Dear Shareholders,

On behalf of China New City Group Limited ("Company") and its subsidiaries (collectively, the "Group"), I submit herewith the results of the Group for the year ended 31 December 2022.

In 2022, due to the impact of the COVID-19 epidemic, the Russia Ukraine conflict, global stagflation, and U.S. dollar interest rate hikes, China's macroeconomics has faced triple pressures of shrinking demand, supply shocks, and weakening expectations. Facing complex and severe domestic and foreign situations and the impact of multiple unexpected factors, the Chinese government has introduced a package of policies to stabilize the economy, intensified macro-control efforts, optimized epidemic prevention and control measures, and taken multiple measures to promote economic stabilization. Overall, it showed a trend of weakening first and then rebounding. In terms of industries, industrial production gradually improved with the implementation of policies to stabilize the supply chain, the service industry was under pressure due to weak demand, infrastructure and real estate investment were relatively sluggish, and consumption continued to be weak.

MARKET
Since the beginning of the year, the central government has frequently released positive signals, from supporting the demand side to supporting the supply side, and the policy efforts has continued to increase. In July, with the wave of loan suspension in many cities, the Central Politburo meeting clearly proposed to guarantee the delivery of buildings and stabilize people's livelihood. Special loans for guaranteed delivery of buildings have been implemented in various projects in succession, stabilizing the confidence of home buyers. Entering the fourth quarter, the Chinese government has increased its financing support for private real estate companies, and the "three arrows" of real estate credit, bonds, and equity policies have been launched simultaneously. On September 29, the central bank and the China Banking and Insurance Regulatory Commission decided to adjust the differentiated housing credit policy in stages, and the credit support for residents' reasonable demand for housing purchases was further strengthened. On November 8, the National Association of Financial Market Institutional Investors continued to promote and expand private enterprise bond financing support tools to support private enterprises, including real estate companies, to issue bonds for financing. On November 28, the China Securities Regulatory Commission announced the adjustment and optimization of five measures to support equity financing for real estate companies.

Under the intensive policies, the real estate fundamentals already have the preconditions for recovery. However, it will take time for the transmission from the policy side to the sales side, and it will take time for the confidence of home buyers to recover. Therefore, the real estate market will recover slowly. Under continued sluggish market conditions, the Group has adhered to a prudent operating attitude, fully coordinated its own resources and business advantages on the basis of ensuring financial stability and safety and strived to recover as soon as possible amid the epidemic.

COMMERCIAL
After more than ten years of experience in commercial real estate development and operation, the Group has gained rich experience in commercial real estate development and advanced operating philosophy. Currently, the Group's existing projects are mainly concentrated in Zhejiang Province. Projects such as Yuyao Zhong An Square, Highlong Plaza, Jia Run Mansion and Xixi New City have been developed and are in operation. In the future, more projects will be implemented and continue to be developed to lead China's innovation Life. After many years of dedication in the industry, we have embarked on a road of steady development with great growth and opportunities. We have established a commercial product system centered on "high-end landmark business + personalized theme business + quality life operation + self-operated brand management" and synergize between sectors to build a strong business ecology and create a differentiated brand.

The commercial sector has focused on the preparations for the opening of Xiaoshan Zhong An Plaza, and it will be perfectly presented in conjunction with the 25th anniversary of the Group. Under the pressure of the current business environment, China New City's headquarters and various industries shall share resources, empower and support, and assist the development of the commercial sector.

The commercial operation segment has enriched the product line, including the high-end landmark Zhong An Center（眾安中心）; personalized theme business with four sub-brands; the commercial segment has undertaken the operation content of future community. The future community is a concept of future lifestyle proposed by the Zhejiang Provincial Government. It is fully implemented in Zhejiang Province and is also the core content of the benchmark for common prosperity in the future. For the commercial segment, we have achieved growth in 2022, including the theme of commercial Zhong An Square Future Community and the digital system. In 2022, Zhong An Square has been re-upgraded, and new plazas will open in 2023, including the brand opening of the Zhong An Square project. The future community projects undertaken by the Group, including Shabei Future Community in Taizhou, Wenzhou Future Community and Shaoxing Future Community, are all operated by our commercial team.

