, to provide

customers with strategic portfolios and financial products that meet their

risk and return needs, and meet customers’ multi-level wealth management

needs. According to internal statistics, during the Reporting Period, the

number of financial products held (except for the cash management product

“Tian Tian Fa” (

天天發

)) was 9,161, and their sales scale (except for the

cash management product “Tian Tian Fa” (

天天發

)) was RMB512.284

billion. As of the end of the Reporting Period, the fund investment advisory

business authorized assets amounted to RMB13.913 billion and the number

of customers was 617,600. According to the statistics from the Asset

Management Association of China (

中國證券投資基金業協會

) in the fourth

quarter of 2022, the Company’s shares and hybrid public funds maintained a

scale of RMB122,600 million, and the public funds in the non-money market

maintained a scale of RMB136,700 million, both ranking the second in the

securities industry.

During the Reporting Period, the Group actively established the “Worry-free

Institute” (

省心研究院

), a public investment think tank. Through reshaping

of research framework and logics, building of service scenarios, review of

service contents and other dimensions, the Group continuously consolidated

the investment research foundation and satisfied multi-layered asset

allocation demands of customers. It strengthened the research and judgment

on various assets and policy trends, optimized the time and pace for product

issuance, intensified the layout of product lines on the basis of asset research

and improved the cashability of financial products and services. The Group

established a classified, hierarchical and grading buy-side investment

advisory service system on customers, continuously optimized customer

service scenarios and customer service plans and provided customers with

personalized asset allocation solutions through deep exploration of customer

demands and continuous customer operation. It advanced the establishment

of an integrated buy-side advisory service mechanism on investment

advisory and constantly increased supports and empowerment to viewpoints

of investment consultants and customers. It enhanced the construction of

digital platforms, continuously upgraded and iterated the investment research

platform and vigorously built a working platform based on investment and

research business processes, achieving effective improvements in timely

product research and convenient strategic management and strengthening the

overall business efficiency and capability.

(3)

Capital-based intermediary business

During the Reporting Period, the Group focused on its customer-oriented

operation philosophy, closely followed market and policy changes,

deepened the cooperation across the entire business chain, continuously

optimized the customer structure, deeply tapped into customer demands and

actively built a multi-layered and differentiated customer service system. It

continuously diversified marketing and service models, constantly bolstered

the construction of the risk management and control system, and practically

strengthened its core competitiveness by relying on the advantages of

the ecological construction of the business and the continuous iteration

of the open securities financing platform system. The Group effectively

consolidated internal and external resources, continuously improved the

securities lending business operation and management system, constantly

diversified cooperation models with licensed financial institutions, actively

explored the lending potential of institutional customers, consolidated the

foundation for the development of securities sources and expanded the

scale of the securities pools. Meanwhile, it led the digital transformation

through the construction of platforms, continuously perfected the platform

and ecosystem of securities lending and practically improved customers’

service experience. The Group newly released the “Securities Lending Path

4.0” (

融券通

4.0), further advanced the continuous iteration of the open

platform for securities lending, efficiently connected the suppliers and

demanders of sources of securities, and continuously optimized the new

model of digital operation of the securities lending industry. According to

the regulatory statement data, as of the end of the Reporting Period, the

balance of margin financing and securities lending business of the Parent

Company was RMB112.347 billion, with a market share of 7.29%, and the

integral maintenance guarantee ratio was 255.98%. Among them, the balance

of securities lending business was RMB17.241 billion, with a market share

of 17.98%. The pending repurchase balance of stock pledged repurchase

business was RMB37.279 billion in total, with an average fulfillment

guarantee ratio of 244.13%. Among them, the pending repurchase balance of

on-balance-sheet business was RMB7.385 billion, with an average fulfillment

guarantee ratio of 252.62%; while the pending repurchase balance of off-

balance-sheet business was RMB29.894 billion.

Prospect of wealth management business for 2023

Wealth management business carries the strategic functions of the Group to

gather and accumulate customer resources and assets on a large scale. In 2023,

the Group will continue to seize the strategic opportunities for the in-depth

development of the wealth management market, rely on the dual-end platform and

ecosystem operation for customers and investment advisors, further expand the

size of customers and customers’ assets through the online and offline integrated

operation driven by the headquarters with the coordination of the headquarters

and branches, promote its transformation into a full life cycle service model for

customers and continue to build new competitive edges for the future.

For wealth management business, the Group will focus on the digital, platform-

based and ecological concept, continuously optimize the synergy mechanisms of

the full business chain and deepen and implement platform-based operation and

customer operation to develop new customer growth and service operation systems

and build a new ecosystem for the wealth management business. It will optimize

the mechanisms on customers, investment advisory and platform operation, deepen

the integrated operation model on centralized customer services and constantly

improve the professional quality of the integrated service operation team to

expand the brand influence and get information about customers’ minds with

refined content operation and create the long-term value of services. The Group

will vigorously build a customer-oriented, specialized, professional, classified and

hierarchical investment advisory team, constantly improve the hierarchical and

grading operation system with hierarchical customers, grading investment advisory

and matched services and speed up in facilitating the professional division of

work on investment advisory and the differentiated empowerment of platforms to

improve the efficiency of investment advisory services. It will continue to upgrade

the structure of platforms, constantly promote the innovation of platform-based

products and the upgrading of service capabilities, strengthen the empowerment

on professional scenarios and the support to the operation of platforms, propel

the surging of wealth management services and satisfy the demand for investment

services of diversified customer groups with different lifecycles.

For the financial product sales and the fund investment advisory businesses,

the Group will continue to strengthen the construction of digital platforms and

constantly enhance the platform-based empowerment capability. It will focus on

professional capabilities on investment and research, continue to diversify strategy

types, optimize service scenarios, and iterate and upgrade allocation models. It

will strengthen content operation and the building of product systems, improve the

path of a research chain of “asset – strategy – product”, and proactively explore

an integrated service mechanism for investment and advisory, continuously

strengthen investment advisory and customer empowerment to constantly improve

the influence of business brands.

For the capital-based intermediary business, the Group will continue to be

customer-oriented, continuously broaden its business thinking and strategic

perspectives, and actively innovate in business operation models. It will focus

on differentiated competitiveness on the ability to obtain sources of securities,

the customer service capability and the application of FINTECH to meet the

diversified and differentiated business needs of customers. It will continue to

diversify customer service dimensions, strengthen resource-based customer

development to achieve high-quality customer acquisition, continue to promote

the iteration and upgrading of the “Securities Lending Path” (

融券通

) platform

and create an integrated securities pool at home and abroad, on and off the market.

We will vigorously build an open and efficient ecosystem in the securities lending

industry and continuously reinforce the brand advantage of the Securities Lending

Path (

融券通

(II) Institutional services business

Market environment and industry trend of institutional services business

(1)

The transformation and upgrading of real economies and the comprehensive

deepening reform of the capital market have provided greater potentials for

the display of integrated advantages of institutional services business

With the implementation of a series of reform measures led by the overall

registration-based IPO system reform in recent years, the market width

and depth have been constantly improved. With increasing inclusiveness

in the market system, the investment and financing functions were

significantly enhanced and the strategic position of the capital market in

serving the high-quality development of the economy continued to rise. The

institutional services business will have an opportunity to achieve leap-

forward development and focus on the development of globalized diversified

businesses covering all chains, all products and all markets, among which,

providing institutional clients with high-quality comprehensive financial

services covering the full life cycle will become an important manifestation

of the core competitiveness of securities companies. Under the new

development pattern of the continuous promotion of the transformation and

upgrading of real economies and the overall deepening of the capital market

reform in China, the securities industry has initiated a new stage with the full

optimization of fundamental systems and the reform and development for the

full restructuring of the market ecosystem, which presents the increasingly

improved market-based resources allocation mechanisms, and the investment

banking business of securities companies faces strategic opportunities

in high-level transformation. Securities companies with optimized and

complete business structures and products systems, rich project reserves and

coordinated business development, whole business chains and full-lifecycle

service systems will achieve more business increment and revenue. In the

future, with the building of the new pattern of the multi-tiered capital market

with dislocation development and orderly competition, the institutional

services business will set higher standards for business qualification, capital

strength, scale advantage, product design, risk control system and business

channels of securities companies. Securities companies that are customer-

oriented, proactively expand the depth and breadth of business and services,

with professional capabilities on systematic and platform-based construction

and are transforming into integrated financial service providers, as well as

practically serve the real economy with all products and high efficiency, will

face more business opportunities and achieve high-quality development.

(2)

The transformation trend of professionalism, institutionalization and

internationalization of the capital market have set higher standards for

institutional services business of securities companies

In recent years, in the context of macroeconomic transformation and

upgrading, continuously deepening of the capital market reform and the

innovation and development of securities business in China, the participation

of institutional investors has been increasing with their shareholding

percentage and market influence significantly increased, and the voice of

institutional investors in the capital market has been increasingly enhanced.

The evolution trend with institutional investors as the participants of

the market has become unstoppable. The in-depth changes of the market

structure will reshape the new ecosystem of the capital market and

facilitate the capital market in increasing trading activity, product richness

and international participation, providing large business development

potential and improvement space for institutional investors of securities

companies. Driven by the policy orientation to promote the high-quality

development of funds and benefited from the capital market reform, the

trend of residents’ wealth allocation towards financial assets continues

to strengthen, the number and management scale of mutual funds have

fluctuated and increased, and the market influence continued to increase,

and the process of institutionalization of the capital market sped up, which

have raised higher requirements on the capabilities of securities companies

in providing integrated and professional financial services. In addition, with

the accelerated formation of a new pattern of high-level two-way opening

of the capital market, superior market resources are speeding up in flowing

into superior institutes and the polarization in the securities industry is

increasingly obvious. The provision of more professional, insightful, and

convenient one-stop, full life-cycle services to customers based on platform

empowerment and efficient integration of onshore and offshore business

resources will be the key in the new round of competition on the institutional

services business among securities companies. In the future, securities

companies which actively develops platform-based, integrated and ecological

institutional investor service system, builds the ecosystem of professional

institutional investors services with a more open horizon and leading service

capabilities and provides comprehensive financial services covering the

full life cycle of investment and financing will obtain more development

opportunities.

(3)

The sustainable development of institutional services business of securities

companies requires strong risk management capabilities as the foundation

Under the complicated environment with macroeconomic transformation

in China, frequent international political conflicts, increasingly stringent

regulations on the capital market, more complicated securities business types,

more diversified financial risk types etc., securities companies face new

challenges in risk management. It is key for securities companies to facilitate

business development and build the new pattern of differentiated competition

and development to improve the comprehensive risk management structure

based on their own development strategies and business development,

establish effective pre-risk control procedures, complete risk management

systems and strong risk culture system, and strengthen the construction

of high-efficient and professional risk control capabilities. Securities

companies should accurately identify, effectively manage and resolve risks

in a timely manner with complete risk management systems, scientific risk

management models and methods and advanced risk management means to

guarantee steady development in the long term. The effective management

of financial risks requires securities companies to continuously optimize

the organizational structure and operational process of risk management,

continue to improve the professional and platform-based comprehensive risk

management mechanism to achieve centralized monitoring, analysis and

full process control of risk information. Defusing financial risks in a timely

manner requires securities companies to effectively utilize the financial

derivatives market while possessing strong capital strength. Under the

background of the official implementation of the Futures and Derivatives

Law, the diversification of the basic financial product system improved

instruments for market risk hedge and risk management and the securities

industry will play a more important role in guaranteeing the stable operation

and healthy development of the financial market and the capital market.

Securities companies should vigorously establish a comprehensive risk

control system, strengthen the establishment of risk prevention, response

and disposal systems, and continuously enhance risk resilience and cycle

resilience capabilities to earnestly seize material strategic opportunities in

the reform and development of institutional services business.

Operational measures and achievements of institutional services business

(1)

Investment banking business

During the Reporting Period, the Group firmly grasped significant

opportunities in deepening the reform of the capital market. Adhering to

the customer-oriented operation philosophy and towards the direction of

industry focus, regional layout and customer demand exploration, the Group

strengthened domestic and overseas, on-exchange and OTC cross-market

synergy, and comprehensively improved the full-range product service

ability and the comprehensive service quick response ability. The investment

banking business continued to maintain the leading market position with

further improvement in business strength.

Consolidated data

Currency: RMB

Categories of

Issuance

Times of lead

underwriting (time)

Lead

underwriting amount

(in RMB10 thousand)

Lead

underwriting income

(in RMB10 thousand)

Current

Period

Accumulated

over the years

Current

Period

Accumulated

over the years

Current

Period

Accumulated

over the years

Issue of new shares

252

3,194,594.25

21,664,664.16

182,513.39

1,066,078.54

Additional issue of

new shares

284

4,957,768.24

45,825,157.46

30,640.47

340,978.77

Allotment of shares

118,387.10

2,280,547.65

471.70

23,109.07

Issue of bonds

2,024

5,695

49,495,258.01

247,629,694.48

94,694.57

636,092.64

Total

2,084

6,267

57,766,007.60

317,400,063.75

308,320.13

2,066,259.02

Note: The above data are from the regulatory statements, while the statistical caliber is

the issuance completion date of the project; preferred shares are included in the

additional newly issued shares; bonds issuance includes treasury bonds, enterprise

bonds, corporate bonds (including exchangeable bonds), convertible bonds, short-

term financing bonds and medium-term notes, etc., but it excludes asset-backed

securitization projects.

①

Equity financing business

During the Reporting Period, the equity financing business continued

the whole business chain strategy, fully displayed the advantages of

the full business chain system and the integrated onshore and offshore

platform of a large investment bank with high-quality customers as

the center. The Group enhanced deepening efforts in the industry,

served leading customers in key industry sectors and completed various

benchmarking projects in the market, recording continuously increasing

industry influences. According to the statistics from Wind Information,

the Group’s equity lead underwriting amount (including the IPOs,

additional offerings, allotment of shares, preferred shares, convertible

bonds, exchangeable bonds) was RMB155.369 billion, ranking the

fourth in the industry.

②

Bonds financing business

During the Reporting Period, the bond financing business, on the basis

of strict risk control, fully utilized its full-license advantage, leveraged

its all-round business advantage of linking equity and debt, continued

to create unique bond products, continuously improved customer

tiered management, and actively cultivated core customer groups and

maintained a stable position in the industry. According to the statistics

from Wind Information, the Group’s lead-underwriting amount of

full variety bonds was RMB980.402 billion, ranking the third in the

industry.

③

Financial advisory business

During the Reporting Period, in terms of the M&A and restructuring,

the financial advisory business seized the historical opportunity of

SOEs reform and fully displayed the advantage of business innovation.

The Group focused on capabilities on the identification of high-value

transaction opportunity and deal-making, and vigorously developed

customer continuous services, thus maintaining the leading position of

the M&A and restructuring business, further strengthening our brand

strengths. The number of M&A transactions approved and registered by

the CSRC was 9, and the transaction amount was RMB165.067 billion,

both ranking the second in the industry.

④

OTC business

During the Reporting Period, the Group actively explored NEEQ listing

projects with the target of listing on the Beijing Stock Exchange,

fully displayed the integrated advantage as a large investment bank

and continuously provided innovation-based developing enterprises

with complete capital market services. During the Reporting Period,

the Group provided continuous overseeing services for 22 listed

companies, and completed one project listing on the NEEQ, one project

with approving letter for listing, two projects under review for listing,

one private placement project of a listed company and one project

with approval for private placement. Jiangsu Equity Exchange, a

holding subsidiary of the Group, continued to optimize its compliance

and risk management system, improved the management of existing

products and actively explored innovative business models. It deepened

digital transformation, completed the application for pilots on the

innovation and application of national blockchains and was granted

the pilot qualification, continuously improving the capability to

provide comprehensive financial services for small, medium and micro

enterprises. As of the end of the Reporting Period, the Group has had

15,025 enterprises listed and displayed, 145 enterprises purely under

custody, 227 membership units, and 79,472 investors of all types, and

it raised RMB11.845 billion for enterprises through financing during

the Reporting Period.

(2)

Prime brokerage (PB) business

During the Reporting Period, the Group continued to practice the whole

business chain service system and earnestly implemented the service

philosophy with customer operation as the core. The Group deployed an

expert team on products to key business sectors, focused on comprehensive

financial service needs from customers’ full lifecycle, relied on digital

platforms to provide integrated operation services, effectively connected

internal and external business ecology to empower our customers and

continuously improve customers’ satisfaction for services. As of the end of

the Reporting Period, the Group had 10,154 fund products in custody and

the total size of fund in custody reached RMB418.436 billion. We provided

administration services to 13,419 fund products (including 806 products

from our asset management subsidiary), of which the service scale reached

RMB983.442 billion (including the business scale of asset management

subsidiary of RMB386.645 billion). According to the statistics from the

Asset Management Association of China (

中國證券投資基金業協會

) in the

fourth quarter of 2022, the Group ranked the fourth in the industry in terms

of the number of products filed under the private fund custody business.

(3)

Research and institutional sales business

During the Reporting Period, in terms of research business, the Group firmly

promoted the transformation of business models and actively practiced the

full business chain to consistently improve business synergy and efficiency,

continuously improve the cross-border research service system and build

the competitive advantages of the research business. It adhered to the digital

and platform-based development orientation, upgraded and iterated the

“Xing Zhi” (

行知

) digital service platform and the “RIS” intelligent research

platform, comprehensively expanded the dimension and depth of platform-

based services, optimized and improved the production and management

processes of products and constantly improved the business consistency

and the production efficiency of platforms. Focusing on leading domestic

and overseas institutional customers, the Group was devoted to displaying

the supporting and leading role of the research business through the linkage

of multi-industrial researches, diversified customer services, enhanced

depth of contents, multiple types of extended service platforms and other

measures to continuously improve the research quality and boost efforts in

tapping into the in-depth value of researches. Centering on customers, in

terms of the institutional sales business, the Group leveraged advantages

in full business chains, classified and concentrated on the demands of key

customer groups for financial services and built the customer-driven and

product-driven service matrix for institutional sales and trading. It promoted

the construction and functional iteration of the “Xing Zhi” (

行知

) service

platform and the institutional investor work platform, actively established

a hierarchical and grading customer service system with collaboration,

linkage and onshore and offshore integration and deeply connected the

diversified demands of institutional investors. The Group has actively carried

out various forms of research service activities, including releasing 10,230

research reports, organizing 23,524 research roadshow services and 1,074

thematic teleconferences, and holding 22 strategy meetings, summit forums

and thematic meeting online or through the integration of online and offline

means. During the Reporting Period, the volume of sub-position transactions

for the public fund was RMB1,218.869 billion.

(4)

Investment and trading business

①

Equity trading business

During the Reporting Period, the Group made ongoing efforts to

resolutely promote business transformation to a trading business model,

stuck to the de-directionalization strategy, optimized and strengthened

the integrated investment system on absolute gains with big data

transaction business, macro fundamental business and innovative

investment business as cores and continued to expand the breadth, depth

and intensity of fundamental research on equity. It established efficient

and excellent system platforms with transactions as the center and

implemented strategies driven by science and technology and solidified

by systems and platforms to promote the integrated and platform-based

development of the equity investment and trading business and actively

build core capabilities on investment and trading. It fully implemented

the digital and platform-based construction and continuously promoted

the iteration and upgrading of platforms to increasingly enhance the

performance of key nodes, strengthen the supervision capability on

business operation and comprehensively boost the business efficiency

of systems and platforms. In addition, during the Reporting Period,

as one of the first securities companies approved to conduct stock

market-making business on the STAR Market, the Group continuously

enhanced the overall planning on the business, constantly improved

the trading system, iterated market-making strategies, perfected the

risk control system and carried out the business in a steady and orderly

manner.

②

FICC trading business

During the Reporting Period, the Group firmly promoted the strategic

transformation of the FICC quantitative trading, continuously

developed the customer-oriented FICC business model with trading

as the core, achieving multi-dimensional improvement in structural

innovation, layout optimization and target expansion for the product

system. In terms of fixed-income proprietary investment business, it

practiced the management model of hedge fund portfolios under the

de-directionalized rotation of general categories of assets, actively

carried out multi-layered and quantitative innovation practice on

models, strategies and products and fully displayed advantages in

market foresight and risk control to polish the steady profitability.

In terms of market-making business, it actively advanced the two-

way empowerment with big trading platforms and achieved all-around

improvement in market-making scale, quotation quality, market-

making efficiency and risk control, continuously intensifying the

influence in the industry. As for bulk commodity business and foreign

exchange business, the Group continuously promoted the platform-

based construction and business innovation and steadily enhanced the

customer service capability. It completed the first foreign exchange

settlement and sale under the current account under the H share “full

circulation” program. The Group continued to advance the digital

business transformation, constantly optimized the business functions

and modules of the HEADS elephant platform (HEADS

大象平台

upgraded and built the core capabilities of the CAMS (credit analysis

management system) and enhanced the investment trading and risk

management capabilities in a systematic and platform-based manner.

③

OTC derivatives trading business

During the Reporting Period, the Group strived to build a customer-

oriented over-the-counter derivatives business system. It constantly

improved the business innovation capability and the trading pricing

capability with trading as the driving force. It created and promoted

cross-market, diversified and differentiated financial derivates products,

provided customers with all-dimensional derivative trading services

and deeply docked institutional service systems and customer demands.

It continuously leveraged on the FINTECH advantages, actively built

accounts with the integration of major asset varieties and trading types

and achieved the accumulation, upgrading and transformation of core

business capabilities with the platform-based construction to fully

empower business development and improve the comprehensive value

creation capability of customers. According to the data portals in the

regulatory statement SAC agreement, as of the end of the Reporting

Period, the Group had 6,576 income swap transaction business

contracts with an ongoing size of RMB111.319 billion; the Group had

1,489 OTC option trading business contracts with an ongoing size of

RMB126.007 billion. During the Reporting Period, the Group issued

3,310 private placement products through the China Securities Internet

System and OTC market, with a total amount of RMB29.542 billion.

Prospect of institutional services business for 2023

In terms of the institutional services business, the Group is devoted to providing

industrial and financial institutional customers with full-business chain services.

It is a key strategic sector for the Group to advance towards high-quality

development. In 2023, the Group will continue to classify and focus on key

customer groups’ demands for financial services, continuously promote the

systemic service model, consistently strengthen business synergy mechanisms,

implement comprehensive operation of customer value and build a new model of

services for institutional customers based on the platform, product and ecosystem

to achieve mutual empowerment and common growth with customers.

For investment banking business, we will continue to focus on customers,

continuously improve domestic and overseas levels of integration, and provide

systematic services covering the whole business chain to customers with a global

perspective and execution. At the same time, we will continue to advance the

platform-based business and the digital transformation, establish the platform-

based big system on investment banking with high-quality customers as the core

and build a more efficient and competitive ecosystem on investment banks with

the focus on the lifecycle demands of customers on all business chains. In terms

of equity financing business, the Group will continue to grasp the historical

opportunities under the capital market reform and the full implementation

of the registration-based IPO system, further strengthen the industry focus

and deeply root in regional development. Moreover, the Group will increase

the number of high-quality customers and continue to enhance the integrated

capabilities on coordinated services across the market and various products. In

terms of the bond financing business, the Group will continue to deeply root

in regional development, focus on industries, concentrate on products, actively

promote innovative products and services, and constantly improve the marketing

development capabilities and professional service capabilities. For the M&A and

restructuring financial advisory business, the Group will practically serve the

needs of customers and investors for industrial M&A and enterprise restructuring,

effectively activate the capital strategies of leading customers, continue to expand

diversified business opportunities, and actively build M&A transactions with

market influence.

For prime brokerage business, we will rely on the platform-based and ecological

development strategies, continue to strengthen customer-oriented operation

philosophy, increase efforts to promote business expansion, further expand the

size of customer groups, constantly promote digital transformation and improve

the efficiency of operation to continuously provide customers with comprehensive

services and achieve diversified realization of business value.

For research and institutional sales business, we will continue to improve the

integrated domestic and overseas system on institutional customer services,

strengthen the introduction of high-quality compound talents and the optimization

of internal talent teams, improve the synergy and efficiency in the full business

chain based on the effective traction of platforms and build all-dimensional and

one-stop financial service ecosystem with the focus on the demands of institutional

investors to continuously improve market competitiveness and industry position.

For investment trading business, we will continue to build platform-based and

systematic investment and trading capabilities, practically upgrade to the goal

of mastering asset pricing rights and productization of trading capabilities,

actively build future-oriented core competitiveness, and promote diversification

of profit models. For the equity trading business, the Group will comprehensively

upgrade the system of big data business strategies, continue to improve the

macro hedging investment capabilities on a large scale, optimize and expand the

investment models of innovative investment businesses, continuously enhance

the efficiency of the systems and platforms, and actively build and improve the

equity investment and trading business system with large-scale and stable profit.

For FICC trading business, the Group will continue to strengthen the systematic

business construction and development, upgrade and improve the functions of the

HEADS elephant platform (HEADS

大象平台

) and the CAMS (credit analysis

management system), fully display the coverage advantages in business objects,

constantly enrich and optimize the product structures, continuously improve

the investment trading capabilities and accelerate the business transformation.

For OTC derivatives trading business, the Group will leverage on first-mover

advantages in business, the advantages in the systems with market competitiveness

and the strong capabilities on business innovation, trading hedge, product design

and pricing, risk control and compliance operation, to continuously innovate

business models and product structures to create hard-core competitiveness.

(III) Investment management business

Market environment and industry trend of investment management business

(1)

Asset management business systems were increasingly improved and the

industry entered into a new stage of accelerating high-quality development

Under the background of the national economic momentum transformation,

the upgrading of industrial structure, the reform of financial systems and

the accelerated direct financing and with the increasingly improvement

of asset management business systems and the introduction of the

implementation rules on personal pensions and relevant supporting policies,

the ecological pattern in the asset management industry in China will be

reshaped. The asset management business is speeding up in shaping a new

pattern with orderly competitions and cooperation. Practically improving

the active management capability and returning to the original intention

of the asset management business have become inevitable trends for the

development of the asset management business of securities companies.

Under the new pattern of the asset management industry with refined,

transparent and standardized high-quality development, the demand for asset

management services is increasingly diversified and integrated. Various

asset management institutions should full leverage on their capabilities and

resource endowments, continuously intensify the product supply capability,

establish a multi-layered product system and asset allocation capability

and develop differentiated operation models and core competitiveness to

provide customers with multi-layered, all-dimensional and high-quality asset

management services. According to the statistics from Asset Management

Association of China (

中國證券投資基金業協會

), as of the end of the fourth

quarter of 2022, the total amount of asset management business of fund

management companies and their subsidiaries, securities companies, futures

companies and private fund management institutions was approximately

RMB66.74 trillion, among which, the amount of private asset management

business of securities companies and their subsidiaries was RMB6.87 trillion.

Asset management institutions should initiatively seize the opportunity of

national economic transformation and the upgrading of residents’ demand,

actively integrate internal and external high-quality business resources and

step up efforts in business innovation in asset management products. They

should constantly diversify product investment strategies, continuously

optimize investment management models, steadily boost the capabilities

on product innovation, investment research and comprehensive risk

management, build a multi-level and diversified asset management business

ecosystem and practically provide professional services and important

support for the investment and financing needs of the real economy and the

preservation and appreciation of residents’ assets.

(2)

China’s equity investment market saw the trading pace slowing down on

the whole with intensified industrial competition and differentiated capital

structures

Under the background of the complicated and severe international situation,

the increasingly strict regulatory environment of the industry and multiple

shocks from factors beyond expectation, China’s equity investment market

faces ordeals. The activity of the fundraising market showed a downward

trend, the enthusiasm for the investment market decreased and the overall

trading volume of the market declined. At the same time, competition

for high-quality projects was fierce, the incremental capital sped up in

gathering to top tier management institutions, which have strong professional

capabilities and resource integration capabilities, and the differentiation

between market fundraising structures continued. According to the statistics

from Zero2IPO Research Center private placement department, in 2022,

7,061 new funds were raised in China’s equity investment market, with

a total fundraising amount of RMB2,158.255 billion, representing a

decrease of 2.28% over 2021; and there were 10,650 investment cases

in China’s equity investment market, with a total investment amount of

RMB907.679 billion, representing a decrease of 36.21% over 2021. With

the recovery and development of the real economy and continuously driven

by the comprehensive deepening of the reform of the capital market,

the optimization of regulatory mechanisms and policy environment on

the industry, and the steady progress of the full implementation of the

registration system in particular, China’s equity investment market will

embrace historical development opportunities and equity investment

institutions are exposed to higher requirements on their management

capabilities. In the long term, while serving the high-quality development

of the real economy, improving the multi-layered capital market systems,

increasing the proportion of direct financing and satisfying the residents’

demand for asset allocation, China’s equity investment market will play

an increasingly important fundamental and strategic role in promoting

innovative capital, supporting scientific and technological innovation of

enterprises and industrial transformation and upgrading. The securities

companies’ private equity investment business should leverage advantages in

full business chains, rely on professional and three-dimensional investment

management systems and continue to enhance all-round and comprehensive

service capabilities. We will actively create core business competitiveness,

thus effectively improving the efficiency of serving real economy.

Operational measures and achievements of investment management business

(1)

Asset management business of securities companies

During the Reporting Period, with the advent of an era with new rules

for post-asset management, Huatai Asset Management, a wholly-owned

subsidiary of the Group, actively adapted to changes in market and

regulatory environment. Adhering to the “customer-oriented” philosophy and

with the investment asset management and the asset management services on

investment banking as drivers, it provided one-stop top-ranking investment

products, asset allocation and overall financial service solutions to empower

the process of the asset management service for customers. Relying on

the resources of the Group in the entire business chains, it strengthened

the two-way driving of the Group, leveraged on the genetic advantages of

investment banking, displayed the digital application capabilities, actively

promoted the establishment of the investment research and trading systems

and continuously enhanced the active investment management capability

to develop core competitiveness on platform operation and integration.

According to the regulatory statement data, as of the end of the Reporting

Period, the total asset management scale of Huatai Asset Management was

RMB479.614 billion. According to statistics from Wind Information, during

the Reporting Period, Huatai Asset Management issued 130 enterprises’ ABS

(asset-backed securitization), ranking the second in the industry; and the

issuance scale was RMB130.500 billion, ranking the third in the industry.

During the Reporting Period, for asset management business of securities

companies, we focused on the overall size and quality of asset management

and continued in transformation towards active management. We actively

built scaled and differentiated product systems covering different risk-return

characteristics by full leveraging the capabilities on asset discovery, risk

pricing and product design. For the collective asset management business, we

effectively implemented transformation under new regulations and completed

the transformation of currency-enhanced public fund, a key product. A total

of 183 collective asset management plans were under management and the

total management scale was RMB66.570 billion. In respect of the single

asset management business, we accelerated the development of net worth

entrusted business and continuously promoted business transformation. A

total of 415 single asset management plans were under management and the

total management scale was RMB114.806 billion. In respect of specialized

asset management business, we continued to promote product innovation to

continuously improve the service capabilities in the full business chain. A

total of 208 specialized asset management plans were under management and

the total management scale was RMB205.269 billion. In respect of the public

fund management business, we actively created net-value wealth management

solutions for investors with different needs and managed 33 public fund

products in total with aggregated management scale of RMB92.969 billion.

The table below sets forth the scale and income of the securities companies’

asset management business:

Currency: RMB

2022

2021

Item

Entrusted

scale

(in RMB100

million)

Net income

(in RMB10

thousand)

Entrusted

scale

(in RMB100

million)

Net income

(in RMB10

thousand)

Collective asset

management business

665.70

16,025.90

696.18

24,055.07

Single asset management

business

1,148.06

21,269.30

1,804.56

28,200.79

Specialized asset

management business

2,052.69

13,471.38

1,947.82

12,211.97

Public fund management

business

929.69

104,230.43

737.17

137,059.45

Note: The above data are from the regulatory statements. In 2021, changes in net income

of collective asset management business and public fund management business were

mainly due to basis adjustment.

(2)

Private equity fund management business

During the Reporting Period, for the private equity fund management

business, the Group focused on industry research based on its business

advantages, deeply deployed on key industries, continuously explored and

invested in high-quality projects in the industry and actively promoted the

invested enterprises to seize the opportunities of the registration-based

IPO system reform to achieve listing and exit. Meanwhile, it strengthened

the partnership with large SOEs, leading enterprises in the industries and

listed companies, promoted the raising of new funds, expanded the size of

fund management and continuously accumulated project reserves for the

investment business. As of the end of the Reporting Period, Huatai Purple

Gold Investment and its secondary subsidiaries as managers have filed a

total of 23 private equity investment funds with the Asset Management

Association of China (

中國證券投資基金業協會

), with a total subscription

amount of RMB56.626 billion and a total paid-up capital of RMB42.934

billion. During the Reporting Period, the above-mentioned private equity

investment funds implemented a total of 30 investment projects with a total

investment amount of RMB1.104 billion, all of which were equity investment

projects. According to the statistics of the Asset Management Association of

China (

中國證券投資基金業協會

), as of the fourth quarter of 2022, Huatai

Purple Gold Investment ranked the third in the industry in terms of average

monthly scale of private fund.

(3)

Asset management business of fund companies

During the Reporting Period, with adherence to equal emphasis on

compliance management and business development, fund companies

under the Group continuously stepped up efforts on product research and

business innovation, optimized and adjusted the layout of products, focused

on improving the construction of intelligent systems and continued to

research and develop diversified investment models to further enhance the

comprehensive capabilities on cross-cycle asset management in multiple

categories and continue to maintain the increase in the total scale of assets

under management. As for asset management business of China Southern

Asset Management, as of the end of the Reporting Period, the total assets

managed by China Southern Asset Management amounted to RMB1,729.516

billion. Among which, China Southern Asset Management managed a total

of 317 funds in its mutual funds business, the total asset size of which

amounted to RMB1,058.535 billion, and the total asset size of private

funds business amounted to RMB670.981 billion. As for asset management

business of Huatai-PineBridge, as of the end of the Reporting Period, the

total assets managed by Huatai-PineBridge amounted to RMB326.789

billion. Specifically, Huatai-PineBridge managed a total of 126 funds

in its mutual funds business, the total asset size of which amounted to

RMB309.170 billion, and the total asset size of private funds business

amounted to RMB17.619 billion. (The profit or loss from equity investments

of China Southern Asset Management and Huatai-PineBridge were included

under other segments in the segment report)

(4)

Asset management business of futures companies

During the Reporting Period, Huatai Futures, a wholly-owned subsidiary of

the Group, actively promoted the technology-led digital transformation and

the innovation-led business transformation, continuously built the customer-

oriented and integrated service system and enhanced the management

capability mainly on FOF products under the CTA strategy for products. It

vigorously expanded customer groups and product scale, constantly improved

professional capabilities and developed core competitive advantages to meet

the differentiated risk appetites and asset allocation demands of customers.

As of the end of the Reporting Period, Huatai Futures managed a total of 38

asset management plans which were in the duration period. The total asset

management scale was RMB1,340,906,200, and the futures equity scale was

RMB177,769,000.

(5)

Alternative investment business

The Group carried out alternative investment business through its wholly-

owned subsidiary Huatai Innovative Investment. During the Reporting

Period, Huatai Innovative Investment continued to improve its internal

management system and mechanism, focused on FINTECH equity investment

and the co-investment business of the STAR Market, and steadily explored

the co-investment business of the ChiNext and the strategic placement

business of the Beijing Stock Exchange according to regulatory requirements

and business layout. As of the end of the Reporting Period, there were 46

subsisting investment projects with an investment scale of RMB2,150.1069

million. The investment attributes mainly include co-investment on the

STAR Market and equity investment.

Prospect of investment management business for 2023

The investment management business plays the dual strategic roles of asset

manager and asset services supplier. It is an important area for the Group’s

financial product innovation and client asset management. In 2023, the Group will

continue to display professional capabilities in asset discovery, risk pricing and

product creation, fully leverage resources advantages in full business chains, and

actively build scaled and featured financial product system with full varieties to

meet the differentiated demands of customers. It will build a first-class investment

management platform to continuously reinforce its leading position in the industry.

The asset management business of securities companies will rely on the platform

of the entire business chain, display the advantages on featured resources of

securities companies in asset management, strengthen differentiated development

endowments, consolidate the foundation of the platform-based infrastructure

capability and constantly and deeply integrate full business scenarios and internal

and external resources into platforms to establish competition barriers with

differentiated businesses, achieve hardcore breakthroughs with platform-based

operation and seek business breakthroughs, transformation and transcendence.

It will display the advantages of large platforms, expand customers of securities

companies with the focus on customer demands, strengthen advantageous

assets with the genes of investment banks and improve featured tracks based

on advantageous industries of securities companies to constantly consolidate its

market influence and brand recognition.

In respect of the private equity fund management business, the Group will seize

the opportunities of the comprehensive deepening of the reform of the capital

market and institutional innovation, continue to further explore and deploy on

key industries, build the ecosystem of key industries, continuously improve its

professional investment management capabilities and further consolidate the

industry influence on key sectors. It will leverage advantages in full industrial

chains of the Group, continue to exploit and explore new businesses, actively

carry out raising of new funds and constantly expand the size of fund management

to facilitate the diversification of business structure and profit models.

In respect of the asset management business of fund companies, we will

continue to strengthen compliance risk control and management and talent team

building. We will continue to maintain the exploration of new businesses and

the development of new products, focus on building multi-layered, distinctive

and differentiated product lines, actively establish an integrated investment and

research platform, constantly deepen the digital and intelligent integration and

practically enhance professional capabilities on investment research, to output

stable, long-term and sustainable investment performance for customers.

In respect of the asset management business of futures companies, we will

proactively integrate internal and external investment research resources,

constantly advance the digital transformation, improve the decision-making

and management mechanism on investment, enhance the research and judgment

capabilities on strategic iteration, continuously strengthen our management

capabilities focusing on FOF products in commodity CTA strategies and

vigorously develop FOF products of major assets, with an aim to proactively

establish a unique product system and management capabilities with differentiated

competitiveness.

In respect of the alternative investment business, we will constantly improve

system and mechanism and operational process, speed up in the construction

of the FINTECH ecosystem, and prudently promote the development of equity

investment, the follow-on investment on the STAR Market, and other new

businesses, effectively control existing business risks and duly handle post-

investment management, and steadily improve capital usage efficiency and return

on assets.

(IV) International business

Market environment and industry trend of international business

(1)

The in-depth development of the institutional two-way opening up of the

capital market accelerated the internationalization of securities industry, and

clients’ demand for cross-border services promoted the international service

capabilities of securities companies

With the gradual implementation of measures on the high-level institutional

and systemic opening up of the capital market in China, the interconnection

mechanism of the capital market was continuously optimized and the

fundamental trading systems were increasingly perfected. International

varieties constantly increased and onshore and offshore investment and

financing channels were continuously expanded. The capital market had

the new value proposition of being a platform connecting onshore and

offshore financial and industrial resources and building a hub with dual-

cycle systems, which will achieve a two-way opening at a higher level, in a

broader range and in more ways. With increasing capabilities of the capital

market to allocate global resources and serve the real economy, the securities

industry will also usher in historic and major development opportunities, and

leading securities companies, leveraging on worldwide resource allocation,

customer service and risk management, will be of greater potential to become

large-scale investment banks with international competitiveness. Currently,

in light of the gradual implementation of laws, regulations, policies and

guidance in respect of two-way opening in the capital market, the growing

demands from clients for cross-border integrated financial services, the

strengthening trend of global asset allocation, and the internationalization

development of securities industry entering a critical period, international

business has become a front field for securities companies to expand

development space, increase new profit growth points and promote business

structure upgrading. Large-scale securities companies should actively seize

the strategic opportunities from the accelerated formation of a new pattern

of high-level two-way opening up of the capital market, further explore and

build a leading comprehensive service platform with integrated domestic

and international operations, continuously optimize domestic and overseas

business cooperation and collaboration mechanism, accelerate the progress of

internationalization and actively build a cross-border ecosystem. They should

also continue to enhance the international operation capabilities, cross-

market service capabilities, global asset allocation capabilities and cross-

border risk management capabilities, to better provide domestic and global

customers with multi-market, all-dimensional and one-stop investment and

financing transaction experience and integrated financial solutions.

(2)

Good growth momentum of the independent channel of the US wealth

management industry is favorable for the long-term development of the

TAMP market

From the perspective of the overall industry development, the current wealth

management industry in the US mainly consists of the independent channel

(registered investment advisors, hybrid and independent broker-dealers,

insurance broker-dealers etc.) and the traditional channel (national and

regional broker-dealers, bank broker-dealers and wirehouse advisors, etc.).

In the wealth management industry, the market share of the independent

channel grows faster than that of the traditional channel and such trend

sustains. According to the statistics of Cerulli, the market size of independent

channels is expected to increase from USD13.1 trillion to USD14.2 trillion

from 2021 to 2026 and the market share will expand from 43% to 49%.

According to the statistics of PriceMetrix, 75% of the investment advisors’

revenue came from management fees in 2020, which was a record level

relative to commissions and the transformation of the charging model from

commissions to management fees was continuously promoted. From the

perspective of business development trends, the funds from investors are

being transferred to investment products with lower costs and fees. The

TAMP industry can keep empowering and fueling the wealth management

business through leading FINTECH development, which can bring the cost

advantage of scale to customers and help them grasp booming development

opportunities. According to the statistics of Cerulli, from 2016 to 2021, the

compound annual growth rate of the TAMP market was 19.1%, which was

significantly higher than that of the overall investment advisory market,

which was 11.6% for the same period.

Operational measures and achievements of international business

During the Reporting Period, as the Group’s holding platform for international

business, Huatai International was fully integrated into the full business chain

system of the Group. It consolidated the intermediary positioning in the capital

market, deeply explored the customer-oriented, integrated and platform-based

cross-border service ecosystem, actively extended overseas business layouts,

expanded trading authority and smoothened trading paths to meet customers’

demands for global asset allocation. It achieved stable performance growth,

constantly deepened the international business layout and continuously enhancing

the influence in overseas markets. As of the end of the Reporting Period, the asset

size of Huatai International reached nearly HK$200 billion, ranking it among the

leading Chinese-funded securities firms in Hong Kong with its comprehensive

strength continuing to improve. In addition, Huatai International established a

subsidiary in Singapore during the Reporting Period and actively applied for the

licenses on capital market services and the waiver of licensing requirements on

wealth management advisory to the Monetary Authority of Singapore.

(1)

Business in Hong Kong

The Group’s business in Hong Kong adhered to its origins as a brokerage

firm, with cross-border business as the starting point, built all-dimensional

and comprehensive cross-border financial service platform systems and

maintained positive growth of its business scale and revenue in the volatile

market environment with its strong platform strength and excellent risk

control capabilities. During the Reporting Period, the business platform

systems including the equity business platform, fixed-income business

platform, wealth management platform, fund platform and flagship

investment banking business continued to deepen with outstanding

differentiated competitive advantages. For the equity derivatives business,

the Group has utilized the advantages of the Group’s platforms to

continuously enhance the allocation of major assets, commodity trading and

the interconnection among securities pools at home and abroad, on and off

the market, and constantly increase the market share and the coverage rate

of top customers; for the stock sales and transactions business, the Group

focused on one-stop and comprehensive cross-border financial services

on “Spot equities + cross-border prime brokerage + QFII” to continuously

improve the cross-border sales system and comprehensively upgrade the

servicing capabilities; for FICC business, the Group accurately judged the

market orientation and conducted forward-looking layout in diversified

businesses, strictly maintained the bottom line for risk control, improved

the cross-border sales and trading systems with the orientation of customer

demands, maintaining the steady business development trend. For the

wealth management business, the Group continuously improved online and

offline platform-based and integrated operation. For online operation, the

Group has continuously optimized the functions and operating capability

of the “ZhangLe Global” (

漲樂全球通

) platform. For offline operation,

the Group actively promoted the upgrading of product functions, trading

systems, account management and other modules, strengthened customer

sales channels for diversified products and provided customers with

comprehensive financial services covering the whole lifecycle. For the

fund business, the Group has continued to enhance the active management

capability, strictly prevented and controlled risks, continuously developed

comprehensive investment platforms with comprehensive business coverage

and increasingly improved functions, vigorously seized high-quality assets

and expanded the management size. For the investment banking business,

the Group practically strengthened cross-market execution and service

capabilities, gave full play to the advantages on the layout on multi product

lines and continuously improved the customer-centric and comprehensive

cross-border investment banking service platform and systems. It sponsored

5 IPO projects and completed 1 listing by way of introduction in the Hong

Kong stock market during the year, ranking the second among Chinese

investment banks in terms of the weighted amount of IPOs sponsored in the

Hong Kong stock market.

During the Reporting Period, the Group’s business in Hong Kong maintained

healthy and balanced business development. As for securities trading, Huatai

Financial Holdings (Hong Kong) achieved the total assets under custody

of HK$80.598 billion and the total stocks trading volume of HK$298.542

billion; as for advising on securities, it actively provided research reports

and advisory services for customers; as for advising on corporate finance,

it participated in completion of 29 listing, re-financing and GDR projects

and 123 bond issue projects with the total amount of trading and issuance of

HK$46.988 billion; as for financing for securities deposits, the accumulated

credit amount was HK$2.418 billion. Besides, during the Reporting Period,

Huatai Financial Holdings (Hong Kong) completed 6 financial advisory

projects in total. During the Reporting Period, Huatai Financial Holdings

(Hong Kong) officially obtained the qualification as a participant of the

Special Purpose Acquisition Companies (SPAC) Exchange of the Hong Kong

Stock Exchange, making it one of the first Chinese securities companies

in Hong Kong obtaining such qualification. It obtained the registration

as a cross-border conversion agency for stock connect global depository

receipts granted by the Shenzhen Stock Exchange, making it one of the first

institutions obtaining the registration for conducting cross-border conversion

businesses from the Shenzhen Stock Exchange after the revision of the rules

and the two-way expansion of the range of application for the Shanghai-

London Stock Connect in 2022.

(2)

AssetMark

AssetMark’s mission is to make a difference in the lives of independent

investment advisors and the investors they serve. The highlights of

AssetMark’s core business include a fully integrated platform with

compelling technology, personalized and scalable services and curated

investment function. Such clear business strategies guided AssetMark to

define its short-term and long-term goals. AssetMark designs and aligns its

strategies to things that matter most to advisors and that differentiate it in

the TAMP marketplace. According to Cerulli Associates and other public

information, as of the end of the third quarter of 2022, AssetMark’s market

share in the US TAMP industry was 11.2%, ranking the third in the industry.

During the Reporting Period, AssetMark maintained its leading position in

the industry and constantly increased the business revenue through leading

business models and advanced technology platforms. As of the end of the

Reporting Period, the total platform assets of AssetMark reached USD91.470

billion; the AssetMark platform served an aggregate of 9,297 independent

investment advisors, of whom, 2,882 active investment advisors manage

assets of more than USD5 million; the total investor households served by

the AssetMark platform reached over 240,000, representing an increase of

14.84% from the end of 2021. During the Reporting Period, 690 investment

advisors signed new contracts with AssetMark. In addition, AssetMark

completed the acquisition of Adhesion Wealth, a wealth management

technology solutions provider, in December 2022, further enhancing its

overall competitiveness in the TAMP market.

(3)

Huatai Securities (USA)

With the US broker-dealer license approved by the US Financial Industry

Regulatory Authority, Huatai Securities (USA) was eligible to conduct

broker-dealer business in the US in 2019, including securities underwriting,

securities brokerage for institutional investors, financial advisory for M&A,

etc. It obtained qualification for proprietary trading in 2020 and obtained

the business qualification for securities trading with institutional investors

in Canada in 2021. During the Reporting Period, Huatai Securities (USA)

continued to improve its system and platform construction, constantly

expanded the variety of trading products and market channels, actively

promoted the development of FICC business, continuously optimized

the cross-border linkage and coordination mechanism of U.S. domestic

businesses and domestic and Hong Kong businesses, and continuously

expanded cross-border FICC trading platform, to effectively meet customers’

asset allocation needs. During the Reporting Period, Huatai Securities (USA)

obtained market access to major stock exchanges in Europe and introduced

the Low-touch algorithm trading platform in the existing High-touch

products in the US market.

Prospect of international business for 2023

International business is a bridge for the Group to build an onshore and offshore

integrated platform as well as a new engine for the high-level development and

profit creation of the Group. In 2023, the Group will continue to deepen the cross-

border integrated management mechanism, constantly strengthen the effective

linkage of teams, platforms and resources and focus on developing the cross-

market capital service ability to provide customers with onshore and offshore

integrated comprehensive financial services and fully improve the competitiveness

and influence of the international business.

Huatai International will stick to focusing on the customer needs, actively build an

integrated, ecological, platform-based and comprehensive cross-border financial

service platform, strengthen business collaboration, diversify product chains and

full-process customer services, strengthen the pre-risk management and control

capability and continuously enhance the platform-based internal synergy in the

full business chain.

For the business in Hong Kong, the Group will continue to improve the customer

service system, consolidate the intermediary positioning of the cross-border

capital market and provide customers with one-stop financial services through

implementing business strategies such as domestic and overseas integration,

equity and debt integration, complementation of institutional wealth, and first-

level and second-level linkage. For equity derivatives business, the Group will

continue to solidify its business strengths, explore new businesses and new

markets and strengthen the levels of customer services in all aspects; for stock

sales and trading business, the Group will actively promote the construction of big

middle office under the prime brokerage business model and continuously build

an integrated global service system with layered coverage and accurate input of

resources based on needs; for FICC business, the Group will continuously improve

the digitalization, boost the capability on integrated sales and transactions based

on the upgrading and iteration of platforms and match multi-layered onshore

and offshore investment and transaction demands of customers; for wealth

management business, it will vigorously advance the integration of online and

offline capabilities, consolidate the transaction and asset allocation functions of

the platform with the orientation of improving customers’ core experience for

online operation and implement the building of platform-based operation with

enhancing digitalization as the core for offline operation; for fund business, it will

continuously promote first-level and second-level linkage and the “investment

linkage” (

投投聯動

) and leverage on the resources advantage across the full

industrial chain to empower customers and actively cooperate with external funds

to improve the reputation and market influence in the industry; for investment

banking business, it will leverage the advantages of the Group as a large platform,

deepen the strategy of advancing all product varieties in parallel, fully display the

advantages in onshore and offshore integration and provide customers with one-

stop comprehensive financial services on the entire industrial chains.

AssetMark will continue to hold onto the core business highlights, build an

integrated technology platform, improve customizable and scaled services,

strengthen advanced investment management capabilities and cultivate a flexible

and professional wealth management ecosystem. AssetMark will continue to

deepen cooperation with the existing investment advisors, focus on customers’

needs, provide differentiated services and assist customer growth to further

expand the investment consulting customer base. AssetMark will continue to

upgrade its digital tools and platforms to empower investment advisors, and

improve interaction experience and office collaboration, and help investment

advisors navigate their clients’ financial health plans. It will vigorously expand

customer channels and devote to improving the operation efficiency and reducing

operational risks through promoting scale-based business and the practice of

the listed company in performing social responsibilities. In addition, AssetMark

will continue to focus on high-quality strategic M&A opportunities to promote

extensive growth.

Huatai Securities (USA) will continue to promote cross-regional cooperation,

deepen the business cooperation and binding in the PRC mainland, Hong Kong

and the US and expand the depth and breadth of the coverage over global

institutional investors. It will vigorously advance the application for the license on

introducing brokers, expand the varieties of FICC products, continuously increase

product and business varieties, constantly broaden market channels and provide

all-round services to meet the customer demand for asset allocation.

(V)

Business innovation and its effects on the Company

’

s business performance, future

development and risk control

During the Reporting Period, the Company constantly carried out business innovation

activities, promoted the innovation of new businesses, new products, services and

management modes, and constantly improved its innovation ability. The development

of innovative business is a supplement to the existing product lines and business scope,

which can effectively release business space, expand client resources and revenue

sources, enhance profitability, as well as improve customer structure and business

model, meet customers’ full and diversified business needs, and further enhance brand

influence.

During the Reporting Period, the Company continued to improve the risk management

mechanism on new businesses, revised the risk assessment and management measures

on the Company’s new businesses, optimized assessment processes on new businesses

and promoted the implementation of construction of process management and control

systems to enhance the quality and efficiency of risk assessment on new businesses and

guarantee that the risks on new businesses are measurable, controllable and bearable.

During the Reporting Period, the Company launched the market making business on

funds and the STAR Market, obtained the market making qualification on certain

commodity futures/options on Zhengzhou Commodity Exchange, Shanghai Futures

Exchange and Guangzhou Futures Exchange and provided liquidity to the market

with its market making capability. The Company set various risk control indicators

on strategic and corporate levels based on its business characteristics and carried out

unified management and control on exposure and position limit. The Company further

improved the ancillary system construction and control mechanism for the market-

making business and included new categories into the risk management system to

ensure that all businesses could be carried out constantly and steadily.

During the Reporting Period, the Company actively participated in investments and

transactions of innovative businesses such as the “Southbound Trading” of bonds,

foreign exchange settlement and sales, stock market-marking on the STAR Market and

market making business on funds. Based on risk characteristics of specific businesses,

the Company deeply studied the substance of risks of all business, identify and assess

potential risks of new businesses, formulate management measures for new businesses

and improve the ancillary personnel arrangement, system construction and management

and control mechanisms on decision-making and authorization, target management, risk

monitoring, model verification and business continuity management to ensure that new

businesses could be carried out in an orderly and steady manner.

(VI) There were no significant changes in the Company

’

s operation status during

the Reporting Period and there were no matters that had or expected to have

significant influence in the future on the Company

’

s operation during the

Reporting Period

VI.

MAJOR OPERATIONS DURING THE REPORTING PERIOD

As of December 31, 2022, on a consolidated basis, total assets of the Group amounted

to RMB846.567 billion, representing a year-on-year increase of 4.95%; total equity

attributable to shareholders of the Company amounted to RMB165.087 billion, representing

a year-on-year increase of 11.23%; total revenue, other income and gains amounted to

RMB46.824 billion, representing a year-on-year decrease of 9.83%; and profit for the year

attributable to shareholders of the Company amounted to RMB11.053 billion, representing a

year-on-year decrease of 17.18%.

(I)

Main businesses analysis

Analysis table of the changes in relevant items of the income statement and the

cash flow statement

Unit: Thousand Yuan

Currency: RMB

Item

Amount for

the current

period

Amount for

the same

period of

last year

Change

percentage

(%)

Total revenue, other income

and gains

46,824,372

51,926,404

(9.83)

Total expenses

(35,815,380)

(38,283,823)

(6.45)

Profit before income tax

12,228,038

16,272,562

(24.85)

Profit for the year attributable to

the shareholders of

the Company

11,052,696

13,346,106

(17.18)

Net cash generated from/(used in)

operating activities

70,290,567

(65,337,094)

N/A

Net cash used in

investing activities

(16,715,000)

(262,042)

N/A

Net cash (used in)/generated from

financing activities

(26,697,139)

44,205,373

N/A

Net increase/(decrease) in cash

and cash equivalents

26,878,428

(21,393,763)

N/A

Revenue, other income and gains

As of December 31, 2022, the Group recorded total revenue, other income and

gains of RMB46,824 million, representing a year-on-year decrease of 9.83%, in

which:

(1)

Fee and commission income recorded a year-on-year decrease of 6.02% to

RMB20,981 million, accounting for 44.81%, mainly due to the decrease in

charges income from securities and futures brokerage business.

(2)

Interest income recorded a year-on-year decrease of 6.76% to RMB13,744

million, accounting for 29.35%, mainly due to the decrease in the Group’s

income from margin financing and securities lending business.

(3)

Net investment gains recorded a year-on-year decrease of 46.53% to

RMB6,027 million, accounting for 12.87%, mainly due to the decrease in

revenue from the Group’s investment business.

(4)

Other income and gains recorded a year-on-year increase of 69.21% to

RMB6,072 million, accounting for 12.97%, mainly due to the increase in

exchange gains.

Unit: Thousand Yuan

Currency: RMB

Item

2022

2021

Increase/decrease

Amount

Ratio

Amount

Ratio

Amount

Ratio

Fee and commission

income

20,981,425

44.81%

22,325,343

42.99%

(1,343,918)

(6.02)%

Interest income

13,744,117

29.35%

14,741,059

28.39%

(996,942)

(6.76)%

Net investment gains

6,026,587

12.87%

11,271,371

21.71%

(5,244,784)

(46.53)%

Other income and gains

6,072,243

12.97%

3,588,631

6.91%

2,483,612

69.21%

Total revenue, other

income and gains

46,824,372

100.00%

51,926,404

100.00%

(5,102,032)

(9.83)%

Total expenses

As of December 31, 2022, the Group’s total expenses were RMB35,815 million,

representing a year-on-year decrease of 6.45%, in which:

(1)

Fee and commission expenses amounted to RMB4,746 million, representing a

year-on-year decrease of 16.04%, mainly due to the decrease in commission

expenses of securities and futures brokerage business.

(2)

Interest expenses amounted to RMB11,111 million, representing a year-on-

year increase of 1.10%, mainly due to the increase in the financing scale.

(3)

Staff costs amounted to RMB10,052 million, representing a year-on-year

decrease of 11.49%, mainly due to the decrease in accrued staff costs as a

result of the income decline in the Group.

(4)

Other expenses mainly include depreciation and amortisation expenses, tax

and surcharges as well as (reversal of)/provision for asset impairment loss

and other operating expenses.

Unit: Thousand Yuan

Currency: RMB

Item

2022

2021

Increase/decrease

Amount

Ratio

Amount

Ratio

Amount

Ratio

Fee and commission

expenses

(4,745,839)

13.25%

(5,652,709)

14.77%

906,870

(16.04)%

Interest expenses

(11,111,339)

31.02%

(10,990,375)

28.71%

(120,964)

1.10%

Staff cost

(10,051,898)

28.07%

(11,357,194)

29.67%

1,305,296

(11.49)%

Depreciation and

Amortization expenses

(1,552,576)

4.33%

(1,432,645)

3.74%

(119,931)

8.37%

Tax and surcharges

(189,971)

0.53%

(239,895)

0.63%

49,924

(20.81)%

Other operating expenses

(8,649,106)

24.15%

(8,062,817)

21.05%

(586,289)

7.27%

Financial assets

impairment reversal/

(losses)

485,349

(1.36)%

(548,188)

1.43%

1,033,537

N/A

Total expenses

(35,815,380)

100.00%

(38,283,823)

100.00%

2,468,443

(6.45)%

Analysis of segment revenue, other income and gains and segment expenses

(1)

Analysis of segment revenue, other income and gains

Unit: Thousand Yuan

Currency: RMB

Business segment

Segment

revenue,

other

income and

gains for

the current

period

Percentage

of total

segment

revenue,

other

income and

gains for

the current

period (%)

Segment

revenue,

other

income and

gains for

the same

period of

last year

Percentage

of total

segment

revenue,

other

income and

gains for

the same

period of

last year

(%)

Increase

or decrease

in percentage

of total segment

revenue, other

income and

gains as

compared to the

same period of

last year

Wealth management business

23,482,561

50.15

26,159,829

50.38

Decrease of 0.23

percentage point

Institutional services business

8,133,656

17.37

12,495,351

24.06

Decrease of 6.69

percentage points

Investment management business

2,270,428

4.85

4,162,162

8.02

Decrease of 3.17

percentage points

International business

9,413,986

20.10

7,892,395

15.20

Increase of 4.91

percentage points

Others (including offset)

3,523,741

7.53

1,216,667

2.34

Increase of 5.18

percentage points

During the Reporting Period, on a consolidated basis, the Group recorded

revenue, other income and gains of RMB46,824 million in total, representing

a year-on-year decrease of 9.83%. Among the principal business segments,

income and other gains from wealth management business, institutional

services business, investment management business and international

business increased year-on-year by RMB-2,677 million, RMB-4,362 million,

RMB-1,892 million and RMB1,522 million, respectively.

In terms of income structure, the income from wealth management business

segment accounted for 50.15% of the Group’s revenue, representing a

decrease in proportion of 0.23 percentage point, mainly because the Group

continued to promote the transformation of its wealth management business

to solidify market advantages under the circumstance that the trading volume

in the stock market was relatively low; as affected by a greater drawdown in

the equity market, the results of the Group’s institutional services business

segment and investment management business segment fluctuated, which

accounted for 17.37% and 4.85% of the Group’s revenue, representing

a decrease in proportion of 6.69 percentage points and 3.17 percentage

points; and the income from international business segment accounted for

20.10% of the Group’s revenue, representing an increase in proportion of

4.91 percentage points, mainly attributable to the improved results of Huatai

Financial Holdings (Hong Kong) and AssetMark.

(2)

Analysis on segment expenses

Unit: Thousand Yuan

Currency: RMB

Business segment

Segment

expenses for

the current

period

Percentage

of total

segment

expenses for

the current

period (%)

Segment

expenses for

the same

period of

last year

Percentage

of total

segment

expenses

for the same

period of

last year (%)

Increase or

decrease in

percentage of

total segment

expenses as

compared to

the same period

of last year

Wealth management business

(15,063,586)

42.06

(18,549,453)

48.45

Decrease of 6.39

percentage points

Institutional services business

(7,434,388)

20.76

(7,574,761)

19.79

Increase of 0.97

percentage point

Investment management business

(1,210,570)

3.38

(1,290,760)

3.37

Increase of 0.01

percentage point

International business

(7,521,339)

21.00

(6,463,785)

16.88

Increase of 4.12

percentage points

Others (including offset)

(4,585,497)

12.80

(4,405,064)

11.51

Increase of 1.30

percentage points

In terms of expenses of each business segment as a percentage of total

expenses of the Group, expenses of wealth management business segment

decreased by 6.39 percentage points, mainly due to the decrease in

fee expenses of securities and futures brokerage business; expenses of

institutional services business segment, investment management business

segment and international business segment increased by 0.97 percentage

point, increased by 0.01 percentage point and increased by 4.12 percentage

points, respectively.

Information of R&D personal

During the Reporting Period, the Group deeply implemented the strategy on

digital transformation, firmly focused on the overall target of “making technology

the core competitiveness of Huatai”, continuously increased investments in IT

construction and constantly established scientific and flexible organizational

systems and talent development systems, achieving stable growth in the number of

R&D staff. As of the end of the Reporting Period, the R&D personal of the Group

amounted to 3,667, representing 21.83% of the total staff of the Group.

As of the end of the Reporting Period, the information of R&D personnel of the

Group is as follows

Number of R&D personnel of

the Company

3,667

Percentage of the number of R&D

personnel to the Company’s

total number of employees (%)

21.83

Education composition of R&D personnel

Education composition category

Number of education composition

Doctor

Master

1,307

Bachelor

2,179

Junior college graduate and below

Age composition of R&D personnel

Age composition category

Number of age composition

<30

1,716

≥30-<40

1,636

≥40-<50

145

≥50

Note:

Due to the internal policies of corporations in the United States, the above statistics of education and age

composition do not include those of employees of corporations in the United States.

Cash flow

Unit: Thousand Yuan

Currency: RMB

Item

Amount

for the

current period

Amount

for the same

period of

last year

Amount

of increase

or decrease

Percentage of

increase or

decrease (%)

Net cash generated from/(used in)

operating activities

70,290,567

(65,337,094)

135,627,661

N/A

Net cash used in investing activities

(16,715,000)

(262,042)

(16,452,958)

N/A

Net cash (used in)/generated from

financing activities

(26,697,139)

44,205,373

(70,902,512)

N/A

Net increase/(decrease) in cash and

cash equivalents

26,878,428

(21,393,763)

48,272,191

N/A

During the Reporting Period, the net increase in cash and cash equivalents of the

Group was RMB26,878 million, in which:

(1)

Net cash generated from operating activities was RMB70,291 million, mainly

due to the decrease in financial assets at fair value through profit or loss and

the scale of financing business.

(2)

Net cash used in investing activities was RMB16,715 million, mainly due to

the increase in cash paid for investment.

(3)

Net cash used in financing activities was RMB26,697 million, mainly due to

the decrease in proceeds from the issuance of bonds and securities.

Detailed description of significant changes in the Group

’

s business types,

components or sources of profit

Unit: Thousand Yuan

Currency: RMB

Item

Amount for

the current

period

Amount for

the same

period of

last year

Year-on-year

change (%)

Principal

reason

Total revenue, other

income and gains

46,824,372

51,926,404

(9.83)

Decrease in net investment gains

Total expenses

(35,815,380)

(38,283,823)

(6.45)

Staff costs and reversal of financial assets

impairment

Operating profit

11,008,992

13,642,581

(19.30)

Decrease in total revenue, other income

and gains

Profit before income tax

12,228,038

16,272,562

(24.85)

Decrease in total revenue, other income

and gains

Profit for the year

11,365,330

13,600,893

(16.44)

Decrease in total revenue, other income

and gains

Among which: profit for the

year attributable to

shareholders of the Company

11,052,696

13,346,106

(17.18)

Decrease in total revenue, other income

and gains

Item

Balance as at

the end of

the period

Balance as at

the beginning

of the period

Year-on-year

change (%)

Principal reason

Total assets

846,567,016

806,650,833

4.95

Increase in financial investments and

purchase under resale agreements

Total liabilities

678,718,307

654,615,049

3.68

Increase in financial liabilities at fair

value through profit or loss

Total shareholders’ equity

167,848,709

152,035,784

10.40

Profit retention and issuance of perpetual

bonds during the year

(II)

Analysis of key items of consolidated statement of financial position

General description of consolidated statement of financial position

Unit: Thousand Yuan

Currency: RMB

Item

As at December 31, 2022

As at December 31, 2021

Increase/decrease

Amount

Ratio

Amount

Ratio

Amount

Ratio

Non-current assets

Property and equipment

6,287,383

0.74%

5,178,222

0.64%

1,109,161

21.42%

Investment properties

217,586

0.03%

294,008

0.04%

(76,422)

(25.99)%

Goodwill

3,352,219

0.40%

2,836,429

0.35%

515,790

18.18%

Land use rights and other

intangible assets

7,439,816

0.88%

6,790,673

0.84%

649,143

9.56%

Interest in associates

18,276,443

2.16%

18,269,459

2.26%

6,984

0.04%

Interest in joint ventures

1,706,184

0.20%

1,749,065

0.22%

(42,881)

(2.45)%

Debt instruments at

amortised cost

36,586,707

4.32%

25,299,666

3.14%

11,287,041

44.61%

Debt instruments at

fair value through other

comprehensive income

7,900,595

0.93%

4,857,284

0.60%

3,043,311

62.65%

Equity instruments at

fair value through other

comprehensive income

241,587

0.03%

163,138

0.02%

78,449

48.09%

Financial assets at fair

value through profit or

loss

10,142,583

1.20%

9,896,339

1.23%

246,244

2.49%

Refundable deposits

42,706,777

5.04%

27,627,129

3.42%

15,079,648

54.58%

Deferred tax assets

596,499

0.07%

654,651

0.08%

(58,152)

(8.88)%

Other non-current assets

300,664

0.04%

282,227

0.03%

18,437

6.53%

Total non-current assets

135,755,043

16.04%

103,898,290

12.88%

31,856,753

30.66%

Current assets

Accounts receivable

7,804,341

0.92%

10,287,174

1.28%

(2,482,833)

(24.14)%

Other receivables,

prepayments and other

current assets

2,157,529

0.25%

2,122,246

0.26%

35,283

1.66%

Margin accounts receivable

100,648,375

11.89%

116,942,245

14.50%

(16,293,870)

(13.93)%

Debt instruments at

amortised cost

11,965,863

1.41%

7,121,850

0.88%

4,844,013

68.02%

Financial assets held under

resale agreements

34,824,221

4.11%

11,751,970

1.46%

23,072,251

196.33%

Debt instruments at fair value

through other

comprehensive income

2,603,784

0.31%

4,457,415

0.55%

(1,853,631)

(41.59)%

Financial assets at fair value

through profit or loss

340,661,962

40.24%

345,362,833

42.81%

(4,700,871)

(1.36)%

Item

As at December 31, 2022

As at December 31, 2021

Increase/decrease

Amount

Ratio

Amount

Ratio

Amount

Ratio

Derivative financial assets

15,788,301

1.86%

15,247,805

1.89%

540,496

3.54%

Clearing settlement funds

8,716,506

1.03%

8,580,941

1.06%

135,565

1.58%

Cash held on behalf of

brokerage clients

140,460,346

16.59%

143,640,263

17.81%

(3,179,917)

(2.21)%

Cash and bank balances

45,180,745

5.34%

37,237,801

4.62%

7,942,944

21.33%

Total current assets

710,811,973

83.96%

702,752,543

87.12%

8,059,430

1.15%

Total assets

846,567,016

100.00%

806,650,833

100.00%

39,916,183

4.95%

Current liabilities

Short-term bank loans

7,997,434

1.18%

8,492,290

1.30%

(494,856)

(5.83)%

Short-term debt

instruments issued

25,772,604

3.80%

53,598,658

8.19%

(27,826,054)

(51.92)%

Placements from other

financial institutions

25,877,713

3.81%

14,018,721

2.14%

11,858,992

84.59%

Accounts payable to

brokerage clients

152,551,723

22.48%

147,501,833

22.53%

5,049,890

3.42%

Employee benefits payable

5,304,177

0.78%

5,757,598

0.88%

(453,421)

(7.88)%

Other payables and accruals

108,096,572

15.93%

106,620,755

16.29%

1,475,817

1.38%

Contract liabilities

218,943

0.03%

265,637

0.04%

(46,694)

(17.58)%

Current tax liabilities

524,997

0.08%

1,245,374

0.19%

(720,377)

(57.84)%

Financial assets sold under

repurchase agreements

144,117,998

21.23%

130,710,001

19.97%

13,407,997

10.26%

Financial liabilities at fair

value through profit or loss

43,005,621

6.34%

28,289,462

4.32%

14,716,159

52.02%

Derivative financial liabilities

9,638,125

1.42%

10,643,222

1.63%

(1,005,097)

(9.44)%

Long-term bonds due

within one year

29,062,749

4.28%

35,372,308

5.40%

(6,309,559)

(17.84)%

Total current liabilities

552,168,656

81.35%

542,515,859

82.88%

9,652,797

1.78%

Net current assets

158,643,317

–

160,236,684

–

(1,593,367)

(0.99)%

Total assets less current

liabilities

294,398,360

–

264,134,974

–

30,263,386

11.46%

Non-current liabilities

Long-term bonds

110,356,589

16.26%

97,966,119

14.97%

12,390,470

12.65%

Long-term bank loans

804,903

0.12%

722,816

0.11%

82,087

11.36%

Non-current employee

benefits payable

6,588,448

0.97%

7,057,339

1.08%

(468,891)

(6.64)%

Deferred tax liabilities

2,203,855

0.32%

2,619,161

0.40%

(415,306)

(15.86)%

Financial liabilities at fair

value through profit or loss

5,569,938

0.82%

2,833,456

0.43%

2,736,482

96.58%

Other payables and accruals

1,025,918

0.15%

900,299

0.14%

125,619

13.95%

Item

As at December 31, 2022

As at December 31, 2021

Increase/decrease

Amount

Ratio

Amount

Ratio

Amount

Ratio

Total non-current liabilities

126,549,651

18.65%

112,099,190

17.12%

14,450,461

12.89%

Net assets

167,848,709

100.00%

152,035,784

100.00%

15,812,925

10.40%

Shareholders’ equity

Share capital

9,075,589

5.41%

9,076,650

5.97%

(1,061)

(0.01)%

Other equity instruments

19,200,000

11.44%

9,996,425

6.58%

9,203,575

92.07%

Treasury share

(1,202,324)

(0.72)%

(1,231,547)

(0.81)%

29,223

–

Reserves

100,090,636

59.63%

95,021,503

62.50%

5,069,133

5.33%

Retained profits

37,923,300

22.59%

35,559,779

23.39%

2,363,521

6.65%

Total equity attributable to

shareholders of the

Company

165,087,201

98.35%

148,422,810

97.62%

16,664,391

11.23%

Non-controlling interests

2,761,508

1.65%

3,612,974

2.38%

(851,466)

(23.57)%

Total shareholders’ equity

167,848,709

100.00%

152,035,784

100.00%

15,812,925

10.40%

As of December 31, 2022, total non-current assets of the Group amounted

to RMB135,755 million, representing an increase of RMB31,857 million as

compared to the beginning of the year, which was mainly due to the increase in

refundable deposits of RMB15,080 million as well as the increase in total amount

of debt instruments at amortised cost and debt instruments at fair value through

other comprehensive income of RMB14,330 million as compared to the beginning

of the year. As of December 31, 2022, total non-current liabilities of the Group

amounted to RMB126,550 million, representing an increase of RMB14,450 million

as compared to the beginning of the year, which was mainly due to the increase in

long-term bonds of RMB12,390 million.

As of December 31, 2022, total current assets of the Group amounted to

RMB710,812 million, representing an increase of RMB8,059 million as compared

to the beginning of the year, which was mainly due to the increase of RMB23,072

million in financial assets held under resale agreements, the decrease of

RMB16,294 million in margin accounts receivable, decrease of RMB3,180 million

in cash held on behalf of brokerage clients and the increase of RMB7,943 million

in cash and bank balances. As of December 31, 2022, total current liabilities of the

Group amounted to RMB552,169 million, representing an increase of RMB9,653

million as compared to the beginning of the year, which was mainly due to the

increase of RMB14,716 million in financial liabilities at fair value through profit

or loss as well as the decrease in the total amount of short-term debt instruments

issued, placements from other financial institutions, financial assets sold under

repurchase agreements and long-term bonds due within one year of RMB8,869

million as compared to the beginning of the year.

Major restricted assets as of the end of the Reporting Period

As of the end of the Reporting Period, major restricted assets of the Group

totaled RMB197,434,806 thousand, including cash and bank balances, financial

assets at fair value through profit or loss, debt investment at amortised cost, debt

instruments at fair value through other comprehensive income and interest in

associates. Except for the above assets, no major assets of the Group were seized,

detained, frozen, mortgaged or pledged so that they could or could not be realized,

or could not be used to pay the debts only under a certain condition. There was no

circumstance or arrangement under which the major assets were occupied, used or

benefited or the disposal of them was limited.

Description of changes in the measurement of assets measured at fair value and

prime assets

Fair value refers to the price received for selling one asset or the price payable for

transferring one liability by a market participant in an orderly transaction on the

measurement date.

