Wenzhou Hongfeng Electrical Alloy Co., Ltd.
Audit Report and Financial Statements
Year 2025
(January 01, 2025 to December 31, 2025)
Table of Contents
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Audit Report: 1-4
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Financial Statements
Consolidated Balance Sheet and Parent Company Balance Sheet: 1-4
Consolidated Income Statement and Parent Company Income Statement: 5-6
Consolidated Cash Flow Statement and Parent Company Cash Flow Statement: 7-8
Consolidated Statement of Changes in Equity and Parent Company Statement of Changes in Equity: 9-12
Notes to Financial Statements: 1-97
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Audit Report
Audit Report No. [2026] ZF10176
To the Shareholders of Wenzhou Hongfeng Electrical Alloy Co., Ltd.:
I. Audit Opinion
We have audited the financial statements of Wenzhou Hongfeng Electrical Alloy Co., Ltd. (hereinafter referred to as "Wenzhou Hongfeng"), which comprise the consolidated and parent company balance sheets as of December 31, 2025, the 2025 consolidated and parent company income statements, the consolidated and parent company cash flow statements, the consolidated and parent company statements of changes in equity, and the related 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 Wenzhou Hongfeng as of December 31, 2025, and its consolidated and parent company operating results and cash flows for the year 2025 in accordance with the Accounting Standards for Business Enterprises.
II. Basis for Audit Opinion
We conducted our audit in accordance with the Auditing Standards for Certified Public Accountants of China. Our responsibilities under these standards are further described in the "Responsibilities of Certified Public Accountants for the Audit of Financial Statements" section of this report. We are independent of Wenzhou Hongfeng in accordance with the Code of Ethics for Certified Public Accountants of China and have fulfilled our other ethical responsibilities. 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 of 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.
We have identified the following key audit matter in our audit:
| Key Audit Matter | How the Matter was Addressed in the Audit |
|---|---|
| (1) Provision for inventory impairment | |
| Refer to Note III (10) "Inventory" and Note V (7) "Inventory". | 1. Understand and evaluate the design and operating effectiveness of internal controls related to the provision for inventory impairment. |
| As of December 31, 2025, the inventory balance was 966,513,520.93 Yuan, with an inventory impairment provision of 23,263,159.01 Yuan. | 2. Obtain the inventory impairment provision calculation, re-check the net realizable value and impairment amount, and evaluate the reasonableness of management's judgments regarding estimated selling prices, selling expenses, and taxes. |
| The company measures inventory at the lower of cost and net realizable value. For finished goods, the net realizable value is the estimated selling price less estimated selling expenses and related taxes. For materials to be processed, it is the estimated selling price of the finished product less the cost to complete, estimated selling expenses, and related taxes. | 3. Perform analytical procedures, inspect inventory quantities and conditions, and perform physical counts for long-aged inventory to assess the adequacy of the impairment provision. |
| Determining the net realizable value involves significant management judgment and estimation, and the provision for inventory impairment is significant to the financial statements. Therefore, we identified it as a key audit matter. | 4. Review changes in the provision for inventory impairment during the current period and analyze the reasonableness of these changes. |