Reply to the Audit Inquiry Letter Regarding the Issuance of Shares to Specific Targets by Jiangsu Zhongchao Holding Co., Ltd.
Suya Feedback [2026] No. 16
Audit Institution: Suya Jin-Cheng Certified Public Accountants (Special General Partnership) Office Address: Floors 14-16, Building A, Zhengtai Center, No. 159 Taishan Road, Jianye District, Nanjing Postal Code: 210019 Fax: 025-83235046 Telephone: 025-83235002 Website: www.syjc.com Email: info@syjc.com
Shenzhen Stock Exchange:
We have received the "Audit Inquiry Letter Regarding the Application of Jiangsu Zhongchao Holding Co., Ltd. for Issuance of Shares to Specific Targets" (Audit Letter [2025] No. 120051) (hereinafter referred to as the "Audit Inquiry Letter") forwarded by Guoyuan Securities Co., Ltd. In accordance with the requirements of the Audit Inquiry Letter, we have conducted a step-by-step verification of the issues involving the accountants and provide the following responses:
Unless otherwise specified, the abbreviations or definitions used in this response are consistent with the "Jiangsu Zhongchao Holding Co., Ltd. 2023 Annual Prospectus for Issuance of A-Shares to Specific Targets" (hereinafter referred to as the "Prospectus").
| Text Style | Content |
|---|---|
| Bold | Questions listed in the Audit Inquiry Letter |
| Songti | Responses to the questions listed in the Audit Inquiry Letter |
| KaiTi (Bold) | Modifications to the Prospectus and other application documents |
In this response, any discrepancies between the totals and the sums or products of individual items are due to rounding.
Question 1
- According to the application materials, the company is currently mainly engaged in the R&D, production, sales, and service of wires and cables. Its main products include five major categories: power cables, wires and cables for electrical equipment, bare wires, cable materials, and cable accessories. During the reporting period, the company's operating income was 5,890.9786 million yuan, 6,111.0072 million yuan, 5,499.4635 million yuan, and 2,611.0659 million yuan, respectively. In 2024, the company's operating income decreased by 611.5437 million yuan compared to the previous year, a decrease of 10.01%, mainly due to the company's implementation of customer structure adjustments. The combined sales revenue of power cables and wires and cables for electrical equipment accounts for more than 90% of the operating income. Among them, the annual revenue of power cables decreased in 2024, and the revenue of wires and cables for electrical equipment continued to decline during the reporting period. During the reporting period, the issuer's net profit after deducting non-recurring gains and losses attributable to the parent company was -89.0657 million yuan, -28.2244 million yuan, -44.0735 million yuan, and 4.1531 million yuan, respectively.
At the end of each period of the reporting period, the book balance of the company's accounts receivable was 3,083.8961 million yuan, 2,914.2857 million yuan, 2,680.0544 million yuan, and 2,664.3030 million yuan, respectively. The proportion of accounts receivable with an aging of more than 5 years increased from 6.92% at the end of 2022 to 11.80% at the end of the reporting period. The bad debt provision ratio for accounts receivable with an aging of less than 6 months is 0.5%, which is lower than the bad debt provision ratio of comparable companies in the same industry. The book value of the company's other receivables was 74.3158 million yuan, 41.6107 million yuan, 36.3424 million yuan, and 147.2826 million yuan, respectively. The significant increase in the book value of other receivables at the end of June 2025 was mainly due to the company's sale of part of its equity in Sumin Investment, and the proportion of other receivables with an aging of more than 5 years increased from 5.42% at the end of 2022 to 33.04% at the end of the reporting period. The company's accounts receivable turnover rate is lower than the industry average. At the end of each period of the reporting period, the book value of the company's notes receivable was 37.3928 million yuan, 143.4055 million yuan, 150.6283 million yuan, and 127.4128 million yuan, respectively, accounting for 0.86%, 3.32%, 3.57%, and 2.90% of the current assets at the end of each period, showing an increasing trend.