When estimating the fair value, the Group considers the characteristics that the

market participants consider when they price the related assets or liabilities on

the measurement date (including the asset status and the limitation on selling or

using the assets), and adopts the currently available valuation techniques that are

supported by adequate available data and other information. The main valuation

techniques used include market approach, income approach and cost approach.

The impact of gains and losses of changes in fair value on the Group’s profit

during the Reporting Period is as follows:

Unit: Thousand Yuan

Currency: RMB

Item

Impact on

profit for

2022

Impact on

profit for

2021

Financial assets at fair value through profit or loss

(13,037,891)

(8,812,676)

Financial liabilities at fair value through

profit or loss

612,267

118,087

Derivative financial instruments

18,974,293

9,003,658

Total

6,548,669

309,069

Structure and quality of assets

As of December 31, 2022, total shareholders’ equity of the Group amounted to

RMB167,849 million, representing an increase of RMB15,813 million or 10.40%

as compared to that of the end of 2021, which was mainly due to the realization of

profit retention and issuance of perpetual bonds by the Group during the Reporting

Period.

The asset structure of the Group continued to be optimized and the assets

maintained good quality and liquidity. As of December 31, 2022, total assets of the

Group amounted to RMB846,567 million, representing an increase of RMB39,916

million or 4.95% as compared to the beginning of the year. Specifically, cash and

bank balances, cash held on behalf of brokerage clients and clearing settlement

funds of the Group amounted to RMB194,358 million, accounting for 22.96% of

the total assets; margin accounts receivable amounted to RMB100,648 million,

accounting for 11.89% of the total assets; financial assets at fair value through

profit or loss amounted to RMB350,805 million, accounting for 41.44% of the

total assets; debt instruments at amortised cost and financial assets at fair value

through other comprehensive income amounted to a total of RMB59,299 million,

accounting for 7.00% of the total assets; property and equipment, investment

properties and other intangible assets accounted for 2.04% of the total assets. Most

of the assets have strong cashability. The Group’s assets have strong liquidity and

the asset structure is reasonable.

During the Reporting Period, the Group’s debt-to-assets ratio decreased. As of

December 31, 2022, the total liabilities of the Group amounted to RMB678,718

million, representing an increase of RMB24,103 million or 3.68% as compared

to the beginning of the year. The debt-to-assets ratio was 75.81% (excluding the

impact of customer funds), representing a decrease of 1.12 percentage points as

compared to the beginning of the year.

As of December 31, 2022, the Group obtained funds through borrowings and

debt financing instruments. As of the end of the Reporting Period, total principal

of the placements from other financial institutions of the Group amounted to

RMB199,872 million. Details are shown as follows:

Unit: Thousand Yuan

Currency: RMB

Borrowings and debt financing plans

As of

December 31,

2022

Placement from China Securities Finance Corporation Limited

–

Placement from other financial institutions

25,877,713

Short-term borrowings

7,997,434

Short-term financing funds payable

25,772,604

Long-term borrowings

804,903

Bonds payable

139,419,338

Total principal

199,871,992

Borrowings and debt financing with a financing maturity of more than one year

were RMB144,330 million, accounting for 72.21%. Among them, programs with

a financing maturity of one to two years were RMB121 million, those with a

financing maturity of two to five years were RMB94,331 million, and those with

a financing maturity of over five years were RMB49,878 million. Borrowings and

debt financing with a financing maturity of less than one year were RMB55,542

million, accounting for 27.79%.

As of December 31, 2022, the Group’s borrowings and debt financing with fixed

interest rate were RMB197,069 million. In particular, the balance of short-term

borrowings was RMB7,997 million; the balance of long-term borrowings was

RMB805 million; the balance of placement from other financial institutions was

RMB25,878 million; the balance of income receipts with fixed interest rate was

RMB11,306 million; the balance of corporate bonds was RMB109,303 million; the

balance of subordinated debts was RMB14,397 million; and the balance of foreign

debts was RMB27,383 million.

As of December 31, 2022, cash and cash equivalents of the Group amounted to

RMB75,549 million, of which RMB cash and cash equivalents accounted for

83.57%.

As of December 31, 2022, the Group’s short-term bank borrowings included

balance of credit borrowings of RMB7,711 million, and that of pledge borrowings

of RMB286 million.

As of December 31, 2022, all of the Group’s long-term bank borrowings were

credit borrowings.

Analysis of profitability

In 2022, confronted with an unfavorable market environment, the Group firmly

implemented the “two-pronged” (

雙輪驅動

) core strategy of wealth management

and institutional services under technology empowerment, and constantly enhanced

its digital operation capability with its operating results greatly outperforming the

industry average. Its comprehensive strength soundly ranked in the forefront of the

industry.

Explanations on the changes in the scope of consolidation of the statements

For details of the explanations on the changes in the scope of consolidation of the

statements of the Group, please refer to Note 24 to the financial statements of this

report headed “Investment in Subsidiaries”.

Analysis of income tax policy

During the Reporting Period, the Company’s income tax was subject to the

Corporate Income Tax Law of the PRC (

《中華人民共和國企業所得稅法》

) and

the Enforcement Regulations of Corporate Income Tax Law of the PRC (

《中華人

民共和國企業所得稅法實施條例》

). The calculation and payment methods of the

income tax shall be subject to the Announcement of the State Administration of

Taxation on Issuing the Measures for the Consolidated Collection of Corporate

Income Tax on Trans-regional Business Operations (Announcement [2012] No. 57

of the State Administration of Taxation) (

《國家稅務總局關於印發

跨地區經營匯

總納稅企業所得稅徵收管理辦法

的公告》

(

國家稅務總局公告

[2012]57

號

)). The

income tax rate applicable to the Company and its domestic subsidiaries is 25%.

The Company enjoys the preferential policy of calculating and deducting research

and development expenses, and the profit tax rate applicable to the Hong Kong

subsidiary of the Company is 16.5%. Other overseas subsidiaries of the Company

are subject to income taxes at tax rates applicable in their jurisdictions.

Analysis of financing channels and financing capacity

Financing channels

In terms of financing methods, the Company has two

financing channels, equity financing and debt financing.

In China, the Company’s short-term financing channels

included credit lending via interbank market, bond

repurchasing via interbank market and stock exchange

market, issuing short-term financing bills, short-term

corporate bonds, issuing income credential via quotation

and service system for inter-institutional private placement

products and self-built counter market, carrying out

margin refinancing and income rights financing in

relation to margin financing and securities lending from

securities and financial companies, banks and other

financial institutions, etc., and the Company’s medium

and long-term financing channels included issuing

corporate bonds, private corporate bonds, financial bonds,

subordinated debt, perpetual subordinated debt and equity

refinancing, etc. In addition, the Company can also

introduce foreign funds through the issuance of overseas

bonds and medium-term notes as well as syndicated loan

to support the business development of the Company.

After years of effective efforts, the Company explored and

established the short, medium and long-term diversified

financing channels, which played a key role in the rapid

development process of the Company’s business.

Liquidity

management

policies and

measures

The Company has always attached great importance

to liquidity management. As for funds management, it

adhered to the principle of “full amount concentrated,

allocated in a unified way, valued by classification

and monitored timely”. In terms of management and

development strategies, it paid attention to matching

business scale with liabilities. Based on reasonable asset

allocation and diversified debt financing, the Company

ensured reasonable matching of duration, scale of assets

and liabilities and proper liquidity.

The Company followed the general principles of

comprehensiveness, prudency, predictiveness for liquidity

risk management according to the centralized management

and hierarchical prevention and control management

model, established a liquidity risk management system

based on comprehensive risk management framework,

as well as a sound liquidity risk management system

appropriate to the Company’s strategy, and implemented

liquidity risk management policy with the preference for

“steadiness and safety”. The Company ensured no liquidity

risk that would cause significant impacts on sustainable

operation, so as to fully guarantee the steady and safe

development of the business of the Company.

In order to ensure its liquidity, the Company has adopted

various measures mainly including: 1) constantly

improving the capital planning system, establishing

a daytime liquidity monitoring system and realizing

a daytime monitoring of the management of capital

position and cash flow through platforms, so as to ensure

the security of daytime liquidity; 2) strengthening the

management for the matching between durations of

assets and liabilities and establishing high-quality current

asset reserves, in order to enhance the diversity and

stability of financing; 3) upgrading and transforming the

treasury management platform, and achieving effective

identification, measurement, monitoring and controlling

on liquidity risks through information system, in order to

ensure that the liquidity risks are measurable, controllable

and tolerable; 4) analyzing supervisory indicators of cash

flow and liquidity risk under certain stress scenarios to

evaluate the tolerance level of the Company for liquidity

risks and analyzing the stress test results to constantly

improve the Company’s response capacity for liquidity

risks; 5) leveraging the consolidation supervision to

continuously strengthen the subsidiary liquidity risk

guidance and to implement vertical management for

overseas subsidiaries’ fund and liquidity risks while also

to propose a package of management and control measures

for core risk points to improve subsidiaries’ response

capacity for liquidity risks and the Group’s prevention and

control for liquidity risks; 6) organizing the formulation,

exercise and evaluation of a liquidity risk contingency

plan, in order to improve the Company’s emergency

capacity for liquidity risks; and 7) improving the liquidity

risk reporting system, so as to ensure that the management

is able to keep abreast of the Group’s liquidity risk level

and management situation.

During the Reporting Period, the Company’s liquidity

coverage ratio (LCR) and net stable funding ratio (NSRF)

continued to meet regulatory requirements and maintained

enough safe space.

Analysis of financing

capability and

financing strategy

The Company has operated in compliance with

regulations, enjoyed sound reputation as well as strong

capital strength, profitability and debt repayment

ability, maintained good cooperation relationships

with commercial banks, and had sufficient bank

credit. As of the end of the Reporting Period, the total

credit line obtained by the Company from commercial

banks amounted to approximately RMB530 billion,

demonstrating a strong short-term and medium-to-long

term financing abilities. As of the end of the Reporting

Period, after assessment by China Lianhe Credit Rating

Co., Ltd., the credit rating of the Company was AAA and

the credit rating outlook is stable. After comprehensive

assessment by Shanghai Brilliance, the credit rating of the

Company was AAA and the credit rating outlook is stable.

After comprehensive assessment by Standard & Poor’s,

the long-term credit rating of the Company was BBB+ and

the credit rating outlook is stable. After comprehensive

assessment by Moody’s, the long-term credit rating of the

Company was Baa1 and the credit rating outlook is stable.

As a listed securities dealer, the Company can also meet

the fund demand for long-term development by means

such as equity refinancing.

Taking into consideration both liquidity and profitability,

the Company held a certain number of fixed-income

products. Interest rate changes will bring direct impact

to the interest income of the cash and the market price

and investment income of the bond investment held by

the Company. Margin financing and securities lending

and other capital-based intermediary business, corporate

debt financing and other businesses which directly relate

to interest rates may directly impact corresponding

interest income and financing interest expenses. At the

same time, the Company’s stock investment was also

indirectly affected by interest rate changes. In addition,

as the Company has registered overseas subsidiaries

whose capital is contributed in foreign currency, the

Company holds foreign currency funds and assets, and the

changes of exchange rate will have certain impact on the

Company’s financial situation. The Company optimized

the distribution of assets and liabilities structure by timely

adjusting all kinds of asset structure, strengthened the

research on the interest rate and exchange rate market,

and used appropriate interest rate, exchange rate and other

derivative financial tools to avoid risks and reduce the

influence of these factors.

Contingencies and

their impacts on the

financial situation

of the Company

–

(III) Analysis of industry operation

For details, please refer to “Management Discussion and Analysis and Report of the

Board” in this report.

(IV) Analysis of investments

Overall analysis of external equity investments

As of the end of the Reporting Period, the Group’s investment in associates

amounted to RMB18,276 million, representing an increase of RMB7 million or

0.04% as compared to RMB18,269 million at the beginning of the period; and

the investment in joint ventures amounted to RMB1,706 million, representing a

decrease of RMB43 million or 2.46% as compared to RMB1,749 million at the

beginning of the period. For details of the overall situation of the Group’s external

equity investment, please refer to Note 25 “Interest in associates” and Note 26

“Interest in joint ventures” to the financial statements in this report.

(1)

Significant equity investment of the Company

For significant equity investment of the Company, please refer to Note 24 to

the financial statements of this report headed “Investment in Subsidiaries”.

(2)

The Company had no significant non-equity investment

(3)

Financial assets measured at fair value

Unit: Thousand Yuan

Currency: RMB

Item

Balance at

the end of

last year

Balance at

the end of

this year

Investment

income

during the

Reporting

Period

The changed

amount

of fair value

during the

Reporting

Period

Financial assets at fair value

through profit or loss

355,259,172

350,804,545

(4,134,693)

(8,903,199)

Debt instruments at fair value through

other comprehensive income

9,314,699

10,504,379

(197,789)

(55,867)

Equity instruments at fair value

through other comprehensive

income

163,138

241,587

–

(59,673)

Derivative financial instruments

4,604,583

6,150,176

28,025,651

4,961,468

(4)

There was no major asset restructuring and integration by the Company

during the Reporting Period

Information about the use of raised funds

(1)

Overview of the use of raised funds

①

Overview of the use of funds raised from the issuance of A Shares

(a)

Information about the use of funds raised from the Initial Public

Offering of A Shares

Under the Approval for the Initial Public Offering by Huatai

Securities Co., Ltd. (Zheng Jian Xu Ke [2010] No. 138) (

《關於

核准

华泰证券股份有限公司

首次公開發行股票的批覆》

(

證監

許可

[2010] 138

號

)) issued by the CSRC, the Company publicly

issued 784,561,275 ordinary shares in RMB to the public on

February 9, 2010, each stock of which was RMB1.00 at an

offering price of RMB20.00, and the total amount of funds raised

was RMB15,691,225,500.00. The raised funds after deducting

the underwriting fee and sponsoring fee of RMB130,000,000.00

amounted to RMB15,561,225,500.00, which were all in place

on February 12, 2010, and verified by Jiangsu Talent Certified

Public Accountants with the capital verification report (Tian Heng

Yan Zi (2010) No. 009) issued. As of December 31, 2012, all the

principal of the funds raised from the IPO was used up and the

accumulative amount of RMB15.681 billion of the raised funds

(including interest of raised funds of RMB119.8082 million) were

used. All of the accounts designated for the use of raised funds of

the Company had been cancelled with settlement of interests.

(b)

Information about the use of funds raised from the Non-Public

Issuance of A Shares

Upon the Approval for the Non-Public Issuance of Shares by

Huatai Securities Co., Ltd. (Zheng Jian Xu Ke [2018] No. 315)

(

《關於核准

华泰证券

股份有限公司非公開發行股票的批覆》

(

證監許可

[2018] 315

號

)) issued by the CSRC, the Company

completed the non-public issuance of 1,088,731,200 RMB-

denominated ordinary shares (A Shares) in July 2018 in

total, each with a nominal value of RMB1.00 at an offering

price of RMB13.05 and the total amount of funds raised was

RMB14,207,942,160.00. After deducting the issuing fees of

RMB74,736,488.79 related to the non-public offering (including

underwriting sponsorship fee, attorney fee, accountant fee,

information disclosure fee, issuance registration fee, stamp duty

and other fees), the net funds raised were RMB14,133,205,671.21,

which were all in place on July 31, 2018 and were verified by

KPMG Huazhen LLP with the capital verification report (KPMG

Huazhen Yan Zi No. 1800286) issued. As of December 31, 2019,

all the funds raised from the Non-Public Issuance of the Company

were used up and the accumulative amount of RMB14.184 billion

of the raised funds (including interest income generated by raised

funds) was used. Accounts designated for the use of raised funds

of the Company have been cancelled.

②

Overview of the use of funds raised from the issuance of H Shares

Approved by the CSRC, the Company completed the issuance of H

Shares in 2015. Funds raised from the issuance of H Shares were

verified by KPMG Huazhen LLP with the capital verification report

(KPMG Huazhen Yan Zi No. 1501031) issued. According to the

Capital Verification Report issued by KPMG Huazhen LLP, the net

funds raised from the initial public issuance of H Shares in 2015 were

RMB30,587,689,604.94 in total (excluding related listing fees), and

raised funds after deducting the underwriting and issuing fees were

RMB30,015,054,696.76 in total. As of December 31, 2020, all the

funds raised from the H Share issuance of the Company were used up

and the accumulative amount of RMB30.666 billion of the funds raised

from the H Share issuance (including interest income generated by

raised funds) was used and relevant accounts have been cancelled.

③

Overview of the use of funds raised from the issuance of GDRs

Upon the Approval for Issuance and Admission of Global Depository

Receipts on London Stock Exchange by Huatai Securities Co., Ltd.

(Zheng Jian Xu Ke [2018] No. 1993) (

《關於核准

华泰证券

股份有

限公司發行全球存託憑證並在倫敦證券交易所上市的批覆》

(

證監

許可

[2018] 1993

號

)) issued by the CSRC, the Company completed

the total issuance of 82,515,000 GDRs in June 2019, each of which

at an offering price of USD20.50 and the total amount of funds

raised was USD1,691,557,500.00. After deducting the issuing fees of

USD39,961,513.72 related to the GDR offering, the net funds raised

were USD1,651,595,986.28, equivalent to RMB11,313,036,931.20 at

the central parity of RMB against the U.S. dollar on the date when

transferred to the account. The abovementioned funds raised were all in

place on June 28, 2019 and were verified by KPMG Huazhen LLP with

the capital verification report (KPMG Huazhen Yan Zi No. 1900393)

issued. As of December 31, 2021, all the funds raised from the GDR

issuance of the Company were used up and the accumulative amount of

USD1.674 billion of the funds raised from the GDR issuance (including

interest arising from the funds raised) was used and relevant accounts

have been cancelled.

Overview of the use of raised funds

Unit: Ten Thousand Yuan Currency: RMB

Raising year

Raising

method

Total

amount of

raised funds

Total amount

of raised

funds used

in the

Reporting

Period

Total amount

of raised

funds used

accumulatively

Total

amount

of raised

funds yet

to be used

Usage and

whereabouts

of raised

funds unused

2019

GDR offering

1,131,303.69

1,158,666.14

2018

Non-Public

offering (A Shares)

1,420,794.22

1,418,421.26

2015

Initial offering

(H Shares)

3,058,768.96

3,066,604.63

2010

Initial offering

(A Shares)

1,556,122.55

1,568,103.37

Total

7,166,989.42

7,211,795.40

(2)

There was no commitment in raised funds of the Company during the

Reporting Period

(3)

There was no change in raised funds of the Company during the Reporting

Period

Projects not funded by raised funds

During the Reporting Period, the Company did not have any project funded by

non-raised funds whose total investment was more than 10% of the audited net

assets of the Company as at the end of the previous year.

(V)

There were no sales of significant assets or equities by the Company during the

Reporting Period

(VI) There was no bankruptcy or restructuring, merger or division, major disposal,

acquisition, replacement or stripping of assets or restructuring of other companies

by the Company during the Reporting Period

(VII) Analysis of Key Subsidiaries

Unit: Ten Thousand Yuan Currency: RMB

Company name

Shareholding

percentage

of the Company

Registered

capital

Total assets

Net assets

Operating

revenue

Total profit

Net profit

Huatai Securities (Shanghai) Asset

Management Co., Ltd.

100%

260,000.00

864,466.22

762,136.30

192,142.91

140,463.81

106,886.33

Main businesses: securities asset management; publicly offered securities investment funds management. (Businesses that need to be

approved by law shall be carried out upon the approval of relevant authorities).

Huatai International Financial Holdings

Company Limited

100%

HK$

10,200,000,002.00

HK$

179,156,056,000

HK$

18,243,644,100

HK$

10,868,553,400

HK$

2,232,909,600

HK$

1,968,489,300

Main business: holding company.

Huatai Purple Gold Investment Co., Ltd.

100%

600,000.00

1,383,479.15

991,939.79

-80,721.87

-92,620.24

-68,590.17

Main businesses: equity investment, debt investment, other fund investments associated with equity investment and debt investment;

investment consulting and investment management for equity investment and debt investment, and financial consulting. (Businesses that

need to be approved by law shall be carried out upon the approval of relevant authorities).

Huatai Innovative Investment Co., Ltd.

100%

350,000.00

446,191.17

379,468.72

7,457.94

-6,152.69

-4,087.78

Main businesses: project investment, investment management, sale of precious metal, hotel management; the followings are permitted

to be operated only by branches: accommodation, catering services, sale of foods, fitness services, swimming pool, laundry collection,

typing and copying, motor vehicle public parking services, conference services, undertaking exhibitions, tourism information

consultation, ticket agent service. (1. Public fund-raising shall not be conducted without approval by relevant authorities; 2. trading

activities of securities products and financial derivatives shall not be publicly carried out; 3. no loans shall be granted; 4. no guarantee

shall be provided to any other enterprises except for its invested enterprises; promises shall not be made to investors that the principal of

their investments will not be subject to any loss or that they will get a minimum return; enterprises shall independently select business

items and carry out operations according to law; businesses that need to be approved by law shall be carried out in accordance with the

approved contents upon the approval of relevant authorities; business activities classified as prohibited or restricted items by industrial

policies of this city shall not be carried out).

Company name

Shareholding

percentage

of the Company

Registered

capital

Total assets

Net assets

Operating

revenue

Total profit

Net profit

Huatai Futures Co., Ltd.

100%

393,900.00

7,708,995.25

465,876.02

417,545.67

42,533.20

31,204.63

Main businesses: commodities futures brokerage, financial futures brokerage, futures investment consultancy, asset management and fund

sales. (Businesses that need to be approved by law shall be carried out upon the approval of relevant authorities).

Huatai United Securities Co., Ltd.

99.92%

99,748.00

823,142.62

551,739.22

351,055.91

82,492.25

61,600.89

Main businesses: securities underwriting and sponsorship (excluding treasury bonds, non-financial corporate debt financing instruments

and financial bond underwriting); financial advisory for securities trading and investment related activities; other businesses approved by

the CSRC.

Jiangsu Equity Exchange Co., Ltd.

52%

20,000.00

66,937.51

44,878.30

10,854.66

5,917.80

4,390.81

Main businesses: provision of premises, facilities and services for approved listing, registration, custody, trading, financing, settlement,

transfer, dividend distribution and pledge of equity interests, bonds, assets and related financial products and financial derivatives of

unlisted companies, organization and monitoring of trading activities, issuance of market information, trading of listed products in the

trading market as an agent, and provision of consultation services for market participants. (Businesses that need to be approved by law

shall be carried out upon the approval of relevant authorities).

China Southern Asset Management Co., Ltd.

41.16%

36,172.00

1,413,332.61

888,559.35

646,948.68

227,231.03

177,058.63

Main businesses: fund raising, fund sales, asset management and other businesses approved by the securities regulatory authority under

the State Council.

Huatai-PineBridge Fund Management Co., Ltd.

49%

20,000.00

249,952.64

158,321.16

140,747.06

50,864.35

37,926.60

Main businesses: fund raising, fund sales, asset management and other businesses approved by the CSRC.

Bank of Jiangsu Co., Ltd.

5.88%

1,154,445.00

298,040,300.00

20,874,100.00

7,057,000.00

3,277,300.00

2,549,400.00

Company name

Shareholding

percentage

of the Company

Registered

capital

Total assets

Net assets

Operating

revenue

Total profit

Net profit

Main businesses: deposits taking from the general public; granting short-term, medium-term and long-term loans; handling domestic

settlements; handing acceptance and discounting of negotiable instruments; issuing financial bonds; acting as an agent for the issue,

honoring and underwriting of government bonds and underwriting of short-term financing bills; buying and selling government bonds,

financial bonds, corporate bonds; engaging in interbank lending; providing letter of credit services and guaranty; acting as an agent

for receipts/payments and insurance business, wealth management, fund sales, precious metal sales, receipts/payments and custody of

collective fund trust scheme; provision of safe deposit boxes; handing entrusted deposits and loans; bank card services; foreign currency

deposits; foreign currency loans; foreign exchange remittances; currency exchange; settlement and sales of foreign exchange, acting as an

agent for forward settlement and sales of foreign exchange; international settlement; proprietary trading and agency for trading of foreign

exchange; interbank foreign exchange lending; trading or acting as an agent for trading in foreign currency securities other than stocks;

credit investigation, consultation and witness services; online banking, and other services approved by the banking regulatory bodies and

relevant authorities. (Businesses that need to be approved by law shall be carried out upon the approval of relevant authorities).

Notes: 1.

In February 2023, according to the management regulation of registration of relevant market entities and the requirements of Market

Supervision Administration in Shanghai Changning District, the scope of business of Huatai Innovative Investment Co., Ltd. was changed

“

General Items: Investment activities with own capital; investment management; sale of metal chains and other metal products; hotel

management; fitness and leisure activities [branch operation]; laundry services [branch operation]; typing and copying service [branch

operation]; parking lot service [branch operation]; conference and exhibition service [branch operation]; tourism development project planning

and consultation [branch operation]; ticketing agency service [branch operation]. (Except for items subject to approval in accordance with the

law, the business activities shall be carried out on their own in accordance with the business license). Permitted items: accommodation service

[branch operation]; catering service [branch operation]; food sales [branch operation]; high-risk sports (swimming) [branch operation]. (Items

subject to approval in accordance with the law, the business activities shall be carried out upon the approval of the relevant departments, and

specific business items shall be subject to the approval documents or permits of the relevant departments)

”

On February 22, 2023, the Bank of Jiangsu convened the 2023 first extraordinary general meeting, which considered and approved the

Resolution on Change of the Registered Capital of Bank of Jiangsu Co., Ltd. Its registered capital was changed to RMB14,769,656,700. Such

matter is still subject to approval by the Jiangsu Regulatory Bureau of the CBIRC.

