[Chart: CSET Logo]
Response to the Audit Inquiry Letter Regarding the Application Documents for the Issuance of Convertible Corporate Bonds to Non-Specific Targets by Beijing CSET Environmental Technology Co., Ltd.
Sponsor (Lead Underwriter): Guotai Haitong Securities Co., Ltd.
(No. 618, Shangcheng Road, China (Shanghai) Pilot Free Trade Zone)
July 2026
Shenzhen Stock Exchange:
We have received your "Audit Inquiry Letter Regarding the Application of Beijing CSET Environmental Technology Co., Ltd. for the Issuance of Convertible Corporate Bonds to Non-Specific Targets" (Audit Letter [2026] No. 020034) (hereinafter referred to as the "Audit Inquiry Letter") issued on April 30, 2026.
Beijing CSET Environmental Technology Co., Ltd. (hereinafter referred to as "CSET," "the Company," or "the Issuer"), in conjunction with Guotai Haitong Securities Co., Ltd. (hereinafter referred to as the "Sponsor," "Sponsor Institution," or "Guotai Haitong"), Lixin Certified Public Accountants (Special General Partnership) (hereinafter referred to as the "Accountant" or "Issuer's Accountant"), Beijing Kangda Law Firm (hereinafter referred to as "Issuer's Lawyer"), and other intermediary agencies, has diligently and honestly discussed, verified, and implemented the issues raised in the Audit Inquiry Letter, and has provided a point-by-point response. The specific response content is attached.
Unless otherwise stated, the definitions or abbreviations used in this response have the same meanings as those in the "Prospectus for the Issuance of Convertible Corporate Bonds to Non-Specific Targets by Beijing CSET Environmental Technology Co., Ltd. (Revised Draft)" (hereinafter referred to as the "Prospectus").
The fonts used in this feedback response represent the following meanings:
| Font | Meaning |
|---|---|
| Bold | Questions listed in the Audit Inquiry Letter |
| Songti | Responses to the questions listed in the Audit Inquiry Letter |
| Bold Italics | Revisions and supplements to application documents such as the Prospectus; modifications to responses to questions listed in the inquiry letter |
Table of Contents
Question 1: 3
Question 2: 62
Other Issues: 131
Question 1
- According to the application materials, the Issuer's main business income consists of municipal solid waste incineration power generation, project construction, environmental protection equipment sales and technical services, and hazardous waste treatment and disposal. During the reporting period, the Company's operating income was 1,404.0054 million yuan, 1,662.7994 million yuan, and 1,872.5764 million yuan, respectively. At the end of each period of the reporting period, the balance of accounts receivable was 638.3154 million yuan, 703.0377 million yuan, and 837.3246 million yuan, respectively. The Issuer's power generation business enjoys electricity price subsidy policies.
The Issuer is primarily engaged in the investment, construction, and operation of municipal solid waste incineration power generation projects through franchise methods such as BOT and BOO. Assets formed by BOT business are accounted for as intangible assets, while assets formed by the BOO model are accounted for as fixed assets. At the end of each period of the reporting period, the book value of the Company's intangible assets was 3,928.6051 million yuan, 4,073.4828 million yuan, and 4,650.2425 million yuan, respectively, accounting for 54.93%, 54.39%, and 54.26% of total assets, mainly consisting of BOT project franchise rights. At the end of each period of the reporting period, the Company's fixed assets were 922.9230 million yuan, 1,169.2779 million yuan, and 1,165.8794 million yuan, respectively.
Regarding technology sources, the Issuer has obtained grate furnace patent technology licenses through signed technical licensing agreements.
The acquisition methods for some of the Company's franchised municipal solid waste incineration power generation projects are inconsistent with relevant regulations. At the end of the reporting period, the Issuer had 8 properties and buildings for which ownership certificates had not yet been obtained.
As of December 31, 2025 (the end of the most recent period), the Issuer held other receivables, other current assets, and other non-current assets, which were not recognized as financial investments.