Zhonghua Certified Public Accountants (Special General Partnership)
Special Explanation on Relevant Issues in the "Audit Inquiry Letter Regarding the Application for Issuance of Shares to Specific Targets by Sinowealth Electronic Ltd."
Zhong Kuai Zi (2026) No. 11737
Shenzhen Stock Exchange:
In accordance with the requirements of the "Audit Inquiry Letter Regarding the Application for Issuance of Shares to Specific Targets by Sinowealth Electronic Ltd." (Audit Letter [2026] No. 020056) (hereinafter referred to as the "Inquiry Letter") issued by your exchange on July 6, 2026, Zhonghua Certified Public Accountants (Special General Partnership) (hereinafter referred to as "we" or "the accountants"), as the reporting accountants for Sinowealth Electronic Ltd. (hereinafter referred to as "the Company," "the Issuer," or "Sinowealth") in its application for the issuance of shares to specific targets, have prudently reviewed the issues raised by your exchange. The relevant situation is replied to as follows:
The data cited in this response to the Inquiry Letter, if there are discrepancies between the totals and the sum of individual items, or if there are discrepancies between the trailing digits after the decimal point and the original data, may be due to differences in precision or rounding.
I. Question 1 of the Inquiry Letter
The Company intends to raise no more than 1,000,000,000.00 RMB by issuing shares to its controlling shareholder, Shanghai Zhineng Industrial Electronics Co., Ltd. (hereinafter referred to as Zhineng Industrial Electronics). After deducting issuance expenses, the funds are intended to be used for the "R&D and Industrialization Project of High-end Industrial (including Automotive-grade) Analog and Mixed-signal Chips" (hereinafter referred to as Project I), the "R&D and Industrialization Project of High-end Industrial (including Automotive-grade) Master Control SoC (including Intelligent)" (hereinafter referred to as Project II), and to supplement working capital.
The main products of Project I are battery management analog front-ends, bridge chips, protection chips, and related analog and mixed-signal chips. The post-tax internal rate of return (IRR) for the project is 23.47%, and the post-tax static investment payback period is 7.92 years (including the construction period). The main products of Project II are microcontrollers (MCU) and related master control SoCs. The post-tax IRR for the project is 16.72%, and the post-tax static investment payback period is 8.64 years (including the construction period).
At the end of each reporting period, the Issuer's asset-liability ratios were 18.66%, 21.05%, 16.22%, and 15.23%, respectively, which are lower than the average of comparable companies in the same industry. As of the end of March 2026, the book value of the Issuer's trading financial assets was 150,604,200.00 RMB.