Chairman's Message

Seeking Development while Ensuring Stability,
Building A Top International State-owned
Investment Company

Huang Xiaofeng


In the blink of an eye, we see the coming of the year 2017. As we bid farewell to the old year and usher in the new, on behalf of the Party Committee and Board of Directors of Guangdong Holdings Limited ("GD Holdings" or the "Group"), I would like to wish all our colleagues a happy new year, and convey my heartfelt thanks to all GD Holdings' employees for their dedication and hard work in the past year, with sincere tribute to our retirees for their continuing support of the development of the Group!

In 2016, the Group has conscientiously studied and implemented the guidelines of the 18th National Congress of the Communist Party of China and the third, fourth, fifth and sixth plenums of the 18th Congress, as well as the guiding principles of General Secretary Xi Jinping's important speeches. In accordance with reform plans set out by the Guangdong provincial government and the Guangdong provincial SASAC, the Group strived to further strengthen and improve Party building, organize in-depth study of the "Two Studies One Action" plan, take various steps to strengthen Party organization, its leading bodies and personnel at all levels, begin implementing Party discipline and clean governance, ensure full implementation of the "Two Responsibilities" and "One Position Two Responsibilities" initiatives in order to create a clean business environment. The Group hastened implementation of the international state-owned investment company pilot reform plan, improved its corporate governance, prepared and began implementation of its "13th Five-Year" development plan, launched the professional manager pilot program, promoted and implemented innovation-driven development strategy, and made continuous efforts to improve quality of development and economic return. The Group adhered to the general principle of seeking development while ensuring stability, accelerated enterprise control transformation, built comprehensive 6S strategic management system, further improved its "3+1" core business model, fostered its core competitiveness, ensured satisfactory execution on reform development and production operation activities. The Group made a good start and steady progress in implementing its 13th Five-Year Plan.

After a year of constant effort, the Group's water resources management sector has hastened projects expansion pace and successfully bid and won 5 new water projects, among them are Lo Ma Hu project in Xuzhou, Jiangsu Province and a water PPP project in Binhai district of Danzhou, Hainan Province. The total design capacity for new projects is 1,575,000 tons/day and the total design capacity for the Group is 15,380,000 tons/day, placing the Group among the largest water companies in China; the HOPSCA sector has not only made good progress in construction projects including the Zhuguang Road project, Panyu Wanbo project, and Tianjin Teem Mall project, but also expedited overall project concept design of the Shenzhen Buxin Project, and achieved excellent sales performance in the Panyu Ruyingju residential project; the advanced manufacturing industrial park sector has been focused on the Dongguan-GDH Yinping Cooperative Innovation Zone project, speeding up development of projects such as the infrastructure PPP project, the first phase of Dalian Machine Tools Group entrepreneurial incubation and manufacturing base, and the GDH smart manufacturing centre; the Group's industrial financing sector has laid the foundations for further financial intermediation platform integration and the combination between industry and finance by establishing business units such as finance company, commercial factoring company and lease finance company while exploring financial instruments such as centralized cross-border RMB fund operation and industrial funds; both of Zhongshan Power Plant's new generators have gone into operation, and the business unit has made significant progress in sale of electricity directly to large consumers; Huajin Company's listing application was approved by the National Equities Exchange and Quotations in November of 2016 after achieving major breakthrough in the system reform innovative pilot program. On the other hand, due to slowdown in domestic economic growth and mounting downward pressure on China's economy overall, the Group also encountered certain business risks and challenges, the retail and hotel management business sectors need to improve their innovative business models, manufacturing sector overall experienced difficulties in business operation due to increased RMB exchange rate fluctuations. The Group accords great importance to aforementioned risks and challenges, and strive to strengthen risk management measures.

2017 will be a crucial year for the Group to further implement its "13th Five-Year" development plan and advanced international state-owned investment company pilot reform. During a recent company inspection visit, Mr. Xu Shaohua, member of the Guangdong Provincial Party Committee and the Executive Vice Governor of Guangdong Province, gave clear guidance on next steps to further advance the Group's international state-owned investment company pilot reform, namely the "four determine, one reinforce" principle, which is to determine the Group's functional positioning in order to build a top-level state-owned enterprise; to determine core business sectors in order to develop a competitive core business platform; to determine the focus of reform in order to establish accretive capital investment business model; to determine corporate governance requirements in order to establish incentive driven disciplinary mechanism; and to reinforce the leadership of the Party in order to create a business environment with honesty and integrity. The Group will conscientiously comprehend and implement the strategic planning and requirements of the Central Government, the Guangdong Provincial Committee, the Guangdong Provincial Government and the Guangdong Provincial SASAC, focus on adhering to the "four determine, one reinforce" principle, to identify shortcomings, bolster areas of weakness and ensure faithful execution and implementation of all requirements.

The Central Economic Work Conference has emphasised that making progress while maintaining stability is not only the guiding principle of governance of China, but also the methodology for economic planning. It will serve as an important guideline to the Group's business operation in 2017. We will further advance the reform plan of building an international state-owned investment company on the premise of ensuring stability; pursue our goals with enthusiasm while exercising prudence. Firstly, to improve Party building and Party conduct. The Group will thoroughly implement the guidelines of the sixth plenums of the 18th Congress of the Communist Party of China and the eighth plenum of the 11th CPC Guangdong Province Committee, uphold the authority of the Party Central Committee with Comrade Xi Jinping at its core, further emphasize the Party's role as the centre of leadership and politics. Coupled with related rules and regulations established by the Group, we will ensure faithful implementation of the Party's political guidelines and Party Internal Oversight mechanism in our daily work, deepen the disciplinary inspection and supervision campaign and ensure Party Committee assumes principal responsibility and Disciplinary Inspection Committee assumes supervisory responsibility; Secondly, to further advance and deepen reform. The Group, will further improve its corporate governance organization by establishing Party organizations (Party Committee), Board of Directors, executive management team with well-defined power and responsibility and a smooth working mechanism at both the Group and the second grade company level, further advance implementation of the professional manager pilot reform program and establish market-driven talent recruitment mechanism, accelerate the implementation of water resources management sector pilot reform program and ensure satisfactory results; Thirdly, to expedite development in core business sector configuration. The Group will pool together resources to focus on its "3+1" core business model, namely water resources management, HOPSCA, advanced manufacturing industrial park as the three core business sectors with industrial financing as support, enhance capital operation activities and optimize resource allocation; Fourthly, to strengthen comprehensive risk control mechanism. The Group will continue to optimise its 6S strategic management system, establish professional manager evaluation system and strategic audit system, revise and improve the strategic management regime. We will enhance foreign exchange risk management and coping mechanism, hasten the Group's asset securitisation progress, speed up the establishment of risk management and internal control mechenisms befitting an international state-owned investment company, further improve production safety management through implementing production safety accountability system and establishing safety management mechanism and standards.

Explore wide, yet garner with caution; be erudite, yet act with consideration. In the new year, we will further propagate the "three honests and four stricts" work ethics, be sensible and practical, seek development while ensuring stability, pursue achievements with a passion, put our efforts into building a top international state-owned investment company, and work together to build a better GDH Group and a better future!