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Regarding the Response to Matters in the Audit Inquiry Letter on the Application for Issuance of Shares to Specific Targets by Jifeng Sanong Technology Service Co., Ltd.
XYZH/2026CDAA1F0232
Jifeng Sanong Technology Service Co., Ltd.
Shenzhen Stock Exchange:
We have received the "Audit Inquiry Letter on the Application for Issuance of Shares to Specific Targets by Jifeng Sanong Technology Service Co., Ltd." (Audit Letter [2026] No. 020031) (hereinafter referred to as the "Audit Inquiry Letter") issued by your exchange on April 20, 2026.
In accordance with your requirements, Jifeng Sanong Technology Service Co., Ltd. (hereinafter referred to as the "Company," "Issuer," or "Jifeng Technology") and ShineWing Certified Public Accountants (LLP) (hereinafter referred to as the "Reporting Accountant" or "we") have implemented the items listed in the Audit Inquiry Letter one by one. The response is provided below for your review.
Unless otherwise specified, terms used in this response to the Audit Inquiry Letter have the same meanings as those in the "Jifeng Sanong Technology Service Co., Ltd. 2025 Annual Prospectus for Issuance of Shares to Specific Targets."
The fonts in this response to the Audit Inquiry Letter represent the following meanings:
| Items listed in the Audit Inquiry Letter | Bold | | Response to items listed in the Audit Inquiry Letter | Songti | | Modifications and supplements to the Audit Inquiry Letter response report | Bold Italics |
Audit Inquiry Letter Response (Continued)
Problem 1
According to the application documents, the Company's main business revenue consists of three product categories: agricultural machinery distribution, agricultural machinery manufacturing, and cargo trucks. The Company's sales model is divided into direct chain sales and dealer agency sales. During the reporting period, the Company's operating income was 2,707.7164 million yuan, 2,649.6508 million yuan, 2,708.9537 million yuan, and 2,224.3033 million yuan, respectively. Net profit after deducting non-recurring gains and losses was 8.1164 million yuan, 12.9537 million yuan, -20.7887 million yuan, and -9.6935 million yuan, respectively, showing significant volatility and continuous losses over the past year and one period. The Company's gross profit margins were 14.87%, 15.37%, 13.26%, and 10.76%, respectively, showing a downward trend. According to the "2025 Annual Report" recently disclosed by the Company, the operating income in 2025 was 2,765.7666 million yuan, a year-on-year increase of 2.10%; the net profit after deducting non-recurring gains and losses was -34.3221 million yuan, a year-on-year decline of 65.10%.
The concentration of the Company's top five suppliers is approximately 60%. The Company's competitive advantages include brand distribution authorization advantages. As of the end of the reporting period, the Issuer has obtained distribution authorization for nearly two hundred agricultural machinery brands.
As of the end of each period of the reporting period, the book balance of the Company's accounts receivable was 471.3269 million yuan, 421.8438 million yuan, 400.5305 million yuan, and 394.5100 million yuan, respectively. Accounts receivable aged over 2 years accounted for more than 20%. The Company's bad debt provision ratio for the aging portfolio is lower than the average of comparable companies in the same industry. The book balance of the Company's inventory was 431.7998 million yuan, 654.2102 million yuan, 678.7926 million yuan, and 716.1369 million yuan, respectively, accounting for 26.04%, 35.06%, 35.59%, and 33.46% of the total assets for the current period, respectively. The inventory turnover rate has declined year by year.
During the reporting period, the Company's sales expenses were 173.9258 million yuan, 195.9813 million yuan, 211.2912 million yuan, and 148.7116 million yuan, respectively, mainly consisting of employee compensation and maintenance service fees, where maintenance service fees include repair costs and sales commissions. As of the end of the reporting period, the Company's other receivables amounted to 40.8267 million yuan, mainly consisting of advances, deposits, external loans, three-guarantee service fees receivable from suppliers, and petty cash.