On February 22, 2023, the Bank of Jiangsu convened the 2023 first extraordinary general meeting, which considered and approved the

Resolution on Amendments of the Articles of Association of Bank of Jiangsu Co., Ltd. The amended Article 19 of the Articles of Association

of Bank of Jiangsu Co., Ltd. is

“

The scope of business of the company is: deposits taking from the general public; granting short-term,

medium-term and long-term loans; handling domestic settlements; handing acceptance and discounting of negotiable instruments; issuing

financial bonds; acting as an agent for the issue, honoring and underwriting of government bonds; buying and selling government bonds,

financial bonds, corporate bonds; engaging in interbank lending; providing letter of credit services and guaranty; acting as an agent for

receipts/payments and sales of wealth management products, fund sales, precious metal sales, receipts/payments and custody of collective

fund trust scheme; provision of safe deposit boxes; bank card services; foreign currency deposits; foreign currency loans; foreign exchange

remittances; currency exchange; settlement and sales of foreign exchange, acting as an agent for forward settlement and sales of foreign

exchange; international settlement; proprietary trading and agency for trading of foreign exchange; interbank foreign exchange lending;

trading or acting as an agent for trading in foreign currency securities other than stocks; credit investigation, consultation and witness

services; derivatives trading; securities investment funds and insurance funds custodian; domestic securities investments custody for qualified

foreign institutional investors; insurance agency; personal pension business; and other services approved by the banking regulatory bodies and

relevant authorities.

”

Such matter is still subject to approval by the Jiangsu Regulatory Bureau of the CBIRC.

The financial data of the Bank of Jiangsu was extracted from its express report of 2022 annual results. The data of net assets represents

owner

’

s equity attributable to shareholders of the listing company, and the data of net profit represents net profit attributable to shareholders

of the listing company.

(VIII)

Structured entities controlled by the Company

The structured entities consolidated by the Group mainly refer to the asset management

plans with the Group concurrently as the manager or investment advisor and the

investor. The Group carries out a comprehensive assessment of whether the Group

will be significantly affected by variable returns due to the return which the Group is

entitled to for the shares held by it and its remuneration as the manager or investment

advisor of the asset management plan, and according to which, determines whether the

Group is the main responsible party for the asset management plan. As at December 31,

2022, the Group has consolidated 61 structured entities with its total assets reaching

RMB71,869,706,994.01. The amount of the trading financial assets in the balance sheet,

which embodied the equity of the Group in the above consolidated structured entities,

was RMB69,504,863,433.19.

(IX) Other information

Establishment and disposal of subsidiaries by the Company during the Reporting

Period

(1)

Establishment and disposal of subsidiaries by the Company during the

Reporting Period

For details of the establishment and disposal of subsidiaries by the Company

during the Reporting Period, please refer to Note 24 to the financial

statements of this report headed “Investments in subsidiaries”.

(2)

Capital increase and equity change in Huatai Futures during the Reporting

Period

During the Reporting Period, upon consideration and approval at the

shareholders’ general meeting of Huatai Futures, it was approved to convert

RMB1,330 million in the audited undistributed profit on December 31, 2021

into the registered capital at the shareholding proportion of shareholders.

The registered capital of Huatai Futures will change to RMB2,939 million

after the capital increase. Huatai Futures has completed the industrial and

commercial registration modification and other procedures on the capital

increase.

During the Reporting Period, Huatai Futures completed the industrial and

commercial registration modification procedures for equity change, and the

Company acquired 40% equity interest held by Deluxe Family Co., Ltd.,

another shareholder of Huatai Futures, after which the Company’s equity

interest in Huatai Futures has been changed to 100%.

At the same time, during the Reporting Period, the Company increased the

registered capital of Huatai Futures of RMB1,000 million to enhance the

capital strength of Huatai Futures and facilitate its business development.

The registered capital of Huatai Futures will change to RMB3,939 million

after the capital increase. Huatai Futures has completed the industrial and

commercial registration modification and other procedures on the capital

increase.

The establishment and disposal of the Company

’

s securities branch offices and

securities branches during the Reporting Period

During the Reporting Period, the Company relocated three securities branch

offices, and no securities branch offices were newly established or cancelled;

2 securities branches were cancelled and 23 were relocated, and no securities

branches were newly established.

As of the end of the Reporting Period, the Company has 28 securities branch

offices and 243 securities branches. For details, please refer to “Appendix II: List

of Branch Offices and Securities Branches” in this report.

(1)

Relocation of securities branch offices during the Reporting Period

No.

Name of

branches

Address after relocation

Issue Date of

License

Xuzhou Branch of

Huatai Securities

1-301# to 1-308#, Building B, Baolong

Square, No. 99 Heping Road, Yunlong

District, Xuzhou City

March 29, 2022

Tianjin Branch of

Huatai Securities

Block C-I, 5/F, North Finance Building,

No. 5 Youyi Avenue, Hexi District,

Tianjin City

April 13, 2022

Zhejiang Branch of

Huatai Securities

Rooms 2801-2808, Xingguangcheng,

No. 1766 Binsheng Road, Changhe

Street, Binjiang District, Hangzhou City,

Zhejiang Province

November 29,

2022

(2)

Cancelled securities branches during the Reporting Period

No.

Name of Securities

Branches

Address

Date of

Cancellation of

License

Securities Branch of

Huatai Securities

in Tiyu North

Road, Sihong,

Suqian

Room 103, Building 23, Fuyuan Tianjun,

Tiyu North Road, Qingyang Town, Sihong

County, Jiangsu Province (Sihong County

Economic Development Zone, Jiangsu

Province)

December 30,

2022

Securities Branch of

Huatai Securities

in Middle Beijing

Road, Siyang,

Suqian

No. 1 Middle Beijing Road, Zhongxing

Town, Siyang County

December 30,

2022

(3)

Relocation of securities branches during the Reporting Period

No.

Name of the branch

before relocation

Name of the branch after

relocation

Address after

relocation

Issue Date

of License

Securities Branch of Huatai

Securities in Xidi 3rd

Road, Wuzhou

Securities Branch of Huatai

Securities in Xidi 3rd

Road, Wuzhou

Business office No. 3-2

and business apartment

No. 2801-2809, 1/F,

No. 19 Xidi 3rd Road,

Wuzhou City

January 14,

2022

Securities Branch of Huatai

Securities in Huayang

North Road, Jurong,

Zhenjiang

Securities Branch of Huatai

Securities in Huayang

North Road, Jurong,

Zhenjiang

No. 1 Huayang North

Road, Huayang Town,

Jurong City

January 14,

2022

Securities Branch of Huatai

Securities in Xinhua

Road, Wuhan

Securities Branch of Huatai

Securities in Xinhua

Road, Wuhan

No. 314 Xinhua Road,

Jianghan District,

Wuhan City

March 4, 2022

Securities Branch of

Huatai Securities in

Guyang Avenue, Dantu,

Zhenjiang

Securities Branch of Huatai

Securities in Guyang

Middle Avenue, Dantu,

Zhenjiang

Rooms 131-133,

Hengyu Building,

Guyang Middle

Avenue, Dantu District,

Zhenjiang City

March 29, 2022

Securities Branch of Huatai

Securities in Heping

Road, Xuzhou

Securities Branch of Huatai

Securities in Heping

Road, Xuzhou

Room 1-104, Building

B, Baolong Square,

No. 99 Heping Road,

Yunlong District,

Xuzhou City

March 15, 2022

Securities Branch of Huatai

Securities in Zhengdong

Central Street, Tianfu

New District, Chengdu

Securities Branch of Huatai

Securities in Tianfu

Avenue, Chengdu

Rooms 1401 and 04,

14/F, Block 1, No.

588 Middle Section of

Tianfu Avenue, Hitech

Zone, Chengdu City,

China (Sichuan) Pilot

Free Trade Zone

March 21, 2022

Securities Branch of Huatai

Securities in West Main

Street, Yingcheng

Securities Branch of Huatai

Securities in West Main

Street, Yingcheng

Shop 20, Gucheng

Xindu, Gucheng

Avenue, Chengzhong

Sub-district, Yingcheng

City, Xiaogan City,

Hubei Province

April 18, 2022

The Second Securities

Branch of Huatai

Securities in South First

Ring Road, Chengdu

Securities Branch of Huatai

Securities in Tianfu

Square, Chengdu

Nos. 02 and 03, 21/F,

Unit 1, Block 1, No. 5

Xiyu Street, Qingyang

District, Chengdu City,

Sichuan Province

April 19, 2022

Securities Branch of Huatai

Securities in Shujin

Road, Chengdu

Securities Branch of Huatai

Securities in Shujin

Road, Chengdu

Rooms 1901 and

1905, Block B, Jinsha

Wanrui Center, No. 1

Shujin Road, Qingyang

District, Chengdu City,

Sichuan Province

April 19, 2022

No.

Name of the branch

before relocation

Name of the branch after

relocation

Address after

relocation

Issue Date

of License

Securities Branch of Huatai

Securities in Baota

Road, Gaochun, Nanjing

Securities Branch of Huatai

Securities in Baota

Road, Gaochun, Nanjing

No. 188-6, Baota Road,

Chunxi Town, Gaochun

District, Nanjing City,

Jiangsu Province

May 28, 2022

Securities Branch of Huatai

Securities in Wanda

Plaza, Panyu District,

Guangzhou

Securities Branch of Huatai

Securities in Pazhou

Avenue, Guangzhou

Rooms 2304, 2305,

2306 and 2307, No. 109

Pazhou Avenue, Haizhu

District, Guangzhou

City

June 21, 2022

Securities Branch of Huatai

Securities in Renmin

South Road, Chengdu

Securities Branch of Huatai

Securities in Renmin

South Road, Chengdu

Rooms 1506 and 1507,

15/F, Unit 1, Building

1, Xinxiwang Building,

No. 45, Renmin

Road South Section

IV, Wuhou District,

Chengdu City, Sichuan

Province

June 14, 2022

Securities Branch of Huatai

Securities in Zhonghua

North Road, Guiyang

Securities Branch of Huatai

Securities in Zhonghua

North Road, Guiyang

No. 16-3, Guizhou

Post Building, No. 2

Zhonghua North Road,

Yuxiu Sub-district,

Yunyan District,

Guiyang City, Guizhou

Province

June 24, 2022

Securities Branch of Huatai

Securities in Zhujiang

Road, CBD, Wuhan

Securities Branch of Huatai

Securities in Jianghan

Road, Wuhan

R1, 1/F and R1-R3,

2/F, Chuanbo

International Square,

No. 250 Jianghan Road,

Jianghan District,

Wuhan City

July 11, 2022

Securities Branch of Huatai

Securities in Middle

Yanzheng Avenue,

Changzhou

Securities Branch of Huatai

Securities in Huayuan

Street, Changzhou

A-101 and 201, No. 137

Huayuan Street, Wujin

District, Changzhou

City, Jiangsu Province

July 26, 2022

Securities Branch of Huatai

Securities in Wuzhong

Avenue, Suzhou

Securities Branch of Huatai

Securities in Wuzhong

Avenue, Suzhou

Rooms 106, 111 and

112, 1/F and Rooms

202 and 203, 2/F,

Wuzhong Commercial

Center, Building 1, No.

198 Su Street, Yuexi

Subdistrict, Wuzhong

Economic Development

Zone, Suzhou

July 26, 2022

100

No.

Name of the branch

before relocation

Name of the branch after

relocation

Address after

relocation

Issue Date

of License

Securities Branch of Huatai

Securities in Denghu

East Road, Foshan

Securities Branch of Huatai

Securities in Denghu

East Road, Foshan

Units 1203-1206, 12/F,

Huaya Financial Center,

No. 8 Denghu East

Road, Guicheng Street,

Nanhai District, Foshan

City (Declaration of

Domicile)

August 17, 2022

Securities Branch of Huatai

Securities in Jiuyi Street,

Quanzhou

Securities Branch of Huatai

Securities in Jinhuai

Street, Quanzhou

Units 705-707, Building

1, Zhongjun Square,

No. 16 Jinhuai Street,

Fengze District,

Quanzhou City, Fujian

Province

September 23,

2022

Securities Branch of

Huatai Securities

in Tianhecheng,

Guangzhou

Securities Branch of

Huatai Securities

in Tianhecheng,

Guangzhou

Units 03-1, 05, 06

and 07, 36/F, Yuehai

Tianhecheng Building

(namely, Tianhecheng

East Tower), No. 208

Tianhe Road, Tianhe

District, Guangzhou

City

September 7,

2022

Securities Branch of Huatai

Securities in Hongri

Avenue, Lianshui,

Huaian

Securities Branch of Huatai

Securities in Hongri

Avenue, Lianshui,

Huaian

Rooms 103 and 104,

Building Z02, Xin Lian

Yi Pin, Zhong Lian One

City, Lianshui County,

Huaian

September 1,

2022

Securities Branch of Huatai

Securities in Gonghe

New Road, Shanghai

Securities Branch of

Huatai Securities in

Guangzhong West

Road, Jingan District,

Shanghai

Rooms 1103 and

1105, Nos. 359 and

365 Guangzhong West

Road, Jingan District,

Shanghai City

September 26,

2022

Securities Branch of Huatai

Securities in Jingshi

Road, Jinan

Securities Branch of Huatai

Securities in Jiefang

East Road, Jinan

203, 2/F, Podium

of Shandong Port

Land-Sea Logistics

Building, No. 25-6

Jiefang East Road, Lixia

District, Jinan City

September 29,

2022

Securities Branch of Huatai

Securities in Jiefang

East Road, Hangzhou

Securities Branch of Huatai

Securities in Jiefang

East Road, Hangzhou

Room 14102, Building

3, GTland Plaza,

Shangcheng District,

Hangzhou City,

Zhejiang Province

November 29,

2022

101

Standardization of accounts such as unqualified accounts, judicially frozen

accounts, risk disposal accounts, and pure fund accounts

As of December 31, 2022, the Company had 4,009 unqualified securities accounts,

3,245 judicially frozen securities accounts, 83,712 risk disposal securities

accounts, and 724,318 pure capital accounts.

Account standardization has reached the following quality standards: (1) Except

for restricted use of dormant securities accounts, remaining unqualified securities

accounts, judicially frozen accounts, risk disposal accounts, etc., the accounts

engaging in normal trading activities are all qualified accounts. (2) Regular

comparison of funds and securities account information was made to verify the

consistency of key information such as customer names and numbers to prevent

the addition of unqualified accounts. Key information inconsistencies due to

special circumstances such as differences in information rules between the

depository bank and the registered company or unusual word processing have been

explained on a case-by-case basis.

Relevant measures for long-term and standardized management of accounts:

the daily management of accounts was strengthened and the real-name system

requirements for account business was strictly implemented. Through face

recognition technology, combined with ID card readers, public security network

verification, mobile phone number verification by relevant operator, the Group has

strengthened investor identity information identification, continued to innovate

account management measures and improve standard long-term management

mechanisms of accounts. It further improved management on consistency of

customers’ basic information, built a unified management platform for customers’

basic information, upgraded customers’ file management system, optimized

the unified management platform by protocol, strengthened the management

of business handling files of customer accounts through Internet channels, and

continued to do its best in the physical and electronic management of customer

account business files.

VII. DISCUSSION AND ANALYSIS OF THE COMPANY’S FUTURE DEVELOPMENT

(I)

Competition landscape and trend of the industry

At present, China is at the key stage of economic development and transformation.

Under the major strategic deployment of accelerating the establishment of a new “dual

circulation” development pattern in which domestic economic cycle plays a leading role

with both the domestic and international economic cycles promoting each other, the

construction of a modern capital market with Chinese characteristics is under continuous

progress. With the implementation of the comprehensive registration-based IPO system

reform, the capital market further displays its role in supporting the development of the

real economy and facilitating the virtuous cycle of capitals and the real economy with

increasing momentum in serving industrial transformation and upgrading and the high-

quality economic and social development. The securities industry will embrace major

strategic opportunities for development. Meanwhile, the development of domestic and

overseas financial markets still faces various complexities and uncertainties, which will

also bring new challenges to the steady development of the securities industry.

102

First, the comprehensive deepening of the reform of the capital market will provide

a broader development space for the securities industry. In recent years, the

comprehensive deepening reform of the capital market has continuously accelerated and

the functions of the capital market have been constantly improved. With an increasing

proportion of direct financing and the continuously establishment and improvement of

the multi-layered capital market system, the adaptability of the capital market to the

real economy was significantly improved and its breadth and depth in serving the real

economy were remarkably expanded. Currently, China’s capital market has embarked

on a new journey of reform and development with fundamental systems continuously

improved, the market structure increasingly optimized and the market resilience

significantly enhanced. The capability of the capital market in serving national

strategies is increasing boosted and the securities industry of China will continue to

enjoy the policy benefits released from the reform of the capital market.

Second, the new pattern of institutional two-way opening up will drive the securities

industry to transform in the direction of high-quality development. With the

implementation of laws, regulations, policies and guidelines on the two-way opening

up of the capital market one after another, the interconnection of onshore and offshore

capital markets is continuously deepened and cross-border investment and financing

channels are increasingly expanded. As the development of the institutional and

systematic two-way opening up of the capital market deepens, the internationalization

of the securities industry speeds up and securities companies should continue to expand

international businesses and speed up in promoting the transformation and upgrading

of the business structure. Oriented by customer needs, building a systematic and

platform-based comprehensive strength actively, and transforming to a comprehensive

financial service provider with complete business chain, industrial chain and service

chain, will become the only way for large securities companies to achieve high-quality

development.

Third, FINTECH empowerment and digital transformation will facilitate the reform

of the business operation model of the securities industry. Currently, China is under a

period of historical convergence featuring a new round of technological revolution and

industrial evolution and the change of the development model. With highly value in and

widely application of FINTECH in the securities industry, online, digital and intelligent

development is becoming the trend of FINTECH in the securities industry. The

application of advanced FINTECH and new digital concepts in the transformation and

iteration of business and management models of securities companies, the establishment

and improvement of ecosystems on the full FINTECH chains and the achievement

of the in-depth integration of FINTECH and business development will be effective

way for securities companies to innovate service models and enhance comprehensive

financial service capabilities.

103

(II) The Company

’

s development strategy

Strategic vision: Striving to become a first-class investment bank with both

domestic advantages and global influence, and a financial institution with

international competitiveness, brand influence and system importance.

Values and operation philosophy: By adhering to the core values of “high

efficiency, integrity, stability and innovation” and committing to the operation

philosophy of “centered on customer services, oriented by customers’ needs and

purposed on customer satisfaction”, to be accountable to all clients, shareholders,

staff and society to achieve harmony and unity.

Strategic orientation: By adhering to the development ideas of marketization

and openness and consistently following the strategic thread of business

platform-based development to continue to promote integrated and international

development and create a brand-new business model of two-pronged, cross-border

linkage and ecological interaction of wealth management and institutional services

with technology empowerment; implementing a differentiated competitive tactic of

“investment banking gene + full business chain” to build core competitiveness of

future-oriented digital and intelligent development and develop significant leading

edge and brand influence in key customer groups, key industries and key regions

with an commitment to being a pioneer of industry reform and innovation and a

promoter of sustainable development to become a first-class investment bank with

innovative vitality and technological characteristics.

(III) Business operation plan

Please refer to “Management Discussion and Analysis and Report of the Board” in this

report.

(IV) The Company

’

s capital needs to sustain the current business and complete the

ongoing investment projects

During the Reporting Period, all businesses of the Company were carried out in an

orderly manner. The capital-based intermediary business and the investment and trading

business are capital-intensive businesses with a huge capital demand and change with

market fluctuations. The Company continuously enhances capital management, improves

the efficiency in resources allocation, constantly diversifies financing varieties, expands

financing channels and reasonably arranges financing maturity to guarantee the capital

needs for various businesses. As of the end of the Reporting Period, the total balance

of onshore and offshore long-term and short-term borrowings, bonds payable and

short-term financing funds payable of the Company was RMB173.994 billion. The

Company will continue to enhance onshore and offshore capital management and

select appropriate financing instruments to raise funds based on the needs in business

development. It will continue to explore new financing varieties and methods, improve

the financing capability and optimize the capital structure of the Company to guarantee

the fund demand for business development.

104

(V)

Potential risks (including the implementation of overall risk management and the

investment in compliance risk control and information technology)

Overview of risk management

The Company attached great importance to risk management. According to

regulatory requirements and the actual situation of business development, the

Company established a relatively comprehensive overall risk management system

based on the core concepts of full staff engagement, full coverage and full

penetration. The Company has a solid and effective risk management framework

with clearly defined responsibilities and staff at all levels performing their duties

effectively; the Company worked out a risk appetite and tolerance system, which

is organically integrated with the development strategy, and established a multi-

level comprehensive risk management system covering all aspects of business

operation and management; in addition, the Company vigorously promoted the

construction of group-wide risk-management technology system and established

centralized, time-based, quantitative and penetrable pillars for risk management

technologies, to improve the effectiveness of risk management of the Group and

further strengthen the Group’s overall risk identification, quantitative evaluation

and risk control capabilities. The Company incorporated its subsidiaries into

the overall risk management system of the Group, explored the construction

of effective risk management model for subsidiaries, vigorously deepened the

management mindset of centralized and unified professional risk lines on a look

through basis, and built a professional risk management system. The overall risk

management system of the Company ran effectively, which earnestly guaranteed

the continuous and healthy development of various businesses of the Company.

During the Reporting Period, the Company comprehensively pushed forward

various risk management tasks with the focus on the in-depth and full penetration

of business risks management and control, the consolidation of the cross-

border integrated risk management system and the building of digitalized risk

management. The Company deepened precise management and control in key

businesses and risk areas, strengthened prospective identification and real-time

monitoring of business risks and built the risk management capability penetrating

into business substance and covering the full life cycle. The Company further

penetrated into the risk control of its overseas subsidiaries to strengthen the

construction of a cross-border integrated risk management system to provide solid

safeguard for the internationalization of the Group. The Company continued to

promote risk management empowered by digitization, deepened all dimensional

risk perception of the Group, achieved the linkage of management and control

procedures and continuously improved capabilities and efficiency on risk

management and control.

105

Risk management structure

Board of Directors

Supervisory Committee

Senior Management

Chief Risk Officer

All Branches

Risk Management

Department

Capital Operation

Department

Information

Technology

Department

Other Departments

Other Professional

Risk Management

Department

Strategic

Development

Department

The risk management organizational structure of the Company covers five major

parts: the Board and Compliance and Risk Management Committee; Supervisory

Committee; the Senior Management and Risk Control Committee; Risk

Management Department and various professional risk management departments;

other departments, branches and subsidiaries.

The Board is ultimately responsible for the overall risk management and is

responsible for reviewing and approving the basic system relating to the overall

risk management of the Company, approving the risk appetite, risk tolerance and

major risk limits of the Company, and reviewing periodic risk assessment reports

of the Company. The Compliance and Risk Management Committee is set up by

the Board to undertake risk management responsibilities including reviewing and

making recommendations on overall risk management targets and fundamental

policies; evaluating and making recommendations on the risks of major decisions

which require the Board’s review, as well as the solutions to these risks; reviewing

and making recommendations on risk assessment reports which require the

Board’s review.

106

The Supervisory Committee of the Company is responsible for supervising

overall risk management, supervising and inspecting the Board and the senior

management on the performance of their duties of risk management, and urging

them to make rectifications. Based on the authorization and approval of the

Board and the operation objectives of the Company, the senior management is

specifically responsible for the implementation of risk management and assumes

the primary responsibility for overall risk management. Upon authorization of the

senior management, the Risk Control Committee under the senior management

is mainly responsible for the decision-making on risk management matters in

the course of operation and authorizing on risk undertakings in various business

lines. Chief risk officer of the Company is responsible for leading the overall risk

management of the Company.

The Company appoints the risk management department to perform the overall

risk management duties and take the lead in managing the market risk, credit risk

and operational risk of the Company; appoints the capital operation department

to take the lead in managing the liquidity risk of the Company; appoints the

information technology department to take the lead in managing the information

technology risk of the Company; and appoints the strategic development

department to take the lead in managing the reputation risk of the Company.

Other departments, branches and subsidiaries of the Company are responsible for

the management of various risks in their respective lines, implementing various

policies, procedures and measures formulated by the Company and various leading

professional risk management departments, accepting guidance from various

leading risk management departments and assigning the risk management duties

and implementation responsibilities. The audit department incorporates overall

risk management into the audit scope, makes independent and objective review

and evaluation on the adequacy and effectiveness of overall risk management, and

is responsible for taking the lead or entrusting external professional institutions to

evaluate the overall risk management system of the Company regularly.

