Reply to Inquiry Letter Regarding Chongqing Shunbo Aluminum Alloy Co., Ltd.'s Application for Issuance of Shares to Specific Objects
To: Shenzhen Stock Exchange
In response to the "Inquiry Letter on the Review of Chongqing Shunbo Aluminum Alloy Co., Ltd.'s Application for Issuance of Shares to Specific Objects" (Inquiry Letter [2025] No. 120064) issued by your esteemed exchange on December 25, 2025, Zhonghua Certified Public Accountants LLP (Special General Partnership) ("We") have audited the relevant content and issues and provide the following reply:
Question 1:
According to the application documents, the company's main business is the production and sales of aluminum alloy, and other business income mainly comes from material sales, scrap sales, interest income, rental income, and trade income. During the reporting period, the company's operating income was RMB 1,106,630.82 million, RMB 1,194,465.23 million, RMB 1,397,651.34 million, and RMB 1,126,602.78 million, showing year-on-year growth. Net profit attributable to the parent company after deducting non-recurring gains and losses was RMB 15,029.47 million, RMB 9,386.53 million, RMB 9,460.07 million, and RMB 18,516.71 million. The company's other income was RMB 11,202.29 million, RMB 11,322.26 million, RMB 19,272.26 million, and RMB 18,633.24 million, including tax rebates, government subsidies, and others. The net cash flow from operating activities was RMB 34,439.20 million, -RMB 41,540.69 million, RMB 43,305.31 million, and RMB 6,619.38 million.
During the reporting period, the gross profit margin of the company's main business was 3.08%, 2.39%, 2.58%, and 2.75%, respectively. The gross profit margin of other businesses was 32.04%, 42.08%, 58.01%, and 34.63%, respectively. The high gross profit margin of other businesses is mainly because the company uses the net method to recognize income for trading businesses such as aluminum ingots, molten aluminum, and scrap steel.
At the end of each reporting period, the book value of the company's accounts receivable was RMB 204,788.00 million, RMB 279,330.20 million, RMB 337,230.39 million, and RMB 301,884.04 million, with a comprehensive bad debt provision ratio of 8.94%, 7.70%, 8.43%, and 10.43%, respectively. Accounts receivable financing was RMB 3,360.30 million, RMB 7,166.62 million, RMB 17,160.61 million, and RMB 19,308.22 million, mainly consisting of highly credit-rated bank acceptance bills and accounts receivable. The book value of the company's inventory was RMB 89,977.78 million, RMB 80,970.39 million, RMB 95,903.71 million, and RMB 120,915.59 million, mainly consisting of raw materials and finished goods. The provision for inventory price decline was RMB -83.03 million, RMB 44.25 million, RMB -126.91 million, and RMB 19.35 million, respectively.
During the reporting period, the company and its subsidiaries received multiple administrative penalties for safety production, environmental protection, data statistics, and taxation. In 2024, a historical supplier of the company was found by the court to have issued fraudulent invoices, resulting in the company's invoices not meeting the requirements. The company paid RMB 12,733.97 million in back taxes for that year.
As of September 30, 2025, the company had financial assets held for trading of RMB 2,883.01 million, other receivables of RMB 22,478.91 million, other current assets of RMB 484,113.92 million, debt investments of RMB 10,540.10 million, long-term equity investments of RMB 2,765.90 million, other non-current financial assets of RMB 2,000.00 million, and other equity instrument investments of RMB 2,350.35 million. The company considers other non-current financial assets and some other equity instrument investments as financial investments.