Zhongshen Zhonghuan Accounting Firm (Special General Partnership) Response to the Inquiry Letter Regarding the 2025 Annual Report from Shenzhen Stock Exchange
To the Management Department of Listed Companies, Shenzhen Stock Exchange:
Zhongshen Zhonghuan Accounting Firm (Special General Partnership) (hereinafter referred to as "our firm" or "we") served as the auditing institution for the financial statements of Yunnan Jiaotou Ecological Technology Co., Ltd. (hereinafter referred to as "Jiaotou Ecological Company" or "the Company") for the year 2025, and issued an unqualified audit report (Zhonghuan Audit No. [2026] 1600041) on March 26, 2026. On April 1, 2026, your esteemed office issued the "Inquiry Letter Regarding the 2025 Annual Report of Yunnan Jiaotou Ecological Technology Co., Ltd." (Company Department Annual Report Inquiry Letter [2026] No. 8) (hereinafter referred to as "Inquiry Letter"). Based on the audit work performed on the relevant financial statements of Jiaotou Ecological Company, we have conducted verification procedures on the relevant questions that require our response in the Inquiry Letter. We hereby provide the verification results as follows:
- Your company achieved operating revenue of 513 million yuan during the reporting period, a year-on-year decrease of 15.04%; the net profit attributable to shareholders of the listed company (hereinafter referred to as net profit) was -25 million yuan, compared to -88 million yuan in the same period last year; the net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses (hereinafter referred to as net profit after deduction) was -80 million yuan, continuing to be negative since 2016. The gross profit margins for the past three years were 12.84%, 10.35%, and 8.29%, showing a continuous downward trend. Your company's 2024 financial report received an unqualified audit report with a significant uncertainty paragraph regarding going concern from the annual audit accountant, primarily due to the negative net profit attributable to shareholders of the parent company after deducting non-recurring gains and losses for three consecutive years from 2022 to 2024. The annual audit accountant issued a standard unqualified audit report for your company's 2025 financial statements. Your company is requested to:
(1) Explain the reasons for the decline in operating revenue and the continuous decrease in gross profit margin in conjunction with the industry environment, operational status, and project settlement cycle of the main business, and analyze whether the gross profit margin level is within a reasonable range compared to peer companies in the same industry, and whether there is a risk of further decline in gross profit margin.
Company's response is as follows:
- Reasons for the decline in operating revenue In 2023, the company's revenue was 602.9 million yuan, in 2024, it was 603.5 million yuan, while in 2025, it was 512.8 million yuan. The main reason for the decline in operating revenue compared to the previous two years is that in 2025, some projects were affected by external factors such as delays in the transfer of work fronts by the owner units and adjustments to design plans, resulting in construction progress not meeting expectations, leading to a significant decline in revenue. The specific details are shown in the table below: