Response to the Audit Inquiry Letter Regarding the Application Documents for Sinoma Science & Technology Co., Ltd.'s Issuance of Shares to Specific Targets
Zhongxinghua Special Audit No. (2026) 0207140
Shenzhen Stock Exchange:
As the audit institution for the 2025, 2024, and 2023 financial statements of Sinoma Science & Technology Co., Ltd. (hereinafter referred to as the "Company"), Zhongxinghua Certified Public Accountants (LLP) (hereinafter referred to as "we" or "the Firm") has issued standard unqualified audit reports under Zhongxinghua Audit No. (2026) 0202060, Zhongxinghua Audit No. (2025) 0201793, and Zhongxinghua Audit No. (2024) 0200769. We have not performed audit or review procedures on the financial statements for January-March 2026.
On December 2, 2025, the Company received the "Audit Inquiry Letter Regarding Sinoma Science & Technology Co., Ltd.'s Application for Issuance of Shares to Specific Targets" [Audit Letter (2025) No. 120057] (hereinafter referred to as the "Inquiry Letter") issued by the Shenzhen Stock Exchange. Based on the audit work performed on the relevant financial statements of Sinoma Science & Technology, we have fulfilled verification procedures for the issues requiring our response in the letter. The verification results are explained as follows:
Question 1
According to the application materials, among the issuer's controlling shareholder, actual controller, and other enterprises under their control, China Jushi and Sinoma Science & Technology have horizontal competition in the glass fiber and related products business. During the reporting period, the Company engaged in related-party transactions, including the procurement of goods and services and the sale of goods and services. The fundraising project for this issuance involves the expansion and upgrading of existing special fiber cloth products. During the reporting period, the Company's net profit attributable to the parent company after deducting non-recurring gains and losses was 2,168.0516 million yuan, 1,966.0839 million yuan, 383.5503 million yuan, and 1,197.2638 million yuan, respectively; the comprehensive gross margin was 23.57%, 23.98%, 17.02%, and 19.68%, respectively, showing an overall fluctuating trend. At the end of each period of the reporting period, the book value of the issuer's construction in progress was 4,090.0146 million yuan, 6,053.8590 million yuan, 10,659.0403 million yuan, and 8,086.0687 million yuan, respectively.
The issuer is requested to provide supplementary explanations on: (1) Whether there is horizontal competition with the controlling shareholder and actual controller that has a significant adverse impact, and whether the related-party transactions during the reporting period have commercial substance, necessity, compliance of decision-making procedures, and fairness of pricing. (2) Whether the glass fiber products currently produced by China Jushi include special fiber cloth or low-dielectric fiber cloth, and whether this issuance leads to new horizontal competition or related-party transactions with the controlling shareholder, actual controller, and other enterprises under their control. (3) Combined with the price trends and changes of the company's main raw materials, changes in main product sales prices, market supply and demand changes and competition, and product pricing models, explain the reasons for and rationality of the fluctuations in the company's net profit and gross margin by main product, and whether there are significant differences from companies in the same industry; quantitatively analyze the impact of main raw material price fluctuations on the company's gross margin, and analyze the company's cost pass-through ability and measures to stabilize performance fluctuations. (4) Combined with the construction cycle, duration and progress, investment amount, and capitalization timing of related projects in construction in progress, explain whether the capitalization timing of related projects during the reporting period complies with relevant accounting standards. (5) Combined with the identification of financial investments, explain whether the issuer held a large amount of financial investments (including quasi-financial businesses) at the end of the most recent period.