Response to the Audit Inquiry Letter Regarding the Application of Guangdong Shenling Environmental Systems Co., Ltd. for Issuing Convertible Corporate Bonds to Unspecified Targets
Sponsor (Lead Underwriter): CITIC Securities Co., Ltd. (Building 4, No. 66 Anli Road, Chaoyang District, Beijing) June 2026
Shenzhen Stock Exchange:
We have received your "Audit Inquiry Letter Regarding the Application of Guangdong Shenling Environmental Systems Co., Ltd. for Issuing Convertible Corporate Bonds to Unspecified Targets" (Audit Letter [2026] No. 020033, hereinafter referred to as the "Inquiry Letter") issued on April 28, 2026. Guangdong Shenling Environmental Systems Co., Ltd. (hereinafter referred to as "Shenling Environmental," the "Issuer," or the "Company"), together with CITIC Securities Co., Ltd. (hereinafter referred to as "CITIC Securities" or the "Sponsor"), Beijing Guofeng Law Firm (hereinafter referred to as "Issuer's Counsel"), and Huaxing Certified Public Accountants (Special General Partnership) (hereinafter referred to as the "Reporting Accountants"), have discussed, verified, and implemented the items raised in the Inquiry Letter in accordance with the principles of diligence, honesty, and trustworthiness. We hereby submit our response for your review.
Unless otherwise specified, the abbreviations or definitions used in this response are consistent with those in the "Prospectus for the Issuance of Convertible Corporate Bonds to Unspecified Targets by Guangdong Shenling Environmental Systems Co., Ltd. (Declaration Draft)" (hereinafter referred to as the "Prospectus").
| Item | Formatting |
|---|---|
| Questions listed in the Audit Inquiry Letter | Bold (non-italicized) |
| Responses to questions in the Audit Inquiry Letter | Songti (non-bold) |
| Citations of the Prospectus and other application documents | Songti (non-bold) |
| Revisions and supplements to the Prospectus and other application documents | Kaiti (bold) |
If the sum of the totals in this response does not match the sum of the listed figures, the discrepancy is due to rounding.
Table of Contents
Question 1: 3 Question 2: 47 Question 3: 82 Other Questions: 83
Question 1
The application materials indicate that from 2022 to the first nine months of 2025, the Issuer's operating income was 2,221.1686 million yuan, 2,511.1944 million yuan, 3,016.1843 million yuan, and 2,507.6012 million yuan, respectively. Net profit attributable to owners of the parent company was 166.2623 million yuan, 104.8965 million yuan, 115.5616 million yuan, and 150.0893 million yuan, respectively. Net cash flows from operating activities were 62.2707 million yuan, 13.8482 million yuan, 135.3194 million yuan, and -4.7733 million yuan, respectively. The gross profit margin for equipment sales was 26.59%, 25.21%, 22.93%, and 22.02%, respectively.
From the end of 2022 to the end of September 2025, the book value of the Issuer's accounts receivable was 1,062.6794 million yuan, 1,324.2684 million yuan, 1,708.1619 million yuan, and 1,856.5773 million yuan, respectively. The proportion of accounts receivable aged within one year was 76.43%, 67.09%, 69.33%, and 67.23%, respectively. Bad debt losses accrued in each period were -12.5670 million yuan, -55.2937 million yuan, -48.1201 million yuan, and 6.9143 million yuan, respectively. The accounts receivable turnover rate was 2.16, 1.89, 1.78, and 1.28 times, respectively, showing a continuous decline and remaining below the average level of comparable companies in the industry.
From the end of 2022 to the end of September 2025, the book value of the Issuer's inventory was 585.8616 million yuan, 695.7278 million yuan, 863.4119 million yuan, and 1,065.0667 million yuan, respectively, with the book balance of goods in transit being 244.5679 million yuan, 329.1041 million yuan, 508.1674 million yuan, and 649.6706 million yuan, respectively. From 2022 to the first nine months of 2025, the provision ratio for inventory impairment was 1.23%, 0.92%, 1.06%, and 0.86%, respectively, which is lower than the average provision ratio of comparable companies in the industry.