Tianjian Letter [2026] No. 811
To: Shenzhen Stock Exchange
We have received the "Audit Inquiry Letter Regarding the Application of Zhejiang Chunhui Intelligent Control Co., Ltd. for Issuing Shares and Paying Cash to Purchase Assets" (Audit Letter [2025] No. 030014, hereinafter referred to as the "Audit Inquiry Letter") forwarded by Zhejiang Chunhui Intelligent Control Co., Ltd. (hereinafter referred to as "Chunhui Intelligent Control" or the "Company"). We have prudently reviewed the financial matters in the Audit Inquiry Letter that require our explanation and report as follows.
I. Regarding the Profitability of the Target Assets
The application documents show: (1) The main business of Chunhui Instrument, the target of this acquisition, is the R&D, production, and sales of temperature sensors, micro-armored electric heating materials, and components. Its customer types include civilian and military clients. Its core competitiveness lies in its technological leadership, R&D and industrialization capabilities, military qualifications, and customer advantages, giving it a high market status. (2) During the reporting period, revenue from civilian clients was 80.3054 million yuan, 101.5255 million yuan, and 22.4492 million yuan, respectively. Revenue from military clients was 21.4937 million yuan, 15.9567 million yuan, and 3.6065 million yuan, respectively. Sales revenue from military clients declined in 2024. (3) During the reporting period, the proportion of overseas revenue of the target assets was 35.42%, 31.83%, and 34.31%, respectively. Major overseas sales markets include the United States, South Korea, India, and the Taiwan region of China. The primary overseas sales client is US-based BE, which is also the largest client of the target assets. (4) During the reporting period, the sales model of the target assets was primarily direct sales to manufacturers, with a small amount of products sold to downstream clients through traders. Sales amounts through traders were 5.9548 million yuan, 7.0517 million yuan, and 1.7085 million yuan, respectively. (5) Ningbo Aoqi Automation Instrument Equipment Co., Ltd. (hereinafter referred to as "Ningbo Aoqi") was both a major competitor in the industry and one of the top five clients of the target assets during the reporting period. (6) After receiving formal orders from clients, the target assets implement outsourced processing for some processes based on product processing requirements, delivery requirements, and production capacity information. The procurement amount from the top five suppliers accounted for 52.57%, 45.87%, and 57.63%, respectively. (7) During the reporting period, the gross profit margin of the target assets' main business was 53.22%, 48.88%, and 45.88%, respectively, showing a gradual downward trend, mainly due to the decline in the gross profit margin of temperature sensors, but it remains higher than the average gross profit margin of comparable companies in the industry.