Shenzhen Jiu'an Certified Public Accountants (LLP) Response to Relevant Issues in the Shenzhen Stock Exchange's "Inquiry Letter Regarding the 2025 Annual Report of Xinjiang Tianshan Animal Husbandry Bio-Engineering Co., Ltd."
To: Shenzhen Stock Exchange, ChiNext Company Management Department:
Xinjiang Tianshan Animal Husbandry Bio-Engineering Co., Ltd. (hereinafter referred to as the "Company") received the "Inquiry Letter Regarding the 2025 Annual Report of Xinjiang Tianshan Animal Husbandry Bio-Engineering Co., Ltd." (ChiNext Annual Report Inquiry Letter [2026] No. 47, hereinafter referred to as the "Inquiry Letter") from the Shenzhen Stock Exchange ChiNext Company Management Department on April 30, 2026. In accordance with the requirements of the Inquiry Letter, Shenzhen Jiu'an Certified Public Accountants (LLP) (hereinafter referred to as "we" or "the accountants") has verified the relevant matters in the Inquiry Letter that require the accountants to verify and express a clear opinion, as follows:
Unless otherwise specified, the abbreviations or definitions of terms in this response are the same as those in the "2025 Annual Report of Xinjiang Tianshan Animal Husbandry Bio-Engineering Co., Ltd." If the total in any table in this response does not match the sum of the values listed in the table or the product does not match, it is due to rounding, unless otherwise specified.
Question 1. During the reporting period, the Company achieved a total operating income of 200.2868 million yuan, a year-on-year increase of 45.56%; the net profit attributable to owners of the parent company (hereinafter referred to as net profit) was -27.1858 million yuan; the net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses (hereinafter referred to as net profit after deducting non-recurring gains and losses) was -34.4724 million yuan; the net cash flow from operating activities was 1.9464 million yuan, a year-on-year decrease of 86.44%. By product, livestock revenue was 78.3810 million yuan, a year-on-year increase of 58.81%, with a gross margin of -9.16%, which has been negative for five consecutive years; meat revenue was 64.8488 million yuan, a year-on-year increase of 61.16%, with a gross margin of -5.69%, which has been negative for two consecutive years; asset leasing revenue was 36.3801 million yuan, a year-on-year increase of 9.63%, with a gross margin of 47.27%, a year-on-year increase of 4.34 percentage points; frozen semen revenue was 11.1559 million yuan, a year-on-year increase of 22.13%, with a gross margin of 51.32%, a year-on-year decrease of 22.66%; the Company added a feed business during the period, achieving revenue of 6.0863 million yuan. Please explain:
1.1 Explain the specific content, business model, and revenue and cost recognition methods for the livestock business and meat business, respectively. Combined with the industry situation, market demand, competitive landscape, changes in major customers, procurement costs, sales prices, changes in live cattle and beef prices and their impact, analyze and explain the reasons for and rationality of the significant growth in revenue from the livestock and meat businesses, the reasons for and rationality of the changes in gross margin and why it has been negative for a long period, whether it is trade business revenue, whether it belongs to operating income deduction items, the impact amount and reasons for changes of each business on the net profit attributable to the parent company, and whether it is consistent with the overall industry development trend and comparable companies in the same industry. If inconsistent, explain the reasons and rationality.
Company Response:
The Company's main businesses include livestock business, meat business, leasing business, frozen semen business, and feed business.
1.1.1 Specific Content, Business Model, and Revenue and Cost Recognition Methods for Livestock and Meat Businesses
1.1.1.1 Livestock Business
(1) Business Content