HUACHANGDA INTELLIGENT EQUIPMENT GROUP CO., LTD.
AUDIT REPORT
DAXIN SHEN ZI [2026] NO. 2-00963
WUYIGE CERTIFIED PUBLIC ACCOUNTANTS LLP.
To the Shareholders of HUACHANGDA INTELLIGENT EQUIPMENT GROUP CO., LTD.:
I. Audit Opinion
We have audited the financial statements of HUACHANGDA INTELLIGENT EQUIPMENT GROUP CO., LTD. (hereinafter referred to as "the Company"), which comprise the consolidated and parent company balance sheets as of December 31, 2025, the consolidated and parent company income statements, consolidated and parent company statements of cash flows, and consolidated and parent company statements of changes in owners' equity for the year then ended, and the notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and parent company financial position of the Company as of December 31, 2025, and the consolidated and parent company results of operations and cash flows for the year then ended in accordance with the provisions of the Accounting Standards for Business Enterprises.
II. Basis for Audit Opinion
We conducted our audit in accordance with the Standards on Auditing of the Chinese Institute of Certified Public Accountants. Our responsibilities under those standards are further described in the "Auditor's Responsibilities for the Audit of the Financial Statements" section of our report. We are independent of the Company in accordance with the Code of Professional Ethics for Certified Public Accountants and the Independent Standards for Certified Public Accountants in China, and we have fulfilled our other ethical responsibilities in accordance with the Code of Professional Ethics. We have complied with the independence requirements applicable to audits of financial statements of public interest entities.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the current period. These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
(I) Revenue Recognition
- Description of the Matter
The Company's operating revenue for 2025 was RMB 2.891 billion. As revenue is a significant financial indicator, there is an inherent risk of management manipulating the timing of revenue recognition to achieve specific targets or expectations. Therefore, we have identified revenue recognition as a key audit matter.
- Audit Response
We performed the following audit procedures for revenue recognition: (1) Understood and evaluated the design and operating effectiveness of key internal controls related to revenue recognition. (2) Performed analytical review procedures, comparing year-on-year, month-on-month, and by product and by customer changes in revenue, and analyzing changes in the selling prices, costs, and gross profit of major products. (3) Sampled and examined supporting documents related to revenue recognition, such as sales contracts or orders, sales invoices, delivery notes, customs declarations, bills of lading, acceptance forms or sign-off records, and bank receipts. (4) Selected a sample of customers recorded in the current year and sent confirmations of transaction amounts and related receivables to evaluate the accuracy of revenue recognition. (5) Selected a portion of customers for confirmation and interviews to confirm sales amounts for the current period and verify the authenticity and accuracy of revenue.
(II) Provision for Bad Debts
As disclosed in Note V.(IV) to the financial statements, as of December 31, 2025, the Company's accounts receivable had a carrying amount of RMB 1.151 billion. As the carrying amount of accounts receivable accounted for 30.45% of total assets, the carrying amount is relatively high and has a significant impact on the financial statements. The Company's accounting policy for the provision for bad debts is disclosed in Note III.(XII). The calculation of the provision for bad debts involves management's professional judgment, and we have identified the calculation of the provision for bad debts as a key audit matter.