On April 29, 2025, along with the release of the 2024 annual report, was a letter to shareholders from L&A GROUP (300949.SZ) President Li Fangyue.

In this open letter, Li Fangyue candidly stated that L&A GROUP faced significant upheaval in the capital market in 2024, “I personally experienced the ‘darkest moment’ since starting my business. But just like a phoenix rising from the ashes, this crisis has allowed L&A GROUP to undergo a profound self-reform in adversity.”

According to the financial report data, the company achieved revenue of 413 million yuan in 2024, a decrease of 13.77% compared to the previous year. The encouraging news is that the gross profit margin of the core business remains as high as 42.68%, and the operating cash flow outflow has sharply decreased by 81.56%, maintaining a robust overall financial structure.

Although industry cycle fluctuations and transformation investments have put short-term pressure on the company's revenue and net profit, the revenue structure continues to optimize, and the results of the strategic transformation are remarkable. In the first quarter of 2025, the company won several major projects and successfully implemented AI technology, releasing positive signals for the accelerated release of long-term value.

During the reporting period, L&A GROUP actively promoted the strategic upgrade of its revenue structure, successfully breaking through the growth bottleneck of traditional landscape design business. The company focuses on the dual main business synergy of “creative design + parent-child cultural tourism” as the core driving force, leveraging its full-chain service capability covering “planning - design - construction - operation” to create a unique differentiated competitive advantage.

The results of business structure optimization are significant. The proportion of landscape design business decreased from 83.85% in 2020 to 52.16% in 2024, while the proportion of comprehensive cultural tourism business rose to 40.37%. Among them, urban renewal and parent-child cultural tourism business contributed over 70% of revenue, making the company's revenue structure more balanced and diversified.

The creative design business performed excellently in the urban renewal field, creating a series of benchmark projects across 15 provinces in the country, with the contract amount of urban renewal business surpassing that of traditional business. In the parent-child cultural tourism sector, Luojia Children has carefully laid out and established a complete ecological capability. In 2024, its business covered more than 50 cities nationwide, with over 250 projects landed, achieving a year-on-year revenue increase of 42%. The company has invested over 100 million yuan to carefully create multiple self-branded projects, and it is expected to successfully achieve the goal of turning losses into profits this year.

Based on the solid foundation of dual main business synergy development, L&A GROUP further enhanced its core competitiveness through multi-dimensional measures such as deep integration of the industrial chain, cultural creative IP cultivation, and technological innovation. The company focuses on deepening the application of the “O+EPC+IP+O” model in urban renewal and cultural tourism development, actively expanding IP value, and accelerating the commercialization of AI technology.

In the field of AI technology, the company’s self-developed Urban Flow platform and the upgraded Urban Flow 3.0 urban renewal cultural tourism rejuvenation model, which integrates over 5,000 project landing experiences, urban renewal and cultural tourism innovation expertise, its own computing power algorithm reserves, and high-quality resources such as Tencent's smart cultural tourism big data, have become the core methodology in the company's project planning, implementation, and operation. The application of this model significantly improves business efficiency, compressing traditional basic research and manual drawing work that used to take 1-3 days to “minute-level,” and shortening the planning cycle from two weeks to a few hours, achieving intelligent management throughout the project lifecycle In terms of IP cultivation, L&A GROUP has established Yueqi Culture, officially laying out its international IP track, promoting the upgrade of IP business from project support mode to independent consumer brand operation, and opening up new growth poles for the company. At the same time, the company integrates high-quality international resources and collaborates with the globally ranked number one University of Southern California School of Cinematic Arts to jointly build an "IP Narrative Laboratory."

The deep linkage between AI and IP has also achieved significant results. For example, in the Guangzhou Children's Park "Luo Jia Box" project, after AI completed the basic design, the team focused on IP scene embedding, shortening the construction period by 60%; the Tianjin Jin Yi PARK introduced the "Luo Jia IP themed pop-up store," with foot traffic exceeding expectations by 30% in the first month of opening, fully validating the powerful chemical reaction of "technological rationality + cultural sensibility."

In the first quarter of 2025, L&A GROUP performed strongly in market competition, consecutively winning the Quzhou Yanjiayu Island project (government total investment of 300 million yuan) and the Luolong District Guanlin area urban renewal EPC project (government total investment of 1.275 billion yuan). The winning of these major projects fully demonstrates the company's profound strength in the full-process operation of large projects, laying a solid foundation for cash flow growth and high annual performance growth.

At the end of the open letter, Li Fangyue said, "On the annual report day, I am very pleased to tell everyone that L&A has weathered the storm, passed the test of the capital market, reinforced the hull in the storm, and finally welcomed the moment of turning adversity into fortune!"