Market Risk

Market risk refers to the risk of asset loss of the Company resulting from

fluctuations in risk factors, including stock prices, interest rates, exchange rates

and commodities.

During the Reporting Period, the global capital market fluctuated significantly due

to the ongoing Russia-Ukraine conflict and the expected changes in the interest

rate hikes by the Federal Reserve. The Company adhered to the concept of value

creation through trading and risk control through hedging, actively controlled its

risk exposure and managed the market risk of holding assets through various risks

control measures. The Company has built up a unified risk limitation system to

control business risks from various aspects, such as Market Value at Risk (VAR),

stop-loss, stress testing, sensitivity, etc. The Company continued to improve its

stress testing system and regularly calculated and appraised the impacts of various

extreme risks. In respect of investments in equity securities, the Company actively

managed risk exposures through various hedge manners to avoid significant

market fluctuations. While ensuring the downside risks of assets controllable,

the Company actively explored trading opportunities and paid attention to the

107

market liquidity of investment targets and high diversification of asset positions.

In respect of fixed-income securities investment, the Company effectively hedged

market risk with interest rate derivatives and adjusted the position structure to

respond to the impacts of interest rate fluctuations on the term and structure of

investment portfolios, and actively sought opportunities for pricing deviations

to enhance overall income while controlling overall duration, basis point value

and VAR value. In respect of derivatives business, the Company adopted market

neutral strategy for the OTC derivatives business and controlled the Greeks values

(such as Delta, Gamma, Vega, etc.) exposure risks within acceptable limits. It

created profit opportunities with risks under control.

Market Value at Risk (VAR) of the Company

Currency: RMB

Forward-looking Period: 1 day; Confidence: 95%; Historical Analogical Method;

Unit (Ten Thousand Yuan)

The Company

The Group

As at the

end of 2022

As at the

end of 2021

As at the

end of 2022

As at the

end of 2021

Equity-sensitive

Financial

Instruments

3,365

15,177

10,939

25,047

Interest-sensitive

Financial

Instruments

4,172

2,298

5,115

2,528

Commodity-sensitive

Financial

Instruments

304

201

407

294

Overall Portfolio Risk

Value

5,977

15,803

10,381

26,175

Source: Internal statistics of the Company.

During the Reporting Period, Sequence Descriptive Statistics of Market Value

at Risk (VAR) of the Company

Currency: RMB

Forward-looking Period: 1 day; Confidence: 95%; Historical Analogical Method;

Unit (Ten Thousand Yuan)

At the

beginning of

the period

At the end

of the period

Maximum

value

Minimum

value

The Group

29,504

10,381

33,173

11,074

The Company

21,719

5,977

25,146

6,475

Source: Internal statistics of the Company.

108

Credit risk

Credit risk refers to the risk of asset loss of the Company resulting from the

default of a product or bond issuer or counterparty (customer).

In terms of financing business, the Company implemented strict and continuous

monitoring of clients and assets at risk and the management measures of timely

risk resolution, and strengthened dynamic counter-cyclical regulation mechanisms

to control business risks and adjust business structures. During the Reporting

Period, under the market volatility, the risks on the Company’s margin financing

and securities lending and stock pledge repurchase businesses were not affected

significantly. In terms of investment business, the Company deepened risk

management and control of the entire process of credit bonds, established a regular

screening and disposal mechanism for risky bonds, and continued to strengthen the

monitoring and pre-warning mechanisms for bond positions, improving the credit

risk prevention and control effectiveness of the Group on credit bond investment.

In terms of transaction business, the Company further promoted the establishment

of a unified management system and the optimization of the management systems

for counterparties and further enhanced the credit management of counterparties

based on internal and external public opinions to strictly control tail risks. In

terms of guarantee settlement business, the Company continued to improve front-

end management and control of risk indicator design and promoted systematic

construction, and strengthened the management and control capabilities of risk

handling and transmission. The Company continued to optimize and improve

the unified management system for credit risks, and improved the ability to deal

with the external complicated credit environment, therefore providing strong risk

control guarantee for the development of various credit businesses. During the

Reporting Period, there was no major credit risk event in the Company and all

businesses ran smoothly.

Liquidity risk

Liquidity risk refers to the risk that the Company cannot obtain sufficient funds

at reasonable costs in time to repay due debts, perform other payment obligations

and meet the capital requirements for carrying out ordinary businesses.

The Company has always attached importance to liquidity safety, preferred

a “sound and safe” liquidity risk preference, followed the general principle

of comprehensiveness, importance, applicability, effectiveness, prudence and

foresight, and continued to strengthen the identification, measurement, monitoring

and control mechanisms of liquidity risks through a management model of

centralized management and hierarchical prevention and control, to improve the

Company’s liquidity risk management capability. On the basis of controlling

overall liquidity risks, the Company identified potential liquidity risks of all

business lines by regular analysis of existing liquidity risk and ad-hoc new

business assessment and proposed targeted control measures. The Company

has established a liquidity indicator analysis framework including cash flow,

and appropriately set risk limits and implemented daily monitoring through the

information technology system, to improve the monitoring frequency and control

level of liquidity risks. At the same time, the Company continued to improve

the capital planning system by strengthening capital position management and

109

establishing a liquidity daytime monitoring system to keep abreast of capital usage

in business and day-time payment progress in a timely manner, further moving

forward the frontline of liquidity risk prevention and control. The Company

regularly and occasionally conducted special stress tests on liquidity risks to

assess the Company’s liquidity risk tolerance under stress from the perspective

of cash flow and liquidity indicators, and took targeted measures to improve the

Company’s liquidity risk resilience. In order to ensure that liquidity needs can be

met in a timely manner under stress, the Company has established high-quality

liquid asset reserve of an appropriate scale based on risk preferences. At the

same time, it has expanded its debt financing channels and quotas from multiple

perspectives, and continued to improve the Company’s emergency financing

capabilities. The Company developed liquidity risk emergency plans to ensure

that liquidity risk events, once occurred, can be solved quickly and efficiently,

and it also carried out regular liquidity risk emergency drills. In addition, the

Company leveraged the consolidation supervision to strengthen the subsidiary

liquidity risk guidance, in particularly to conduct vertical management on its Hong

Kong subsidiaries with emphasizes on their liquidity management, to improve the

subsidiaries’ response capability to liquidity risks and the Group’s prevention and

control of overall liquidity risks. During the Reporting Period, the Company’s

liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) continued to

remain at a level that can meet regulatory requirements and far beyond the safety

requirements.

Operational risks

Operational risk refers to risk on the Company’s losses caused by inadequate or

problematic internal procedures, personnel, systems or external events.

During the Reporting Period, with system and process control as the foundation,

the Company continued to strengthen the accuracy and precision of operational

risk identification and improved the quality and effectiveness of the Group’s

operational risk control with various channels. Taking the opportunity of the

digital transformation, the Company intensified the front-end control of systems

and pressed ahead with the management of operational risk at earlier steps. With

the flight test and special inspections on sectors with high residual risk as the

starting point, the Company focused on key businesses and links, positioned key

weaknesses in control and promoted the optimization of management mechanisms.

With process control as the means, the Company achieved the closed-loop control

link covering risk perception, identification and assessment, response and handling

as well as rectification and tracking. Based on operational risk management

tools, the Company carried out traceability and analysis on multi-dimensional

classifications of data and further refined control requirements for the three major

tools based on the effectiveness of application. With the publicity of the risk

culture as the driver, it empowered business development, smoothened channels

for two-way feedbacks and experience sharing, upgraded efforts in the penetration

of publicity and trainings and facilitated the operational risk management risk

to deeply take root in the Group. The Company solidly advanced the normalized

and standardized management of business continuity to enhance the effectiveness

of disruption prevention and control and emergency response and guarantee the

continuous business operation without abnormal conditions.

110

Compliance risk

Compliance risk refers to exposure to property loss or business reputation loss

as a result of bearing legal responsibility, supervisory measures or disciplinary

sanctions imposed on securities companies due to violation of laws, regulations

and standards by operational management or professional conduct performed by

securities companies or their employees.

During the Reporting Period, the Company continued to improve its compliance

management system in terms of system development, working mechanism and

staff management, so as to effectively promote the full coverage of compliance

management. The Company accelerated the development of digital compliance

and stereoscopic compliance, continued to enhance its self-research ability for

core systems and was committed to achieving early discovery of compliance risk.

The Company kept up with industry development trends and regulatory dynamics,

and prudently carried out business compliance reviews to facilitate the stable

implementation of new businesses and new products; proactively researched and

actively promoted compliance control of key businesses through compliance

assessment, prompt supervision, and meeting attendance. In addition, the Company

also continued to enhance professional risk control of staff, improved investment

behavior management systems and mechanisms of employees, strengthened anti-

corruption promotion and training as well as warning education, and promoted the

implementation of the cultural development of the securities industry; intensified

compliance inspections based on problems and risks, focused on key businesses

and critical parts, and tracked and implemented rectification status; and improved

the group-wide compliance management mechanism, in particularly its overseas

subsidiaries to strengthen compliance communication and control among members

of the Group; and intensified the capacity building of compliance staff and

enhanced the ability to create value of compliance.

Information technology risk

Information technology risk refers to exposure to losses caused by the failure

of the information system to continuously ensure the stable and safe operation

of transaction and business management in terms of business realization, timely

response, solving capacity and data security, resulting from technical problems or

data leakage out of internal or external reasons.

The business lines and the middle and back-office management of the Company

are highly depended on the information system, which has become the key support

to the operation of businesses of the Company. During the Reporting Period, the

Company continued to improve information technology governance and increased

investment in information technology to strengthen the management system and

process platform-based development of information technology risks, strengthened

the identification, evaluation, monitoring and report of information technology

risks, and carried out special ratification, further improving the level and

effectiveness of risk management. During the Reporting Period, the Company’s

information system was operated safely and stably. No major information

technology risk events occurred.

111

Reputational risk

Reputational risk mainly refers to exposure to risks that are detrimental to the

normal operation of the Company exposed by the negative judgments from

relevant media caused by the Company’s operation, management and other

conducts or external events.

During the Reporting Period, the Company’s reputational risk management

mechanism was running steadily without occurrence of any significant reputational

risk events. Focusing on its strategy and key business, the Company continued

to intensify its precaution, monitoring and handling of reputational risks, which

created a good public sentiment for the Company’s development. At the same

time, the Company continued to strengthen group management, prior management

and fast response mechanisms, further enhancing its awareness on preventing and

the ability on response to reputational risk.

10.

Model risk

Model risk refers to the risk of adverse consequence or loss to the Company’s

businesses resulting from incorrect or inappropriate model design, development or

use.

During the Reporting Period, the Company continued to improve risk management

policies and mechanisms based on the life cycle of model and constantly promoted

model risk management and control by approaches and measures including

model validation, assessment and monitoring before and during events. The

Company developed and improved the model risk management system adaptive

to its own business development while optimizing risk management system and

organizational structure as well as the model’s information and data management

module function, and systematized model validation and evaluation processes.

During the Reporting Period, the Company’s model risk management was operated

safely and stably. No major model risk events occurred.

11.

Implementation of overall risk management of the Company during the Reporting

Period

The Company attached great importance to the overall risk management. Adhering

to the steady risk management culture and with controlling risks, improving

efficiency and promoting development as the targets of risk management, the

Company sticks to the core risk management idea with high engagement, full

coverage and deep penetration and the management approach of collectivization,

specialization and platformization and continuously enhances the core

competitiveness on risk management.

For the full coverage of risks, the comprehensive risk management of the

Company covers all domestic and overseas subsidiaries, branches and business

lines for major risk types. The Company established a risk management system for

subsidiaries by combining centralized management and control and hierarchical

authorization, raised clear requirements to subsidiaries on issues including the

construction of the risk management system, risk management policies and

indicator system, risk management personnel allocation and assessment and risk

112

reports, and set up differentiated and detailed rules for risk management. All risk

management departments of the Company fulfilled the management responsibility

on market risk, credit risk, liquidity risk, operational risk, reputational risk

and information technology risk through in-depth linkage and conducted risk

identification, prudent assessment, dynamic monitoring, timely reporting and

response for all risks and businesses before, during and after each operation.

For the surveillance of risks, the Company continued to improve the promptness

and accurate presentation of risk surveillance and analysis. The Company

continued to deepen the multi-dimensional and multi-layered risk limitation

system with top-to-bottom breakdown and bottom-to-top summarization and

achieved accurate calculation, dynamic monitoring and timely alarming on risk

indicators through platformization to speed up in realizing integrated and real-time

risk monitoring in the Group.

For the measurement of risks, the Company realized the measurement on the

market, credit and liquidity risks, and continuously improved the risk measurement

model management to develop core technological competitiveness on risk

measurement. The Company carried out evaluation and verification of valuation

model and risk measurement model, and continuously perfected and iterated the

measurement model and built the bottom of technological competence to improve

the accuracy of measurement results and provide measurable technological and

fundamental guarantees for risk management.

For the analysis of risks, the Company established and improved a multi-level risk

reporting system, further strengthened the breadth and depth of risk analysis, so

as to ensure the timely and effective transfer of risk information among various

levels and departments. The Company increased investment in pressure test,

continued to improve the establishment of the pressure test system and systematic

functions and further integrated and consolidated the bottom capability on pressure

test. In combination with the results of pressure tests on regular comprehensive

and professional risk and drivers of irregular matters, the Company identified tail

risks through forward-looking analysis to provide supports to the management and

decision-making of the Company.

For risk response, the Company has, based on risk monitoring and analysis results,

formulated certain response strategies including risk avoidance, reduction, transfer

and tolerance matched with different risk appetites and established reasonable

and effective response mechanisms on asset impairment, risk hedging, capital

supplement, scale adjustment, asset and liability management. At the same

time, the Company developed practical risk and crisis response mechanisms and

schemes and continuously improved them through regular exercises to enhance

the capability of the Company on preventing, reacting and resolving risks. The

Company continued to consolidate the systematic implementation of front-

end control and achieve process-based rules and platform-based processes to

practically prevent risks.

113

The Company provided sufficient support and protection for its comprehensive

risk management in aspects of cultivating a culture, developing policies,

increasing investment, improving the system and recruiting talents. The Company

continued to carry out themed trainings on risk management and risk management

culture publicity activities covering all employees and intensified efforts in

the publicity and penetration of risk management and the depth of reaching

among all employees. The Company further implemented and optimized risk

management assessment, giving full play to the guiding role of risk assessment.

The Company established a three-dimensional risk management system covering

basic systems, management guidelines and implementation rules and developed

a regular evaluation and revision mechanism for the system, through which the

implementation of the system was included into the risk assessment. The Company

attached great importance to risk management and information technology system

construction, and implemented guarantees of resources on risk management and

the establishment of systems. It adhered to the concept of digital transformation,

accumulated the risk management capability through systems and platforms

and continuously established a cross-border and integrated platform for risk

management with group-wide coverage and deep penetration, empowering the risk

management. The Company intensified its efforts in training and engaging risk

management personnel, enabling the risk management personnel of the Company

continuously meet regulatory requirements.

12.

The investment of the Company in compliance risk control during the Reporting

Period

The Company attached great importance to its compliance operation and risk

management by continuously enhancing the construction of the compliance risk

control system, optimizing the composition of compliance risk control personnel,

and increasing investment in the construction of the compliance risk control system

to improve our professional abilities in compliance risk control with technology as

the driving force. The Company’s investments in compliance risk control mainly

include: investment in compliance risk control personnel, the daily operating costs

of compliance risk control and investment in construction of compliance risk

control related systems. In 2022, on Parent Company basis, the total investment in

compliance risk control of the Company amounted to RMB757,115,900.

13.

The investment of the Company in information technology during the Reporting

Period

The Company has always valued innovation in information technology, adhered

to the concept of “return to the origin of financial services with technology

empowerment to achieve the co-creation of technology and business” and focused

on the target of “client’s success, business innovation, operation optimization

and employee empowering” to comprehensively promote the Company’s digital

transformation and strive to creating a leading core technology competitiveness

in the forefront of the industry. The Company’s investments in information

technology mainly include: IT capital expenditure, daily expenses for operation

and maintenance of IT, leasing and depreciation cost of computer rooms, circuit

leasing cost and remuneration of IT personnel. In 2022, on Parent Company basis,

the total investment in information technology of the Company amounted to

RMB2,724,079,500.

114

(VI) Establishment of the monitoring and complementary mechanism of the Company

’

dynamic risk control indicators

Establishment of the monitoring and complementary mechanism of the dynamic

risk control indicators

The dynamic risk control index monitoring and replenishment mechanism is one

of the important measures for the Company to control risks. During the Reporting

Period, to further perfect the management mechanism on the dynamic monitoring

system for risk control indicators and improve the timeliness and accuracy of

the calculation results in the statements of risk control indicators, the Company

amended the Administration Measures for Dynamic Monitoring on Risk Control

Indicators. With full data, complete functions and normal operation, the dynamic

monitoring system for risk control indicators of the Company can effectively

support the monitoring on the net capital, liquidity and other risk control indicators

of the Company. The Company solidly promoted the monitoring and alarming on

various risk control indicators, continuously improved the dynamic monitoring

mechanism for risk control indicators mainly based on net capital and liquidity

and assigned full-time operators to conduct daily monitoring, duly report and

handle various abnormalities; with stricter corporate monitoring standards as the

monitoring threshold based on the regulatory standards and pre-warning standards

for risk control indicators specified by the CSRC, launched corresponding

reporting route and response plan according to different pre-warning level and

ensured that the net capital, liquidity and other risk control indicators always

comply with the regulatory requirements; constantly optimized the function of the

net capital and liquidity dynamic monitoring system to ensure that the dynamic

monitoring system can effectively support the monitoring of the Company’s net

capital, liquidity and other risk control indicators.

The Company has established a dynamic complementary mechanism for net

capital and liquidity. The Company’s complementary pathways of net capital

include but not limited to capital fund raising for increase in capital and share,

issuance of subordinated bonds, compression of highly-risky investment types

and scale, and reduction or suspension of profit distribution, etc. The Company’s

complementary pathways of liquidity include but not limited to external financing

(interbank borrowing, bond repurchase, corporate bond, short-term corporate

bond, subordinated debt, short-term financing bill, income receipts, refinancing

integrated fund, gold lease, etc.), realization of part of the liquid reserve, control

or adjustment of business scale, etc.

Conditions of risk control indicators triggering the pre-warning criteria or not

conforming to the required standards, and corrective measures adopted and

rectification effects during the Reporting Period

During the Reporting Period, the Company conducted prospective estimation or

pressure tests of risk control indicators for profit distribution, capital increase

in and guarantee provision to subsidiaries, engagement in new businesses and

other major events. The above-mentioned matters were implemented under the

condition that the analysis and test results meet the regulatory requirements.

During the Reporting Period, main risk control indicators of the Company were

all in line with the regulatory requirements, and there were no such circumstances

where the risk control indicators violated the pre-warning standards or were not in

compliance with the provided standards.

115

VIII. THERE WERE NO CIRCUMSTANCES IN THE COMPANY’S FAILURE TO

MAKE DISCLOSURE IN ACCORDANCE WITH THE STANDARDS DUE TO

INAPPLICABILITY OF THE STANDARDS REQUIREMENTS OR SPECIAL

REASONS INCLUDING NATIONAL SECRETS AND TRADE SECRETS AND THE

EXPLANATIONS OF REASONS THEREOF

IX.

OTHER DISCLOSURES

(I)

Share capital

For the Company’s share capital for the year ended December 31, 2022 and the details

of changes therein, please refer to “Changes in Shares and Shareholders” in this report.

(II)

Arrangement of pre-emptive rights

According to the provisions of the PRC laws and the Articles of Association, none of

the shareholders of the Company has any pre-emptive rights.

(III) Repurchase and Cancellation of Part of the Restricted A Shares

On February 8, 2021, a series of resolutions including the Resolution on the Restricted

Share Incentive Scheme of A Shares of Huatai Securities Co., Ltd. (Draft) and its

Summary was considered and approved at the Company’s first extraordinary general

meeting of 2021. On March 23, 2021, upon consideration and approval at the fourteenth

meeting of the fifth session of the Board of Directors of the Company, the Company

made adjustment to the Restricted Share Incentive Scheme of A Shares and agreed to

grant restricted A Shares to the incentive participants. On April 7, 2021, the Company

received the Certificate of Registration of Changes in Securities issued by China

Securities Depository and Clearing Corporation Limited Shanghai Branch to set out

the record date being April 6, 2021 and granted 45,488,000 restricted A Shares to 810

eligible incentive participants at the grant price of RMB9.10 per Share. The Company

has completed the registration of the grant of the restricted A Shares. From the grant of

the restricted A Shares by the Company to February 28, 2022, a total of 22 incentive

participants of the grant were no longer qualified as incentive participants due to their

resignations for personal reasons and termination their employment contracts with the

Company. The restricted A Shares that had been granted to them but not yet unlocked

were repurchased and cancelled by the Company.

During the Reporting Period, the Resolution on Repurchase and Cancellation of Part

of the Restricted A Shares by the Company was considered and approved at the 2021

Annual General Meeting, the 2022 First A Share Class Meeting, and the 2022 First H

Share Class Meeting of the Company, respectively, which agreed that the Company

shall repurchase and cancel a total of 1,060,973 restricted A Shares granted but not

yet unlocked from 22 incentive participants of the grant who are no longer qualified

as incentive participants. During the Reporting Period, the Company has completed

the repurchase and cancellation of the 1,060,973 restricted A shares. The total share

capital of the Company after the cancellation was 9,075,589,027 shares, including

7,356,543,347 A Shares, which accounted for 81% of the total number of shares; and

1,719,045,680 H Shares, which accounted for 19% of the total number of shares.

116

(IV) Sufficient public float

As at the latest practicable date before printing of this annual report, based on the

information available to the public and as far as the Directors are aware of, the Directors

believe that the Company’s public float satisfies the requirements for minimum public

float under Rule 8.08 of the Hong Kong Listing Rules.

(V)

Directors

’

interests in competing business with the Company

None of the Directors of the Company has any interest in business that competes or is

likely to compete, either directly or indirectly, with the business of the Company.

(VI) Service contracts of Directors and Supervisors

According to rules 19A.54 and 19A.55 of the Hong Kong Listing Rules, the Company

has entered into a contract with each of the Directors and Supervisors in respect of

(among other matters) compliance of relevant laws and regulations, as well as the

Articles of Association and provisions on arbitration. Save as disclosed above, none of

the Directors or Supervisors of the Company has entered into or is proposed to enter

into any service contracts with the Company in their respective capacities as Directors/

Supervisors (other than contracts expiring or terminable by the employers within one

year without the payment of compensation other than statutory compensation).

(VII) Directors

’

and Supervisors

’

interests in material contracts, transactions or

arrangements

During the Reporting Period, the Directors or Supervisors of the Company or entities

that are connected to them did not have material interests, whether directly or indirectly,

in any material contract, transaction or arrangement entered into by the Company or its

subsidiaries.

(VIII)

Permitted indemnity provision-liability insurance for Directors, Supervisors and

senior management

As authorized in 2014 annual general meeting, the Company has provided liability

insurance for Directors, Supervisors, senior management, and other relevant competent

persons. Appropriate insurance coverage has been arranged for Directors, Supervisors

and senior management of the Company against potential legal actions and liabilities

that arise from performing their duties to reasonably avoid management and legal risks

faced by Directors, Supervisors and senior management of the Company and to promote

the full discharge of duties by the Directors, Supervisors and senior management of the

Company.

(IX) Profile of Directors, Supervisors and senior management

For profiles of Directors, Supervisors and senior management of the Company, please

refer to “Primary work experience” under “Changes in shareholding structure and

remuneration of current and resigned Directors, Supervisors and senior management

during the Reporting Period” in “Directors, Supervisors and Senior Management” in the

section headed “Corporate Governance” in this report.

117

(X)

Remuneration policy

For the remuneration and share incentive scheme of Directors, Supervisors and senior

management of the Company, please refer to “Changes in shareholding structure and

remuneration of current and resigned Directors, Supervisors and senior management

during the Reporting Period” and “Remuneration of the Directors, Supervisors and

Senior Management” under “Directors, Supervisors and Senior Management” in the

section headed “Corporate Governance” in this report.

(XI) Share option scheme

The Company did not establish any share option scheme.

(XII) Major customers and suppliers

The Group provides services to a wide range of institutional and individual clients

across various sectors. The Group’s clients range from retail customers, wealth clients,

high-net-worth individuals, institutional clients to corporate clients, who are primarily

located in China. The successful listing in Hong Kong and London and smooth

implementation of its deployment strategies in the international market will facilitate

the Group in carrying out its overseas operations, exploring customer resources and

boosting for further development of the Group’s businesses. In 2022, the revenue

attributable to the five largest clients of the Group accounted for less than 30% of the

total operating revenue of the Group.

The Group has no major supplier due to the nature of its business.

(XIII)

Relationship with employees, customers, suppliers and persons with important

relationships

For details of the employees’ remuneration and training plans of the Company, please

refer to “Remuneration policy” and “Training programs” under “Information about the

Staff of the Parent Company and Major Subsidiaries at the end of the Reporting Period”

in the section headed “Corporate Governance” in this report. For the relationship

between the Company and its major customers and suppliers, please refer to “Major

customers and suppliers” under “Other Disclosures” in the section headed “Management

Discussion and Analysis and Report of the Board” in this report.

(XIV)

Business review

For analysis of business using key financial performance indicators, please refer to

“Company Profile and Key Financial Indicators” of this report.

(XV) Corporate governance

For the corporate governance condition of the Company, please refer to “Corporate

Governance” of this report.

118

(XVI)

Tax relief

Shareholders of A Shares

According to the provisions in the Notice on Issues Regarding Differentiated

Individual Income Tax Policy for Dividends and Bonuses of Listed Company

(Cai Shui [2015] No. 101) (

《關於上市公司股息紅利差別化個人所得稅政策

有關問題的通知》

(

財稅

[2015]101

號

)) and the Notice on Issues Regarding the

Implementation of Differentiated Individual Income Tax Policy for Dividends and

Bonuses of Listed Company (Cai Shui [2012] No. 85) (

《關於實施上市公司股息

紅利差別化個人所得稅政策有關問題的通知》

(

財稅

[2012]85

號

)) jointly issued

by the Ministry of Finance, State Administration of Taxation and the CSRC, for

individual shareholders of the Company, if the term of shareholding (a period

from the date when the individual acquires the listed shares on public offering

and transferring markets to the date one day before the shares are transferred

and settled) is within one month (inclusive), all the dividend and bonus incomes

thereof are counted as taxable income at the effective tax rate of 20%; if the term

of shareholding is between one month and one year (inclusive), temporarily, 50%

of the dividend and bonus incomes are counted as taxable income at the effective

tax rate of 10%; if the term of shareholding exceeds one year, temporarily, the

dividend and bonus incomes are exempted from individual income taxes. When

dividends and bonus incomes are distributed by a listed company, such company,

temporarily, shall not withhold or pay any individual income taxes on behalf of

the individuals whose term of shareholding is within one year (inclusive); instead,

the taxable incomes shall be calculated by a securities registration and settlement

company based on the term of shareholding when the individual transfers those

shares and the Company shall withhold and pay the taxes through the securities

registration and settlement company. For dividend and bonus incomes obtained

by securities investment funds from listed companies, the individual income taxes

thereof are calculated and levied pursuant to the provisions in the document of Cai

Shui [2012] No. 85.

For QFII, according to the provisions in the Notice on Issues Regarding

Withholding and Payment of Corporate Income Taxes when PRC Resident

Enterprises Distribute Dividends, Bonuses and Interests to the QFII (Guo Shui

Han [2009] No. 47) (

《關於中國居民企業向

QFII

支付股息、紅利、利息代扣代繳

企業所得稅有關問題的通知》

(

國稅函

[2009]47

號

)) issued by State Administration

of Taxation, the listed company withholds and pays corporate income taxes

at a uniform tax rate of 10%. If the dividend and bonus incomes obtained by

QFII shareholders are entitled to the treatment as stipulated in tax treaties

(arrangements), application for tax refund can be submitted to the governing

tax authority after the acquisition of such dividends and bonuses according to

regulations.

119

According to the provisions in the Notice on Tax Policy Regarding Shanghai-

Hong Kong Stock Connect Pilot Programs (Cai Shui [2014] No. 81) (

《關於滬港

股票市場交易互聯互通機制試點有關稅收政策的通知》

(

財稅

[2014]81

號

)) issued

by the Ministry of Finance, State Administration of Taxation and the CSRC, for

the dividend and bonus incomes obtained by investors (including enterprises and

individuals) on Hong Kong market from investing in A Shares listed on Shanghai

Stock Exchange, the implementation of differentiated taxation is suspended before

Hong Kong Securities Clearing Company Limited meets the conditions to provide

CSDC with the investors’ identifications, terms of shareholding and other specific

data. The listed company withholds and pays the income taxes at the tax rate

of 10%, which should be duly declared to the governing taxation authority. For

Hong Kong investors who are tax residents of foreign countries that have entered

a tax treaty with the PRC specifying an income tax rate for dividend and bonus

incomes below 10%, the enterprises or individuals can, by themselves or entrust a

withholding agent to apply to the governing tax authorities of the listed company

for the treatment as stipulated in such tax treaties. The governing tax authorities

shall refund the taxes according to the discrepancy between the levied taxes and

taxes payable based on the rate specified in the tax treaty after verifying and

approving the application.

For the qualified investors who invest in the GDR issued by the Company on

London Stock Exchange and comply with the relevant domestic and foreign

regulatory rules (GDR Investors), according to the Corporate Income Tax Law of

the PRC (

《中華人民共和國企業所得稅法》

) and other relevant tax regulations,

the Company shall withhold and pay income taxes at a tax rate of 10%. Citibank

and National Association, as the nominal holders of domestic basic A Shares

corresponding to GDR, receive the cash dividends distributed by the Company.

If the dividend and bonus incomes obtained by GDR Investors are entitled to the

treatment as stipulated in relevant tax treaties (arrangements), applications can be

submitted to the governing tax authority according to regulations.

For other institutional investors, the taxes on their dividends and bonus incomes

shall be paid on their own.

Shareholders of H Shares

According to the provisions in the Notice by the State Administration of Taxation

on Issues Regarding the Administration of Individual Income Tax Collection

after the Annulment of Document Guo Shui Fa [1993] No. 045 (Guo Shui Han

[2011] No. 348) (

《國家稅務總局關於國稅發

[1993] 045

號文件廢止後有關個

人所得稅徵管問題的通知》

(

國稅函

[2011]348

號

)), for the dividend and bonus

incomes acquired by individual shareholders as overseas residents from the

issuance of shares in Hong Kong by domestic non-foreign investment enterprises,

the withholding agent shall legally withhold and pay the individual income

taxes according to item “interest, dividend and bonus income”. For the issuance

of shares in Hong Kong by domestic non-foreign investment enterprises, the

individual shareholders as overseas residents can enjoy relevant tax preferences

according to the provisions in the tax treaty signed by the country to which

the resident identity belongs and the PRC and in the tax arrangements between

Mainland China and Hong Kong (Macao). According to relevant tax treaties

120

and tax arrangements, the tax rates for dividends are normally 10%. To simplify

administration of tax collection, when the domestic non-foreign investment

enterprises issuing shares in Hong Kong distribute dividends and bonuses, the

individual income taxes are generally withheld at the tax rate of 10% without

application. If the dividend tax rate is not 10%, individual income taxes shall

be withheld as per the following provisions: (1) for residents subject to tax rate

below 10% pursuant to relevant treaties, the withholding agent can apply related

treatment under such treaties on behalf of the residents and the governing tax

authority will refund the additional tax payments after approving the application;

(2) for residents subject to tax rate over 10% but lower than 20% pursuant to

relevant treaties, when the withholding agent distributes dividend and bonus, the

individual income tax shall be withheld and paid at the actual tax rate specified in

the treaties and application for approval is not necessary; (3) for residents from the

country which did not enter into any tax treaty with the PRC and other situations,

when the withholding agent distributes dividend and bonus, the individual income

tax shall be withheld and paid at the tax rate of 20%.

According to the provisions in the Notice on Issues regarding Withholding of

Enterprise Income Taxes when PRC Resident Enterprises Distribute Dividends to

Overseas Non-resident Enterprise shareholders of H Shares (Guo Shui Han [2008]

No. 897) (

《關於中國居民企業向境外

股非居民企業股東派發股息代扣代繳企業

所得稅有關問題的通知》

(

國稅函

[2008]897

號

)) issued by the State Administration

of Taxation, when Chinese resident enterprises distribute annual dividends to

overseas non-resident enterprise shareholders of H Shares for 2008 and subsequent

years, the corporate income tax shall be withheld and paid at the uniform tax rate

of 10%.

According to the provisions in the Notice on Tax Policy Regarding Shanghai-

Hong Kong Stock Connect Pilot Programs (Cai Shui [2014] No. 81) (

《關於滬港

股票市場交易互聯互通機制試點有關稅收政策的通知》

(

財稅

[2014]81

號

)) issued

by the Ministry of Finance, State Administration of Taxation and the CSRC, for

dividends and bonuses acquired by Mainland individual investors by investing

in listed H Shares on the Hong Kong Stock Exchange via Shanghai-Hong Kong

Stock Connect, such H Share companies shall withhold the individual income tax

at a tax rate of 20%. For dividends and bonuses acquired from Mainland securities

investment funds by investing in listed shares on the Hong Kong Stock Exchange

via Shanghai-Hong Kong Stock Connect, the individual income tax shall be

levied as per above regulations. For dividends and bonuses acquired by Mainland

enterprise investors by investing in listed shares on the Hong Kong Stock

Exchange via Shanghai-Hong Kong Stock Connect, such H Share companies shall

not withhold any income taxes on the dividends and bonuses, and such income

tax shall be declared and paid by the enterprises on their own. Meanwhile, for the

dividends and bonuses acquired by Mainland resident enterprises for continuous

holding of H Shares for 12 months, the corporate income tax shall be exempted

according to laws.

According to the current practices of Inland Revenue Department of Hong Kong,

no tax shall be levied for dividends distributed by the Company in Hong Kong.

The shareholders of the Company shall pay relevant taxes and/or be entitled to tax

reliefs according to the above provisions.

121

(XVII)

Environmental policies and performance of the Company

For the environmental policies and performance of the Company, please refer to

“Environment and Social Responsibility” in this report.

(XVIII)

Compliance with relevant laws and regulations

As a public company listed at home and abroad, the Company abides, in a strict manner,

by the requirements of the laws, regulations and normative documents of domestic and

foreign places where the Company is listed including the Company Law, Securities

Law, Regulation on the Supervision and Administration of Securities Companies, Rules

for Governance of Securities Companies, Code of Corporate Governance for Listed

Companies in China, Corporate Governance Code in Appendix 14 of Hong Kong

Listing Rules and the Articles of Association. The Company established and perfected

its rules and regulations to standardize the operation of the Company, and devoted

itself to maintaining and improving its sound market image. Please refer to “Suspected

Violations of Laws and Regulations by, Punishment on and Rectification of the

Company and its Directors, Supervisors, Senior Management, Controlling Shareholders

and de facto Controllers” in the section headed “Major Events” in this report for the

punishment and public denouncement received by the Company during the Reporting

Period.

(XIX)

Reserves and distributable reserves

Please refer to the consolidated statements of changes in equity and Note 55 to the

financial statements of this report for changes in reserves and distributable reserves.

(XX) Property and equipment and investment properties

Changes in properties and equipment and investment properties of the Group during

the year are set out separately in Notes 20 and 21 to the consolidated financial

statements. As at December 31, 2022, the Group did not own any investment properties

or properties for development and/or for sale with one or more ratio (as defined in the

Rule 14.04(9) of the Hong Kong Listing Rules) over 5%.

(XXI)

Management contracts

No contracts concerning the management and administration of the whole or any

substantial part of the business of the Company were entered into or existed during the

year ended December 31, 2022.

(XXII)

Donations

The Company actively performed its social responsibilities in 2022 by investing

RMB42,828,900 (2021: RMB46,001,600) in public activities including public service

advertising and charitable contribution.

122

(XXIII)

Five-year financial highlight

For the highlight of operating results, assets and liabilities of the Group in the past five

financial years, please refer to “Key Accounting Data and Financial Indicators for the

Past Five Years” under “Key Accounting Data and Financial Indicators” in the section

headed “Company Profile and Key Financial Indicators” in this report. This summary

does not constitute a part of the audited consolidated financial statements.

(XXIV)

Auditors

Upon approval by the Company’s 2019 Annual General Meeting held on June

18, 2020, the Company employed KPMG Huazhen LLP as the audit service

institute of the Company and its holding subsidiaries for the 2020 annual financial

statements and internal control to issue A Share audit report and internal control

audit report and GDR audit report; and employed KPMG as the audit service

institute of the Company’s H Share to issue H Share audit report. The audit

service fee was capped at RMB6.00 million. In 2020, KPMG Huazhen LLP issued

a standard unqualified opinion audit report on the annual financial report prepared

by the Company in accordance with the China Accounting Standards for Business

Enterprises. Certified public accountants Cheng Hailiang and Qian Ruwen signed

the report; KPMG issued a standard unqualified opinion audit report on the annual

financial report prepared by the Company in accordance with the International

Financial Reporting Standards. Certified public accountant Lee Lok Man signed

the report.

Upon approval by the Company’s 2020 Annual General Meeting held on June

22, 2021, the Company employed KPMG Huazhen LLP as the audit service

institute of the Company and its holding subsidiaries for the 2021 annual financial

statements and internal control to issue A Share audit report, internal control

audit report and GDR audit report; and employed KPMG as the audit service

institute for the Company’s H Shares to issue H Share audit report. The audit

service fee was capped at RMB6.00 million (of which the internal control audit

fee was capped at RMB0.50 million). In 2021, KPMG Huazhen LLP issued a

standard unqualified opinion audit report on the annual financial report prepared

by the Company in accordance with the China Accounting Standards for Business

Enterprises. Certified public accountants Cheng Hailiang and Qian Ruwen signed

the report; KPMG issued a standard unqualified opinion audit report on the annual

financial report prepared by the Company in accordance with the International

Financial Reporting Standards. Certified public accountant Lee Lok Man signed

the report.

Upon approval by the Company’s 2021 Annual General Meeting held on June

22, 2022, the Company employed Deloitte Touche Tohmatsu Certified Public

Accountants LLP as the audit service institute of the Company and its holding

subsidiaries for the 2022 annual financial statements and internal control to

issue A Share audit report, internal control audit report and GDR audit report;

and employed Deloitte Touche Tohmatsu as the audit service institute for the

Company’s H Shares to issue H Share audit report. The audit fee amounted to

RMB4.20 million (of which the internal control audit fee was RMB0.35 million).

In 2022, Deloitte Touche Tohmatsu Certified Public Accountants LLP issued a

standard unqualified opinion audit report on the annual financial report prepared

123

by the Company in accordance with the China Accounting Standards for Business

Enterprises. Certified public accountants Hu Xiaojun and Han Jian signed the

report; Deloitte Touche Tohmatsu issued a standard unqualified opinion audit

report on the annual financial report prepared by the Company in accordance with

the International Financial Reporting Standards. Certified public accountant Eric

Tong signed the report.

Upon approval by the Company’s second meeting of the sixth session of the

Board of Directors held on March 30, 2023, the Company proposed to employ

Deloitte Touche Tohmatsu Certified Public Accountants LLP as the audit service

institute of the Company and its holding subsidiaries for the 2023 annual financial

statements and internal control to issue A Share audit report, internal control audit

report and GDR audit report; and employ Deloitte Touche Tohmatsu as the audit

service institute for the Company’s H Shares to issue H Share audit report. The

audit service fee was capped at RMB4.60 million (of which the internal control

audit fee was RMB0.40 million). This issue is yet to be approved at the 2022

Annual General Meeting of the Company.

There have been changes in auditor of the Company in the past three years.

According to the Administrative Measures for Selection and Appointment of

Accounting Firms by State-owned Financial Enterprises (Cai Jin [2020] No. 6)

(

《國有金融企業選聘會計師事務所管理辦法》

(

財金

[2020]6

號

)) issued by the

Ministry of Finance, the service term of the accounting firm previously appointed

by the Company expired after the completion of the audit on the 2021 Annual

Report. On June 22, 2022, the Resolution on the Change of the Accounting

Firm of the Company for 2022 was considered and approved at the 2021 Annual

General Meeting, which approved the Company to engage Deloitte Touche

Tohmatsu Certified Public Accountants LLP as the audit service institute for

the 2022 annual accounting statements and internal control audit services of the

Company and its controlled subsidiaries, and issued the A Share Audit Report, the

Internal Control Audit Report and the GDR Audit Report, and appoint Deloitte

Touche Tohmatsu as the H Share audit service institute of the Company and issue

the H Share Audit Report.

(XXV)

Auditor

’

s remuneration

For auditor’s audit service fee during the Reporting Period, please refer to “Auditors”

under “Other Disclosures” in the section headed “Management Discussion and Analysis

and Report of the Board” in this report.

During the Reporting Period, the Company employed Deloitte to provide non-auditing

services, such as agreed procedures and advisory service, and the fees for such non-

auditing services were RMB1.0692 million.

124

(XXVI)

Review of Annual Results

This annual financial report has been audited. The Audit Committee under the Board of

Directors has reviewed the Company’s audited annual financial statement and annual

report as of December 31, 2022, and did not raise any objections to the accounting

policy and convention adopted by the Company.

(XXVII)

Publication of the Annual Report

This annual report will be released on the Company’s website (www.htsc.com.cn) and

the HKEXnews website (www.hkexnews.hk).

The 2022 annual report of the Company which contains all the information required

by the Hong Kong Listing Rules will be sent to shareholders and published on the

Company’s website (www.htsc.com.cn) and the HKEXnews website (www.hkexnews.

hk).

By order of the Board

Zhang Wei

Chairman

March 30, 2023

125

CORPORATE GOVERNANCE

DESCRIPTION OF CORPORATE GOVERNANCE

As a public company listed in both domestic and overseas, the Company has been operating

business in a standard manner and in strict compliance with the requirements set forth in

the laws, regulations and regulatory documents of the PRC and the overseas jurisdiction

where the shares of the Company are listed, and has made continuous efforts to maintain

and enhance the good image of the Company in the market. The Company keeps improving

its corporate governance structure, compliance risk control and internal control system

according to the requirements under the Company Law, the Securities Law, the Regulations

on Supervision and Management of Securities Companies, the Rules for Governance of

Securities Companies, the Rules for Corporate Governance of Listed Companies, the

Corporate Governance Code (the relevant code is set out on https://en-rules.hkex.com.hk/

sites/default/files/net_file_store/new_rulebooks/h/k/HKEX4476_3828_VER10.pdf) as set out

in Appendix 14 to the Hong Kong Listing Rules and other relevant laws and regulations as

well as the Articles of Association, in order to establish a modern corporate system, and shape

a corporate governance structure where checks and balances among the general meeting, the

Board, the Supervisory Committee and the operation management are maintained, with each

of them being separated from the other and performing its own functions and responsibilities

corresponding to its position within the specified terms of reference, thereby ensuring all

the operational activities of the Company are carried out smoothly and in accordance with

relevant laws and regulations.

(I)

Corporate governance

During the Reporting Period, the Company conducted its operations and management

in a standard and orderly manner. Various rules and regulations have been formulated

and continuously refined in strict compliance with the requirements of laws, regulations

and regulatory documents to regulate the Company’s operations. During the Reporting

Period, in order to further improve corporate governance, the Company amended and

improved the Articles of Association in accordance with the relevant requirements of

the Constitution of the Communist Party of China (

《中國共產黨章程》

), the Regulations

on the Work of the Communist Party of China for its Grassroots Organizations

at State-owned Enterprises (Trial) (

《中國共產黨國有企業基層組織工作條例

(

試

行

)

》

), the Securities Law, the Company Law, the Regulation on the Supervision and

Administration of Securities Companies (

《證券公司監督管理條例》

), the Provisions

on the Administration of Equity of Securities Companies (

《證券公司股權管理規

定》

), the Provisions on Issues Concerning the Implementation of the Provisions on the

Administration of Equity of Securities Companies (

《關於實施

證券公司股權管理規

定

有關問題的規定》

), Code of Corporate Governance for Securities Companies (

《證

券公司治理準則》

), the Guidelines for the Articles of Association of Listed Companies

(

《上市公司章程指引》

), the Provisions on Strengthening the Supervision of Listed

Securities Companies (

《關於加強上市證券公司監管的規定》

), and the Ten Elements

of Cultural Construction of the Securities Industry (

《證券行業文化建設十要素》

)

issued by the Securities Association of China and other relevant laws, regulations and

normative documents as well as the Approval for the Qualification for Market Making

and Trading Business of Listed Securities by Huatai Securities Co., Ltd. (

《關於核准

華

泰證券股份有限

公司上市證券做市交易業務資格的批覆》

) issued by the CSRC and the

126

relevant requirements of market regulation administration authorities on standardized

description of business scope and in light of repurchase and cancellation of part of

the restricted A Shares under the equity incentive scheme of the Company; in order

to safeguard the legitimate rights and interests of all shareholders of the Company,

ensure the standardized and efficient operation of the general meetings of the Company

and ensure that shareholders can exercise their powers and functions equally and

effectively, the Company amended and improved the Rules of Procedures for General

Meetings in accordance with the Rules for the General Meetings of Shareholders of

Listed Companies (

《上市公司股東大會規則》

) and other relevant requirements; in order

to further perfect the corporate governance structure of the Company and protect the

rights and interests of minority shareholders and stakeholders, the Company amended

and improved the Working System for Independent Directors in accordance with the

Rules for the Independent Directors of Listed Companies (

《上市公司獨立董事規則》

the Measures for the Supervision and Administration of Directors, Supervisors, Senior

Management Officers and Practitioners of Securities Fund Operating Institutions (

《證券

基金經營機構董事、監事、高級管理人員及從業人員監督管理辦法》

) and the Rules

Governing the Listing of Stocks on the Shanghai Stock Exchange (

《上海證券交易所股

票上市規則》

) and other relevant requirements; and in order to continue to standardize

the decision making on related-party transactions of the Company and improve its

standardized operation, the Company amended and improved the Management System

for Related-party Transactions in accordance with the Provisions on the Administration

of Equity of Securities Companies and the Rules Governing the Listing of Stocks on

the Shanghai Stock Exchange and other relevant requirements. All amendments to

such systems were considered and approved at the general meetings of the Company.

Meanwhile, in order to improve the corporate governance structure and strengthen the

decision-making functions of the Board, the Company amended and improved the Terms

of Reference of Special Committees under the Board in accordance with the Articles of

Association and other relevant requirements; in order to safeguard the legitimate rights

and interests of the Company and investors, and regulate the information disclosure

behaviour of the Company and relevant information disclosure obligators, the Company

amended and improved the Management Measures for Information Disclosure in

accordance with the Administrative Measures for the Disclosure of Information of

Listed Companies (

《上市公司信息披露管理辦法》

) and the Rules Governing the Listing

of Stocks on the Shanghai Stock Exchange and other relevant requirements; in order to

further enhance the communications between the Company and investors and potential

investors, and promote investors’ understandings of the Company, the Company

amended and improved the Administrative System Regarding Investor Relationship

in accordance with the Work Guidelines for the Investor Relations Management of

Listed Companies (

《上市公司投資者關係管理工作指引》

) and the Rules Governing the

Listing of Stocks on the Shanghai Stock Exchange and other relevant requirements; and

in order to strengthen the management of the Shares of the Company held by Directors,

Supervisors and senior management of the Company and the changes therein, the

Company amended and improved the Administrative System regarding the Shares of the

Company Held by Directors, Supervisors and Senior Management in accordance with

the Management Rules for Company’s Shares Held by Directors, Supervisors and Senior

Management of Listed Companies and Movements of Their Shares (

《上市公司董事、

監事和高級管理人員所持本公司股份及其變動管理規則》

) and the Rules Governing

the Listing of Stocks on the Shanghai Stock Exchange and other relevant requirements.

All amendments to such systems were considered and approved by the Board of the

127

Company. In addition, during the Reporting Period, as considered and approved by the

Board and the Supervisory Committee of the Company, and at the general meeting of

the Company and according to the election by the congress of workers and staff of the

Company, the Company formed the sixth session of the Board and the sixth session of

the Supervisory Committee. Through the establishment and improvement as well as

the full implementation of the above systems, the Company’s governance structure and

level have been continuously standardized and improved.

The convening, holding and voting procedures of the general meeting, the Board and

the Supervisory Committee of the Company were standard, legal and valid, and the

Company disclosed truthful and accurate information in a complete, timely and fair

manner. The Company carried out investor relationship management in a standard and

professional manner, and carried out inside information management and registration

of insiders in strict compliance with the requirements of the System regarding Insider

Registration and Management and Confidentiality of the Company and other relevant

rules. The Company adhered to the principle of scientificity, standardization and

transparency when practicing corporate governance. During the Reporting Period, the

Company was rated as the highest level A in the 2021-2022 information disclosure

evaluation of listed companies organized by the Shanghai Stock Exchange, and won the

Best Practice Award in the 2022 Best Practice for Board Office of Public Companies

organized by China Association for Public Companies. At the same time, the secretary

of the Board of the Company was rated as 5A in the 2022 Performance Evaluation

of the Secretary of the Board of Directors of Listed Companies organized by China

Association for Public Companies. In addition, in 2022, the Company maintained its

annual MSCI ESG rating of A for two consecutive years, currently the highest rating for

a domestic securities company.

