Yongxin Ruihe (Shenzhen) Certified Public Accountants (Special General Partnership)
Reply to the Annual Report Inquiry Letter of Shanghai Jintai Chemical Co., Ltd.
Shenzhen Stock Exchange SME Board Company Management Department:
In accordance with the "Reply to the Annual Report Inquiry Letter of Shanghai Jintai Chemical Co., Ltd." (SME Annual Report Inquiry Letter [2026] No. 105) (hereinafter referred to as the "Inquiry Letter") issued by your department, Yongxin Ruihe (Shenzhen) Certified Public Accountants (Special General Partnership) (hereinafter referred to as "the Firm" or "Yongxin Firm") has organized relevant personnel to investigate and address the issues raised in your department's Inquiry Letter one by one. The reply is as follows:
I. Regarding Risk Warning Matters
The company's 2024 financial statements received an "unable to express an opinion" from the annual audit institution, primarily due to issues with the strategic inventory stocking and doubts regarding the cash flow of equity investments. According to the company's 2025 annual report, the aforementioned issues that led to the "unable to express an opinion" have been resolved.
- According to the special explanation in the 2024 audit opinion, the company signed procurement agreements with multiple trading companies at the beginning of each quarter in 2024 and transferred funds, and then signed termination agreements at the end of the quarter to return the funds. A total of RMB 931 million was transferred out, and RMB 930 million was returned, with a remaining balance of advance payments of RMB 0.1787 billion at year-end. After the funds were transferred out, related trading companies transferred similar amounts to non-supplier entities around the same time, posing a significant risk of funds flowing through channels to the ultimate beneficiaries. The annual audit institution could not obtain sufficient audit evidence to determine whether there was related party non-operational fund occupation or to confirm the accuracy of related accounts and amounts. The summary table of non-operational fund occupation and other related party transactions for 2024 shows that the transaction amount with trading companies such as Ruonai Trading (Shanghai) Co., Ltd. (hereinafter referred to as "Ruonai Trading") during the reporting period was RMB 861 million, with cumulative repayments of RMB 889 million and a year-end balance of RMB 10.2261 million. According to the company's 2025 summary table of fund occupation, the cumulative non-operational fund occupation by Ruonai Trading and other trading companies in 2025 was RMB 250.8305 million, with interest of RMB 2.54 million. As of the end of 2025, the aforementioned funds and interest have been fully recovered. The company believes that the related fund occupation has been resolved. Please have the company: (1) Explain the circumstances of fund transactions between the company and Ruonai Trading and other trading companies in 2025, including the supplier name, procurement content, procurement amount, settlement method, and payment status of inter-company accounts. (2) List the specific information of strategic inventory stocking suppliers, including their establishment date, business model, how they were contacted by the company, their business qualifications and scale, whether they match the company's procurement scale, and whether they have any relationship or other interests with the company's largest shareholder, directors, supervisors, senior management, former controlling shareholder, actual controller, and their related parties. (3) Verify the ultimate source of funds for the strategic inventory stocking funds recovered during the reporting period, and whether they originated from the company or its related entities. Please have the annual audit firm provide a special opinion on items (1), (2), and (3), and explain the communication with the previous audit firm regarding the strategic inventory stocking fund matters. Based on the audit plan, specific audit procedures, and audit evidence obtained during the 2025 annual report audit regarding the recovery of strategic inventory stocking funds, please explain whether the obtained audit evidence is sufficient and appropriate.