During the year, Zhong An Square won the "2022 Top 10 Commercial Property Project in China in Terms of Brand Value", and Zhong An Commercial Group's key commercial complex brand "Zhong An Square" was once again recognized by the industry, demonstrating the brand of Zhong An Square.

HOTEL
The Group has four hotels in operation, namely Holiday Inn Hangzhou Xiaoshan, Hangzhou Qiandao Lake Bright Resort Hotel, Ningbo Bright Hotel and Huaibei Bright Hotel.

In terms of hotel operations, the continuous and repeated COVID-19 epidemic in 2022 has brought great impacts to the hotel industry. However, the hotel team members have given full play to their practical experience in operation and development, continuously innovated operation modes, and won a good market reputation. We remained a leader among our competition in terms of indicators such as consolidated revenue, occupancy rate and average room prices of the Group's hotels thanks to the diligent efforts of the hotel team.

Under the severe market conditions, the hotel segment implemented lean management centering on "cost reduction, quality improvement, and efficiency increase", and achieved growth in key core indicators, such as occupancy rate and average room price, against headwind.

Adhering to the development strategy of "one body with two wings", we will open up a new track while maintaining and increasing the value of the existing core assets in one body: explore the three-party management model with international brands and combine a large number of members of hotel assets, property carriers and third-party brands to enter the trillion-dollar prefabricated market and break through the value of our own brand.

In response to repeated outbreaks of the epidemic during the year, the Group must be prepared and make plans, and at the point of economic downturn, clarify the direction of investment and expansion, and actively expand at a low level. In terms of cost reduction and efficiency increase, we will tap more space, increase revenue, and make overall plans for cost reduction, efficiency increase and quality improvement. To improve service quality, the front-line employee incentive plan was implemented after reaching an agreement with the human resources administration center of the headquarter.

RESULTS
In 2022, the Group recorded a decrease in revenue and the capital structure was slightly decreased. During the year, the Group's revenue was approximately RMB591,783,000, representing a year-on-year decrease of approximately 32.1%; gross profit was approximately RMB117,373,000, representing a year-on-year decrease of approximately 45.8%; net loss attributable to owners of the Company was approximately RMB432,523,000. As at the end of 2022, the total equity of the Group reached approximately RMB5,307,909,000, representing a decrease of approximately 7.4% from the end of 2021; the carrying amount of cash reached approximately RMB1,180,239,000.

The Group recorded a loss per share attributable to ordinary equity holders of the parent of approximately RMB21.5 cents. The board of directors (the "Board") of the Group does not recommend the payment of any final dividend for the year under review.

PLAN FOR THE NEXT THREE YEARS

With four major business segments, industrial real estate development, commercial operation, hotel management and industrial investment, as the core, we will expand companies in other emerging industries under China New City, such as industrial services, rural cultural tourism, smart agricultural approval, film and television education, digital health, etc., to achieve horizontal integration of high-quality resources, crossbusiness cross-drainage, and accelerate the creation of a large customer membership pool.

According to China New City's three-year strategic plan, by 2025, various industries will reach a new level. With the steady increase in scale, increasingly mature development, and continuous innovation in concepts, it will basically achieve the development goal of a new urbanization operation and resource integration service provider, laying a solid foundation for practicing the corporate philosophy of "creating new urban life".

PROSPECTS

China New City has focused on high-quality development under the new economic form and reported and determined the three-year strategic plan in combination with industrial characteristics and industry development and changes. Mature industries are based on operations and focus on the cultivation of teams and talents in a business-oriented manner according to strategic planning, so as to realize the maintenance and appreciation of heavy assets. The incubation industry needs to conduct in-depth reviews and sum up experience to formulate development goals, management standards and exit rules at different stages according to mobilizable resources.

We believe that by 2025, through the three-year strategic planning, various industries will reach a new level, the internal circulation between different industries will be opened up, and each industry will empower each other to create a new urban life and empower urban development. Our company is based in Hangzhou, and we will focus on in-depth development in Hangzhou while waiting for the opportunity to expand externally.

ACKNOWLEDGEMENT

On behalf of the Board, I would like to express my sincere gratitude to the continuing support and trust of shareholders of the Group and business partners as well as the dedicated efforts of all the staff of the Group.

Hong Kong, 24 March 2023