Reply to Assessment Issues in Shenzhen Stock Exchange Inquiry Letter Regarding Jiangsu Dongxing Smart Medical Technology Co., Ltd. Restructuring
To Shenzhen Stock Exchange:
On May 26, 2026, Jiangsu Dongxing Smart Medical Technology Co., Ltd. (hereinafter referred to as "the Company") received an inquiry letter from the Shenzhen Stock Exchange's ChiNext Company Management Department regarding the restructuring (hereinafter referred to as the "Inquiry Letter"). Xiamen Jiabao Asset Appraisal Real Estate Valuation Co., Ltd. (hereinafter referred to as the "Appraisal Institution") has thoroughly discussed and analyzed the issues raised in the Inquiry Letter and provides the following explanations.
Unless otherwise specified, the abbreviations or terms used in this reply are consistent with the "Definitions" in the "Report on Major Asset Purchase by Jiangsu Dongxing Smart Medical Technology Co., Ltd. (Draft for Review) (Revised Edition)".
Minor discrepancies may exist between the sum of individual items and the total in some tables within this Inquiry Letter reply, which are due to rounding during the calculation process.
Xiamen Jiabao Asset Appraisal Real Estate Valuation Co., Ltd.
Page 1
Problem Four
This transaction adopted the income approach and asset-based approach for valuation. As of the valuation base date, December 31, 2025, the book value of the target company was RMB 20,173.34 million, the valuation under the income approach was RMB 85,535.59 million, representing an appreciation rate of 324%; the valuation under the asset-based approach was RMB 29,832.11 million, representing an appreciation rate of 47.88%. Please explain:
(1) Based on the characteristics and trends of sales volume and price changes of major products during their life cycles, the changes in sales price and volume of products on the market during the reporting period, the inclusion of the target company's products in centralized procurement in various regions of China, the impact of centralized procurement on the sales volume and price of the target company and similar products, the validity period of centralized procurement, the possibility of future winning bids and renewals, patent protection periods, target patient populations, prevalence rates, existing mainstream treatment plans, product market space, competitive landscape and marketization level, the technological advancement of the target company's main products and their competitive advantages compared to imported products or similar domestic products, continuous R&D capabilities, and the comparison of safety and efficacy of in-progress and marketed products of comparable companies in the same industry, please explain whether there is a risk of future decline in sales volume or unit price for the target company's main products, the sales structure of various sub-product categories during the forecast period, the projected unit prices and their comparison with the reporting period, the basis for forecasting the sales volume and unit price of main products, and the basis and reasonableness for the projected sustained growth of operating revenue during the forecast period.
(2) Explain the specific basis and reasonableness for the forecast of operating cost composition for each year during the forecast period. Whether the raw material consumption is matched with the output, and whether it matches the material consumption per unit of products during the reporting period. Whether the projected unit purchase price of raw materials matches the market price level and the purchase price during the reporting period. Combined with the gross profit margin level during the reporting period, market competition, the target company's bargaining power, and the arrangements for inclusion in medical insurance or centralized procurement, as well as the comparable products of peer companies, further explain the basis and reasonableness for the projected gross profit margin of main products.