Huaxing Certified Public Accountants LLP
Add: 6-9/F Block B, 152 Hudong Road, Fuzhou, Fujian, China
Reply to Guangdong Shenling Environmental Systems Co., Ltd. Inquiry Letter on Application for Issuance of Convertible Bonds to Non-specific Objects
Huaxing Special Word [2026] No. 25013720118
Shenzhen Stock Exchange:
We have received the "Inquiry Letter on the Application of Guangdong Shenling Environmental Systems Co., Ltd. for Issuance of Convertible Bonds to Non-specific Objects" (Inquiry Letter [2026] No. 020033) issued by your exchange on April 28, 2026 (hereinafter referred to as the "Inquiry Letter"). Guangdong Shenling Environmental Systems Co., Ltd. (hereinafter referred to as "Shenling Environment," "the Issuer," or "the Company") and Huaxing Certified Public Accountants LLP (hereinafter referred to as the "Reporting Accountant"), along with other relevant parties, have diligently, responsibly, and honestly discussed, audited, and implemented the issues raised in the Inquiry Letter. The reply is as follows, subject to your review.
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Issue 1
According to the reporting materials, the Issuer's operating revenue from 2022 to September 2025 was RMB 222,116.86 million, RMB 251,119.44 million, RMB 301,618.43 million, and RMB 250,760.12 million, respectively. Net profit attributable to parent company owners was RMB 16,626.23 million, RMB 10,489.65 million, RMB 11,556.16 million, and RMB 15,008.93 million, respectively. Net cash flow from operating activities was RMB 6,227.07 million, RMB 1,384.82 million, RMB 13,531.94 million, and RMB -477.33 million, respectively. The gross profit margin of equipment sales was 26.59%, 25.21%, 22.93%, and 22.02%, respectively.
As of the end of September 2025, the book value of the Issuer's accounts receivable was RMB 106,267.94 million, RMB 132,426.84 million, RMB 170,816.19 million, and RMB 185,657.73 million, respectively. The proportion of accounts receivable within one year was 76.43%, 67.09%, 69.33%, and 67.23%, respectively. The provision for bad debt losses in each period was RMB -1,256.70 million, RMB -5,529.37 million, RMB -4,812.01 million, and RMB 691.43 million, respectively. The accounts receivable turnover ratio was 2.16 times, 1.89 times, 1.78 times, and 1.28 times, respectively. The accounts receivable turnover ratio has been continuously declining and is lower than the average level of comparable companies in the same industry.
As of the end of September 2025, the book value of the Issuer's inventory was RMB 58,586.16 million, RMB 69,572.78 million, RMB 86,341.19 million, and RMB 106,506.67 million, respectively. Among them, the book balance of goods delivered but not yet invoiced was RMB 24,456.79 million, RMB 32,910.41 million, RMB 50,816.74 million, and RMB 64,967.06 million, respectively. From 2022 to September 2025, the provision for inventory write-downs as a percentage of inventory was 1.23%, 0.92%, 1.06%, and 0.86%, respectively, which is lower than the average provision rate of comparable companies in the same industry.
As of September 2025, the book value of the Issuer's financial assets held for trading was RMB 1,581.23 million, the book value of other receivables was RMB 3,906.72 million, the book value of other current assets was RMB 1,480.46 million, the book value of long-term equity investments was RMB 290.09 million, and other non-current assets were RMB 2,860.97 million. The Company recently signed an agreement with Shishi Private Equity Fund Management (Jiaxing) Co., Ltd. and others to jointly invest in Jiaxing Mutong Equity Investment Partnership (Limited Partnership) (hereinafter referred to as the "Industrial Investment Fund"). The Company subscribed for RMB 50 million, holding a 24.99% stake in the partnership. According to the reporting materials, the actual controller and his
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Regarding the controlling shareholder's aggregate 44.89% voting rights, the Issuer has related party transactions during the reporting period.