Xinjiang Tianshan Animal Husbandry Bio-Engineering Co., Ltd.
To: Shenzhen Stock Exchange, ChiNext Company Management Department:
Following the receipt of 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 "Annual Report Inquiry Letter") on April 30, 2026, Xinjiang Tianshan Animal Husbandry Bio-Engineering Co., Ltd. (hereinafter referred to as the "Company") attached great importance to the matter and organized relevant departments to study and discuss the contents of concern to your department. We have researched the inquiry items with a serious and responsible attitude. The responses to the inquiries are as follows:
Question 1. During the reporting period, the Company achieved total operating revenue of 200.2868 million yuan, a year-on-year increase of 45.56%; realized a net profit attributable to owners of the parent company (hereinafter referred to as net profit) of -27.1858 million yuan; and realized a net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses (hereinafter referred to as net profit after deduction) of -34.4724 million yuan. The net cash flow generated 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 this period, realizing 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 and meat businesses, respectively. Combined with the industry situation, market demand, competitive landscape, changes in major customers, procurement costs, sales prices, and price fluctuations of live cattle and beef, analyze and explain the reasons for and rationality of the significant growth in revenue for 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 constitutes trade business revenue, whether it belongs to operating revenue deduction items, the impact amount and reasons for changes of each business on 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, meat, leasing, frozen semen, and feed businesses.
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
The Company's livestock business consists of livestock breeding and sales. Breeding is divided into fattening and conditioning. Fattening involves the Company purchasing feeder cattle from the place of origin and selling them externally after fattening to meet customer procurement standards. Conditioning involves the Company purchasing qualified young cows and feeder cattle from the place of origin, and performing professional conditioning such as quarantine, grouping, and epidemic prevention and treatment before selling them to meet customer procurement standards; the sales targets mainly include cattle brokers, farms, and slaughterhouses.
(2) Business Model
The Company conducts operations such as cattle introduction, fattening, epidemic prevention and control, and sales based on factors such as capital, site, climate, market supply and demand, and prices.