Wuyige Certified Public Accountants LLP (Special General Partnership)
Reply to the Audit Inquiry Letter Regarding Beijing Lier High-Temperature Materials Co., Ltd.'s Application for Issuance of Shares to Specific Targets
Ref: Daxin Beizi [2026] No. 2-00114
Shenzhen Stock Exchange:
We have received the "Audit Inquiry Letter Regarding Beijing Lier High-Temperature Materials Co., Ltd.'s Application for Issuance of Shares to Specific Targets" (Audit Letter [2026] No. 120041) (hereinafter referred to as the "Inquiry Letter") issued by your exchange on July 21, 2026. As the audit institution for Beijing Lier High-Temperature Materials Co., Ltd. (hereinafter referred to as the "Issuer," "Company," or "Beijing Lier"), Wuyige Certified Public Accountants (Special General Partnership) (hereinafter referred to as "we," "reporting accountants," "Daxin," or "audit institution") has prudently reviewed the matters related to the Inquiry Letter and hereby provides the following explanation.
Question 1
The application materials indicate that the total amount of funds to be raised in this issuance does not exceed 1,025.4356 million RMB, which will be used for the 30,000-ton composite zirconia and new energy and aerospace zirconium-based materials project (hereinafter referred to as Project I), the innovation R&D center construction project (hereinafter referred to as Project II), the Vietnam refractory material production base construction project (hereinafter referred to as Project III), and the replenishment of working capital.
Project I will be implemented by the company's wholly-owned subsidiary, Luoyang Lier, with an estimated total investment of 365.36 million RMB, and it is proposed to use 297.36 million RMB of the raised funds. After the project is completed, it will form an annual production capacity of 30,000 tons of composite zirconia and new energy and aerospace zirconium-based materials. The implementation entity for Project II is Beijing Lier, with an estimated total investment of 260.4741 million RMB, and it is proposed to use 237.1741 million RMB of the raised funds. The construction content mainly includes engineering construction, R&D environment setup, and the purchase of advanced R&D and testing equipment. The implementation entity for Project III is the company's wholly-owned sub-subsidiary, Vietnam Lier, with an estimated total investment of 213.087 million RMB, and it is proposed to use 183.2778 million RMB of the raised funds, with plans to build an overseas production base for refractory materials. During the reporting period, the balance of the issuer's prepayments increased significantly from 85.79 million RMB to 200.44 million RMB, an increase of 133.64%.