Dear Shareholders,

Thank you for your relentless support towards Dachan Food!

In 2024, the turbulence and uncertainty of the global landscape has elevated dramatically. Against the background of escalating geopolitical conflicts, intensified great power competition as well as an obvious trend towards deglobalisation in trade, the world was in a persistent low growth interval. With insufficient domestic effective demand and overcapacity in some industries, certain enterprises suffered from difficulties in operation and residents confidence in consumption was weak. China has successively introduced a number of policies to boost market confidence with a view to drive consumption recovery.

In recent years, there has been an imbalance in the development pace of the supply and demand of the white feather broiler industry in China, leading to a relative overcapacity on the supply side.Oversupply caused intensified competition within the industry, severely squeezing the profit along the entire industrial chain. In the face of increasing involution of the competitive environment, the Company took the initiative to restructureits business model, focus on downstream food processing, increase the scale of deep food processing while downscale the upstream breeding operation to gradually reduce the risk of price fluctuations of the white feather broiler market. Adheringto the customer-oriented approach as always, the Company hasbeen developing differentiated products and processed products through deep understanding of the needs of value customers, strengthening both its product and sales competitiveness as well as putting great efforts in raising the value of each chicken.

This was the fourth year for the Company to concentrate its efforts in China and food processing transformation. From the disposal of its Southeast Asian feeds business to the parent company in 2021 to commencement of the Bengbu food processing facilities for one-stop food production chain in thethird quarter of 2023, the Company has continued to focus its resources on the strategic adjustments of food development. Benefiting from this core strategy, when the domestic broiler market was depressed, the Company's overall results hasbecome more robust because of the risk hedging between the meat segment and the foods segment. In 2024, the operating income of the foods segment grew by 11% year-on-year despite the highly challenging competitive environment, accounting for 44% of the Company's total operating income and 71% of its gross profit, making it the Company's most important source of profitability and growth driver.

TAKING THE FOODS SEGMENT AS THE LEAD AND DRIVING THE GROWTH OF THE WHOLE CHAIN OF BUSINESS

In recent years, in order to cushion the impact of cyclical fluctuations in the livestock and poultry market on profitability, large-scale rearing and breeding enterprises have increased their investment in food processing in the downstream of the industrial chain, which has led to increasingly fierce competition in the food business. The PRC market is enormous, and paying focused attention is the only way out for small and medium enterprises. Following the changes in the living habit, higher demands on food safety, tastiness and convenience, and the increase in market scenarios, numerous opportunities will be brought to the Company.

1. SPECIALIZING SALES CHANNELS WITH DIVERSIFIED PRODUCTS

With in-depth development in domestic meat and food product market over a decade, we believe that the Company has a leading edge in the industry regarding channel setup and team building, etc. We will strengthen our investment in research and development of food sales channels, continue to promote channel specialization, and design products with different price ranges according to different consumption scenarios, in order to cope with the ever-changing consumption trend in the existing market. We will continuously optimise our product mix through ongoing transformation and upgrade to satisfy the emerging needs of the market and consumers, which includes developing healthier and tastier fully-cooked products that meet quality standards, as well as promoting antibiotics-free, additive-free and clean label measures along the supply chain.

2. CONTINUING INVESTMENT IN THE FOOD BUSINESS AND PRIORITISING RESOURCES TO EXPAND AND STRENGTHEN PROCESSED FOOD OPERATIONS.

We will continue to expand our food production capacity and increase our investment intensity in equipment and skills in the food supply chain, research and development and digital operation, so as to further strengthen our dominant position in the food processing industry. Through comprehensive assessment of the external market and competitive condition combined with an objective analysis of the Company’s strengths and weaknesses, we decided to build our core competitiveness by focusing on two regions: the one-stop domestic food production competitive advantage in the Yangtze River Delta region with Bengbu, Anhui Province as the core, and the one-stop exported food production competitive advantage in northeast China region with Dalian as the core.

3. BEING CUSTOMER DEMAND-ORIENTED, RECONSTRUCTING THE INTEGRATED SUPPLY CHAIN AND REDUCING THE RISK OF MARKET FLUCTUATIONS.

By closely monitoring the changes in the catering and consumer markets, the Company, driven by customer demands, restructured a supply chain system of downstream food processing, midstream broiler slaughtering and upstream breeding with a model of more downstream food production and sales and less upstream breeding, in order to respond flexibly to the uncertainties in the external market.

KEEPING SUFFICIENT CASH AND MAKING PROGRESS WHILE MAINTAINING STABILITY

In the face of the critical and complicated external environment, we insisted that it is crucial to keep sufficient cash and not to pursue blindly on upscaling upstream breeding, so as to strive to remain invincible in the increasingly fierce elimination of the industry.

Through business model transformation, structural adjustment, inventory reduction, refined management, cost reduction and efficiency improvement as well as more robust financial operations, the Company has achieved a cash inflow from operations of over three times the net profit before taxation and a safe financial gearing ratio in 2024, which provides a reliable capital guarantee for the subsequent expansion of processed food capacity.

DIGITALISED MANAGEMENT AND AUTOMATED PRODUCTION

We operate in a traditional industry that is labor-intensive. With the decline in the birth rate and the aging trend of China, the demographic dividend has disappeared. In response to this change, the Company continued to increase its investment in automation and digitalization, and advanced production processes and automated processing equipment has been extensively applied to the new onestop meat and food production line in Bengbu. Moreover, the Company launched an ERP upgrade project in the fourth quarter of this year. In the future, we will continue to optimize data analysis and decision support with more powerful system functions to ultimately achieve intelligent digital management

PRACTISING ESG CONCEPTS AND PURSUING LONG-TERM SUSTAINABLE DEVELOPMENT

We have always attached great importance to environmental, social and corporate governance, and our sustainable development strategy is integrated to our corporate culture and operation plans in order to achieve the Company’s sustainable business development and further enhance its value.

Through a three-tier management, execution and supervision mechanism at all levels of the Board, the Executive Committee and the management, ESG, in particular corporate governance has become an operating philosophy in all aspects of the Company. In July 2024, the Company was awarded an A grade in the Wind ESG rating. The middle-office function supported by the ESG system provides the front-end business departments with strong enabling support and a reliable risk control barrier.

In 2025, the international political and economic environment and the domestic economic situation are still fraught with uncertainties. In the face of the complex and volatile external environment, the Company’s business strategy remains focused on seeking progress while maintaining stability and continuing in the building of long-term relative competitiveness: concentrating resources on the food product development and accelerating the growth pace of food product so as to drive the overall development of one-stop solutions; continuing to promote the diversification of feeds products and channels in order to counter the risk of the hog cycle and the changes in the market landscape; continuing to adjust the business model of meat products, focusing on the differentiation of products and enhancement of products’ value to lower the impact of market fluctuations on operating results.

As an enterprise dedicated to meeting consumers’ demand for high-quality food product, we will continue to improve product quality and the service level. We are confident and determined to overcome the challenges in the external environment and continue to further cultivate in China’s food market. We will continue to uphold the concept of honesty and integrity in our operations, provide consumers with safe and healthy food products, further strengthen our corporate governance system, proactively assume our corporate social responsibility, and withstand the uncertainties of the external environment with sustainable and high-quality development.

Thank you for all your support.

Chairman

James Chun-Hsien Wei

Hong Kong

March 2025