Shareholders and the General Meeting

The shareholders’ general meeting is the organ of the highest authority of the

Company, and the shareholders exercise their rights through the shareholders’

general meeting. The Company convenes and holds shareholders’ general meetings

in strict accordance with the relevant provisions of the Articles of Association

and the Rules of Procedures for General Meetings to ensure the equal status of all

shareholders, in particular the minority shareholders, and enable them to exercise

their rights completely. The largest shareholder and the de facto controller of

the Company exercised their rights in accordance with the laws, regulations

and the Articles of Association, and neither directly or indirectly intervened in

the decisions and operations of the Company beyond the general meeting nor

appropriated any fund of the Company or requested the Company to provide any

external guarantee. The Company was completely independent from its largest

shareholder and de facto controller in terms of staff, assets, finance, organization

and business.

128

Directors and the Board

The election and change of Directors were in strict compliance with the Articles

of Association. The number and composition of the Board conformed to the

requirements of the relevant laws and regulations. The Board has continuously

improved its rules of procedures. All the Board meetings were duly convened

and held, and all voting procedures at the meetings were legal and valid. The

Company has established the Working System for Independent Directors, and all

the independent Directors have independently and objectively worked to protect

the legitimate rights and interests of the Company and its shareholders, and played

a role of check and balance in the decision-making process of the Board. The

Board has the following mechanism in place to ensure independent views and

input from Directors are conveyed to the Board. Meanwhile, the Board reviews

the implementation and effectiveness of this mechanism every year: The Board of

the Company comprises 13 Directors, of whom 5 are independent non-executive

Directors, representing more than 1/3 of the Board. The independent Directors of

the Company are required to issue independent opinions on significant matters

of the Company and report to the Board for disclosure concurrently with relevant

announcements of the Company. Each year, all independent Directors of the

Company submit an annual performance report to the Board and the shareholders’

general meeting for consideration, and disclose relevant information on their

positions in other listed companies or organizations in the annual report. The

Company has established Special Committees under the Board that are responsible

to the Board and submit the voting results of the meetings to the Board, among

which the majority members of the Audit Committee and the Nomination

Committee are independent Directors who host the posts of chairman. All

members of the Remuneration and Appraisal Committee are independent Directors.

The Nomination Committee is responsible for reviewing the structure, size and

composition of the Board each year, reviewing and making recommendations

on the qualifications of Directors and senior management and reviewing the

independence of independent non-executive Directors and other matters.

The Company ensures that independent Directors have the right to information

equivalent to that of other Directors and are provided with the necessary working

conditions to perform their duties, and for matters that need to be decided by the

Board, the Company shall notify independent Directors in advance pursuant to

statutory limit of time and provide true, accurate and sufficient information at the

same time. If independent Directors consider that the information is insufficient,

they may request the Company to supplement.

All Directors of the Company are able to perform their duties with due diligence

in accordance with the relevant regulations to safeguard the interests of the

Company and all shareholders.

129

There is no financial, business, family or other significant/related relationship

between the Directors, Supervisors and senior management of the Company.

The Company believes that the increasing diversity of the Board is one of the

key factors that help support its strategic objectives and maintain sustainable

development. Therefore, the Company has, when determining the composition of

the Board, adopted the following measures to maintain or enhance its balance and

diversity:

(1)

consider the diversity of Board members in several aspects, including but

not limited to gender, age, cultural and educational background, professional

experience, skills, knowledge and popularity in service. The determination

of the members should be based on the value of the candidates and the

contribution that they could make to the Board. All nominations of the

Board should be in the principle of “merit-based”. When the candidates are

selected, the benefits from the diversity of Board members should be taken

into full consideration according to their objective conditions.

(2)

The Nomination Committee will report annually on the diversified

composition of the Board in the annual report, inspect the implementation of

the abovementioned policy on diversification of Board members and review

such policy every year so as to ensure its effectiveness.

130

In 2022, the Company set up the sixth session of the Board of Directors, with

members including strategic Shareholder representatives introduced through the

non-public issuance of A Shares, forming a Board with diversified composition

and complementary advantages.

As of the end of the Reporting Period, the composition of the Board of the

Company is as follows:

By age group

Aged 50 and below: 5 persons; aged 51-55: 6 persons; aged 56-60: 1 person; aged

over 60: 1 person

By category of Directors

Executive Directors: 3 persons; non-executive Directors: 5 persons; independent

non-executive Directors: 5 persons

131

By gender

Female Directors: 2 persons; male Directors: 11 persons

Professional background

Finance, economics, accounting, laws, business administration, economic

management, enterprise management, industrial economics, electronic

communication, English, etc.

The Board considers that the current composition of the Board is diversified

regarding skills, gender, experience and knowledge and that the nomination policy

of the Company ensures that the Board will have potential alternate candidates to

continue the established diversity of the Board.

Supervisors and the Supervisory Committee

The election and change of the Supervisors were in strict compliance with

the Articles of Association. The number and composition of the Supervisory

Committee conformed to the requirements of the relevant laws and regulations.

The Supervisory Committee has continuously improved its rules of procedure.

All the meetings of the Supervisory Committee were duly convened and held,

and all voting procedures at the meetings were legal and valid. The Supervisory

Committee is responsible to the general meeting. Based on the principle of being

responsible to all shareholders, the Supervisory Committee effectively supervised

the legality and compliance of the Company’s finance and the performance

of duties by the Board and the management of the Company. All Supervisors

diligently performed their duties, attended all meetings of the Supervisory

Committee and sat in the meetings of the Board as non-voting delegates, made

reports to the general meeting and submitted its work report.

Senior Management of the Company

The election and change of the senior management were in strict compliance with

the Articles of Association. The procedures for appointment of senior management

complied with the Company Law and the Articles of Association. The Company

has formulated the Terms of Reference of the CEO and the Executive Committee

and the Terms of Reference of the Secretary to the Board and other rules and

regulations. The senior management of the Company conducted operations

and performed their duties legally and diligently in accordance with the laws,

regulations and authorizations of the Board, in order to maximize shareholders’

benefits and social benefits.

132

Information Disclosure and Transparency of the Company

The Company disclosed information in a truthful, accurate, complete and timely

manner in strict compliance with the requirements of laws, rules and relevant

regulations, and ensured that all shareholders had an equal access to the relevant

information of the Company, thereby ensuring the transparency of the Company.

The Company strengthened the management of inside information, worked to

ensure the confidentiality of inside information, and safeguarded the principle of

fairness in information disclosure in strict compliance with the System regarding

Insider Registration and Management and Confidentiality of the Company. The

Board designated the secretary to the Board to be responsible for the Company’s

information disclosure, and the Office of the Board also assisted the secretary

in information disclosure. Meanwhile, the Company also arranged dedicated

personnel to answer telephone enquiries of investors and questions from

investors via e-mails and the SSE interactive E-platform, actively interacted with

institutional investors during their on-site surveys, and set up an investor relations

section on the Company’s website.

Stakeholders

The Company gave full respects to the shareholders, customers, staff and

other stakeholders and protected their legitimate rights and interests from the

perspective of system building and in each link of business operation, ensured the

development of the Company in a sustainable, harmonious, healthy and standard

way, in order to achieve all-win results for the Company and all stakeholders, thus

maximizing the Company’s profits and social benefits.

During the Reporting Period, according to the requirements of the regulatory

departments, the Company further improved its organizational structure,

institutional building and strengthened management of inside information, and

ensured that the actual status of the corporate governance of the Company

complied with the requirements of the regulatory documents published by the

CSRC regarding the corporate governance of listed companies. Meanwhile, the

Company strictly complied with all the code provisions as set out in the Corporate

Governance Code, and met most of the recommended best practices in the

Corporate Governance Code.

(II)

Formulation and Implementation of Insider Registration and Management System

The Company formulated the System regarding Insider Registration and Management

and Confidentiality in April 2010 in accordance with the requirements of relevant laws

and regulations, regulatory documents and the Articles of Association and in light of the

actual situation of the Company, which was considered and approved at the seventeenth

meeting of the first session of the Board, in order to strengthen the management of

inside information, maintain the confidentiality of inside information, ensure fair

information disclosure and protect the legitimate rights and interests of investors.

133

In December 2011, according to the Provisions on the Establishment of an Insider

Registration and Management System by Listed Companies (CSRC Announcement

[2011] No. 30) (

《關於上市公司建立內幕信息知情人登記管理制度的規定》

(

證監會

公告

[2011]30

號

)) by the CSRC, the Circular on Filing Records of Insiders by Listed

Companies (Shang Zheng Gong Han [2011] No. 1501) (

《關於做好上市公司內幕信息知

情人檔案報送工作的通知》

(

上證公函

[2011]1501

號

)) by the Shanghai Stock Exchange

and other relevant requirements issued by regulators, the Company made amendments

to the System Regarding Insider Registration and Management and Confidentiality,

which were considered and approved at the seventh meeting of the second session of the

Board.

In March 2015, in order to meet the relevant regulatory requirements regarding the

listing of the H Shares of the Company, the Company made amendments to the System

Regarding Insider Registration and Management and Confidentiality, which were

considered and approved at the sixteenth meeting of the third session of the Board.

In March 2019, for consistency with the Articles of Association, the Company made

amendments to the System regarding Insider Registration and Management and

Confidentiality, which was considered and approved at the twentieth meeting of the

fourth session of the Board.

In August 2020, according to relevant requirements of the revised Securities Law, the

Guidelines on Insiders Reporting by Listed Companies of the SSE as well as relevant

laws, regulations and regulatory documents, the Company made amendments to the

System regarding Insider Registration and Management and Confidentiality, which was

considered and approved at the seventh meeting of the fifth session of the Board.

During the Reporting Period, the Company made more efforts to maintain the

confidentiality of inside information, performed its obligation of insider registration,

management and confidentiality diligently, kept records of the names of insiders

who had accessed to the inside information at the stage of negotiation, planning,

demonstration and consultation and contracting as well as in the processes of reporting,

delivery, preparation, auditing, resolution and disclosing before its final disclosure in

strict compliance with the requirements of System regarding Insider Registration and

Management and Confidentiality, and kept records of information relating to insiders

and memos of progress of major events, in order to effectively prevent insider dealing

and properly carry out information disclosure.

During the Reporting Period, the Company organized internal investigation into the

dealing of shares and derivatives of the Company by insiders, and found that none of the

holders of inside information had made use of inside information in share transactions

before any significant-price-sensitive-nature information disclosure that may affect

the share price of the Company, and the Company has not received any punishment or

administrative measure imposed by regulatory departments due to the implementation of

the Insider Registration and Management System or the possible involvement in insider

dealing.

134

(III) Corporate Governance Policies and the Board

’

s Responsibilities for Corporate

Governance

The Company has been in strict compliance with the Hong Kong Listing Rules, and

followed all the principles in the Corporate Governance Code to be its own corporate

governance policies. In respect of the corporate governance function, the terms of

reference of the Board shall at least include:

(1)

to formulate and review the corporate governance policies and practices of the

Company;

(2)

to review and monitor the training and continuous professional development of the

Directors and the senior management;

(3)

to review and monitor the Company’s policies and practices on compliance with

laws and regulatory requirements;

(4)

to formulate, review and monitor the code of conduct and compliance manual (if

any) applicable to monitor employees and Directors;

(5)

to review the Company’s compliance with the Corporate Governance Code and

disclosure in the Corporate Governance Report.

(IV) Securities Transactions by Directors, Supervisors and Employees

During the Reporting Period, the Company adopted the Model Code as set out in

Appendix 10 to the Hong Kong Listing Rules as the code of conduct for securities

transactions of the Company by all Directors and Supervisors. According to the

domestic regulatory requirements, the Company convened the thirteenth meeting

of the third session of the Board on November 25, 2014 to consider and approve

the Administrative System regarding the Shares of the Company Held by Directors,

Supervisors and Senior Management (the “Administrative System”) in order to regulate

the holding and dealing in the shares of the Company by Directors, Supervisors

and senior management. On March 6, 2015, the Company made amendments to the

Administrative System in order to meet the relevant regulatory requirements regarding

the listing of H Shares of the Company, which were considered and approved at the

sixteenth meeting of the third session of the Board. On October 28, 2022, the Company

made amendments to the Administrative System in order to strengthen the management

of the Shares of the Company held by Directors, Supervisors and senior management

of the Company and the changes therein, which were considered and approved at

the twenty-seventh meeting of the fifth session of the Board of the Company. The

compulsory provisions contained in the Administrative System are stricter than

those under the Model Code. Having made all enquiries with Directors, Supervisors

and senior management, the Company confirmed that all Directors, Supervisors and

senior management had strictly complied with the relevant requirements under the

Administrative System and Model Code during the Reporting Period. The Board of the

Company will, from time to time, carry out inspection on corporate governance and

operation of the Company, in order to ensure the relevant provisions under the Hong

Kong Listing Rules are well observed and to protect the interests of the shareholders.

Please refer to “Changes in shareholding structure and remuneration of current and

resigned Directors, Supervisors and senior management during the Reporting Period”

under “Directors, Supervisors and Senior Management” under “Corporate Governance”

in this report for details of the shareholding of the Directors, Supervisors and senior

management of the Company.

135

II.

SPECIFIC MEASURES TAKEN BY THE CONTROLLING SHAREHOLDERS

AND DE FACTO CONTROLLERS OF THE COMPANY TO ENSURE THE

INDEPENDENCE OF THE COMPANY IN TERMS OF ASSETS, PERSONNEL,

FINANCE, ORGANIZATION AND BUSINESS, AND THE SOLUTIONS, WORK

PROGRESS AND FOLLOW-UP WORK PLANS THAT INFLUENCE THE

INDEPENDENCE OF THE COMPANY

The shareholding structure of the Company is relatively decentralized without controlling

shareholders. The de facto controller of the Company is Jiangsu SASAC. Since its inception,

the Company has been operating in strict compliance with relevant laws and regulations

including the Company Law and the Securities Law as well as the requirements of the

Articles of Association. The Company is completely separated from its shareholders in

respect of business, staff, assets, organization and finance, owns a complete business system

and is capable of operating independently in the market.

Information about the independence of business

In accordance with the requirements of the Company Law and the Articles of

Association, the Company conducts business on its own pursuant to the law within the

operating scope approved by the CSRC, and has obtained various business materials

required for securities business operation with an independent and complete business

system and the ability of self-operation. Its business operation is not controlled or

affected by its shareholders or related parties. The Company can compete in the market

independently. Shareholders and related parties of the Company did not breach the

Company’s working procedures or intervene in the Company’s internal management or

the making of its operational decisions.

Information about the independence of the staff

The Company set up a dedicated human resources department, and established

independent and complete systems for labor employment, personnel management, salary

management and social security. The Directors, Supervisors, and senior management

of the Company were selected and employed in compliance with relevant requirements

of the Company Law, the Securities Law, the Measures for the Supervision and

Administration of Directors, Supervisors, Senior Management Officers and Practitioners

of Securities Fund Operating Institutions and the Articles of Association. The current

Directors, Supervisors and senior management of the Company meet the corresponding

qualifications. The senior management of the Company held no positions in its largest

shareholder and de facto controller and other enterprises under its control. The Company

adopts an appointment system for the senior management, a labor contract system for all

staff, and enters into Labor Contract with all the staff in accordance with the law. The

Company owns independent rights for labor employment and its staff are independent

from the shareholders and enterprises under their control without any interference from

the shareholders.

136

Information about the integrity of the assets

The Company owns main business qualifications, land, real estate, vehicles and other

operating equipment required for business operation. The above assets are subject to

no mortgage, pledge or other guarantees, and the Company is the legal owner of these

assets. The assets of the Company are independent from its largest shareholder and

other shareholders. As of the end of the Reporting Period, the Company provided no

guarantees for the debts of any of its shareholders and their subsidiaries by using its

assets or reputation as the collateral. The Company had full control and use right over

its assets, and there had been no circumstance under which the interests of the Company

were damaged due to the largest shareholder’s occupation of any of its assets and funds.

Information about organizational independence

In strict compliance with the requirements of the Company Law and the Articles of

Association, the Company has set up a sound corporate governance structure, under

which the general meeting, the Board of Directors, the Supervisory Committee, the

senior management and relevant operating management departments have been formed.

The general meeting, the Board of Directors, the Supervisory Committee and the

senior management are in good operation and exercise their respective functions and

powers pursuant to the law. The Company owns an independent and complete system

for securities business operation and management, and conducts business on its own.

The organizations are set up and run in compliance with the relevant requirements of

the CSRC. The existing offices and premises of the Company are totally separate from

its shareholders without the circumstances of sharing organizations with them or their

direct intervention in the Company’s business activities.

Information about financial independence

As required by the Accounting Standards for Business Enterprises and the Financial

Systems of Securities Firms, the Company has established an independent financial

accounting and management system, set up an independent accounting department, and

employed independent financial accountants. The chief financial officer and financial

personnel of the Company held no positions in its shareholders. The Company has

opened an independent bank account, applied for an independent tax registration and

paid taxes in accordance with laws and regulations. The Company shared no accounts

and taxes with its shareholders and related parties.

As of the end of the Reporting Period, the Company provided no guarantees for its

shareholders and other related parties. During the Reporting Period, the Company

experienced no peer competition and related-party transactions resulted from

shareholding reform, features of the industry and national policies or mergers and

acquisitions.

137

CONTROLLING SHAREHOLDERS, DE FACTO CONTROLLERS AND

OTHER UNITS UNDER THEIR CONTROL ENGAGED IN SAME OR SIMILAR

BUSINESSES AS THE COMPANY AND IMPACTS OF HORIZONTAL

COMPETITIONS OR SIGNIFICANT CHANGES IN HORIZONTAL COMPETITIONS

ON THE COMPANY, SOLUTIONS ADOPTED, SOLVING PROGRESS AND

SUBSEQUENT SOLUTIONS

In July 2010 and with the approval of the People’s Government of Jiangsu Province,

Jiangsu SASAC decided to transfer the state-owned equities in Jiangsu Sainty

International Group Limited to Guoxin Group, the largest shareholder of the Company.

Guoxin Group directly and indirectly held 78.5% equities of Jintai Futures Co., Ltd.,

and became the controlling shareholder of Jintai Futures Co., Ltd. Jintai Futures

Co., Ltd. is principally engaged in commodities futures brokerage, financial futures

brokerage, futures investment consultancy and asset management, which has horizontal

competition with Huatai Futures, a subsidiary by the Company.

To avoid the abovementioned horizontal competition, on June 10, 2014, the Company

organized the convening of the sixth meeting of the third session of the Board and the

fourth meeting of the third session of the Supervisory Committee, which considered and

approved the Resolution on Avoiding Horizontal Competition in Futures Businesses

Between Jiangsu Guoxin and Huatai Securities and submitted to the 2014 second

extraordinary general meeting convened on June 26, 2014 for consideration and

approval. Meanwhile, the independent Directors of the Company expressed independent

opinions on the resolution. They believed that such horizontal competition has no

significant effect on the operation and development of Huatai Securities and the

interests of minority shareholders and the resolution is in line with relevant regulations

of the CSRC and beneficial to the legitimate interests of investors, small and medium

investors in particular, and meets the requirements of Huatai Securities on maximizing

shareholders’ interests.

On June 27, 2014, Guoxin Group re-signed the Letter of Undertaking on Waiving

Horizontal Competition and Conflict of Interests based on relevant regulations and the

requirements of the resolutions at the 2014 second extraordinary general meeting of

the Company. For the details of the announcement on the change of such undertaking,

please refer to the announcement (Lin No. 2014-047) on the performance and change of

undertaking by the Company’s shareholder dated June 28, 2014.

138

III.

BRIEF INTRODUCTIONS TO THE GENERAL MEETINGS

Meeting

Convening

date

Resolutions

Enquiry index of the websites

designated for publication of

the resolutions

Date of

disclosure

of the

publication of

the resolutions

Status

2021 Annual

General

Meeting

June 22, 2022

To consider the Resolution on Amendments to the

Articles of Association of Huatai Securities Co.,

Ltd.;

To consider the Resolution on Repurchase and

Cancellation of Part of the Restricted A Shares by

the Company;

To consider the 2021 Work Report of the Board of

the Company;

To consider the 2021 Work Report of the

Supervisory Committee of the Company;

To consider the 2021 Final Financial Report of the

Company;

To consider the Resolution on the 2021 Annual

Report of the Company;

To consider and approve the 2021 Profit

Distribution Plan of the Company;

To consider the Resolution on the Estimated

Ordinary Transactions with Related Parties of the

Company for 2022;

To consider the Resolution on the Estimated

Investment Amount for the Proprietary Business

of the Company for 2022;

10. To consider the Resolution on the Change of the

Accounting Firm of the Company for 2022;

11. To consider the Resolution on the Election of an

Independent Non-executive Director of the Fifth

Session of the Board of the Company;

12. To consider the Report on Performance of Duties

of the Independent Non-executive Directors of the

Company for 2021;

13. To consider the Resolution on the Election of a

Non-executive Director and an Executive Director

of the Fifth Session of the Board of the Company;

14. Debriefing of the Report on Performance

Assessment and Remuneration of the Directors of

the Company for 2021;

15. Debriefing of the Report on Performance

Assessment and Remuneration of the Supervisors

of the Company for 2021;

16. Debriefing of the Report on Performance

of Duties, Performance Assessment and

Remuneration of the Senior Management of the

Company for 2021.

http://www.sse.com.cn

http://www.hkexnews.hk

http://www.londonstockexchange.com

http://www.htsc.com.cn

June 23, 2022

All resolutions

were

considered

and approved

139

Meeting

Convening

date

Resolutions

Enquiry index of the websites

designated for publication of

the resolutions

Date of

disclosure

of the

publication of

the resolutions

Status

2022 First

A Share Class

Meeting

June 22, 2022

To consider the Resolution on Repurchase and

Cancellation of Part of the Restricted A Shares by the

Company.

http://www.sse.com.cn

http://www.hkexnews.hk

http://www.londonstockexchange.com

http://www.htsc.com.cn

June 23, 2022

The resolution

was

considered

and approved

2022 First

H Share Class

Meeting

June 22, 2022

To consider the Resolution on Repurchase and

Cancellation of Part of the Restricted A Shares by the

Company.

http://www.sse.com.cn

http://www.hkexnews.hk

http://www.londonstockexchange.com

http://www.htsc.com.cn

June 23, 2022

The resolution

was

considered

and approved

2022 First

Extraordinary

General

Meeting

December 30,

2022

To consider the Resolution on Amendments to the

Articles of Association of Huatai Securities Co.,

Ltd.;

To consider the Resolution on Amendments to

Rules of Procedure for General Meeting of Huatai

Securities Co., Ltd.;

To consider the Resolution on the Change of

Business Scope and Amendments to the Articles

of Association of Huatai Securities Co., Ltd.;

To consider the Resolution on the Amendments to

the Working System for Independent Directors of

Huatai Securities Co., Ltd.;

To consider the Resolution on the Amendments

to the Management System for Related-party

Transactions of Huatai Securities Co., Ltd.;

To consider the Resolution on the Election of

Executive Directors and Non-executive Directors

of the Sixth Session of the Board of the Company;

To consider the Resolution on the Election of

Independent Non-executive Directors of the Sixth

Session of the Board of the Company;

To consider the Resolution on the Election of

Non-employee Representative Supervisors of the

Sixth Session of the Supervisory Committee of the

Company.

http://www.sse.com.cn

http://www.hkexnews.hk

http://www.londonstockexchange.com

http://www.htsc.com.cn

December 31,

2022

All resolutions

were

considered

and approved

140

Description of general meetings

The 2021 Annual General Meeting of the Company, with on-site & network voting methods

adopted, was held at the Conference Room of Renaissance Nanjing Olympic Centre Hotel

(No. 139, Aoti Street, Jianye District, Nanjing). The general meeting was organized by

the Board of Directors and hosted by the Chairman – Mr. Zhang Wei. Certain Directors,

Supervisors and the secretary to the Board attended the meeting and certain senior

management of the Company and witnessing lawyers employed by the Company and relevant

personnel of Computershare Hong Kong Investor Services Limited sat in the meeting. The

meeting was convened and held, and its voting method was in conformity with relevant

regulations such as the Company Law and the Articles of Association and so on. Details

of relevant announcements on the resolutions of the general meeting can be found on the

website of the Shanghai Stock Exchange (http://www.sse.com.cn), the HKEXnews website

of the HKEX (http://www.hkexnews.hk), the website of the London Stock Exchange (http://

www.londonstockexchange.com) and our Company’s website (http://www.htsc.com.cn) and

China Securities Journal, Shanghai Securities News, Securities Daily and Securities Times.

The 2022 First A Share Class Meeting of the Company, with on-site & network voting

methods adopted, was held at the Conference Room of Renaissance Nanjing Olympic

Centre Hotel (No. 139, Aoti Street, Jianye District, Nanjing). The general meeting was

organized by the Board of Directors and hosted by the Chairman – Mr. Zhang Wei. Certain

Directors, Supervisors and the secretary to the Board attended the meeting and certain senior