Shida Group Performance Forecast Draws Regulatory Inquiry

Recently, Fujian Shida Group Co., Ltd. (referred to as “Shida Group,” 600734.SH) disclosed a detailed response to the regulatory letter issued by the Shanghai Stock Exchange. The announcement shows that the company expects to achieve total operating revenue of 315 million to 365 million yuan in 2025, mainly recognized in the fourth quarter, with a single quarter estimated to realize revenue of 180.41 million to 230.41 million yuan. In December 2025 alone, the company recognized project revenue of 233.6383 million yuan (unaudited), accounting for over 60% of the annual expected revenue, while no project revenue was recognized in January of the same year. In response to regulatory concerns about whether the company has engaged in “premature recognition or cross-period recognition of revenue,” Shida Group stated that there is no such situation, and the relevant accounting treatment complies with the “Enterprise Accounting Standards.”

However, a closer look at the disclosed data reveals that the revenue recognized in December (234 million yuan) is actually higher than the upper limit of the entire fourth quarter’s expected revenue (230 million yuan). On March 18, a staff member from Shida Group’s Securities Department told a reporter from the “Economic Information Daily” that the company’s response letter states that the expected operating revenue for 2025 is 374 million yuan, which is a specific figure, not a range as in the performance forecast. Based on this, the company’s fourth quarter revenue would be 239 million yuan.

In the regulatory letter, the Shanghai Stock Exchange requested the company to supplement disclosures on the specific composition of annual operating revenue, corresponding amounts, gross profit margins, and year-over-year changes, along with analysis of the reasons for these changes. If there is a mix of total amount method and net amount method, please distinguish and list them separately; also, explain whether there is any premature or cross-period revenue recognition based on relevant policies and regulations, whether the revenue recognition during the reporting period complies with the “Enterprise Accounting Standards,” etc.

Regarding the application of the “total amount method” and “net amount method,” Shida Group listed the main project developments in its response and stated that the specific work undertaken in relevant projects includes major integration steps, and the company can control the goods before transferring them to customers. Therefore, the company is the primary responsible party in these projects, and there is no situation of using the total amount method to replace the net amount method for revenue recognition.

The company’s verification shows that no project revenue was recognized in January 2025, while in December 2025, revenue of 233.6383 million yuan (unaudited) was recognized. Among the main projects, the second bid section of the Kelongyun Smart Computing Center project by Xinjiang Kelongyun Cloud Computing Digital Technology Co., Ltd., the Fuzhou Gulou Smart Home project by Fujian Yaohe Communication Engineering Co., Ltd., the Shaoguan Smart Computing Center expansion project by Ruantong Zhixuan Technology (Shaoguan) Co., Ltd., and the Data Circulation Intelligent Early Warning Platform by Fujian Big Data First-Level Development Co., Ltd. all recognized revenue in late December, with amounts of 204.2954 million yuan, 8.4245 million yuan, 7.9832 million yuan, and 7.5221 million yuan, respectively.

“All of these projects were completed and accepted by December 2025, and control was transferred to the customers. Therefore, the company does not have any premature or cross-period revenue recognition, and the accounting treatment for revenue recognition complies with the ‘Enterprise Accounting Standards,’” Shida Group stated in its response.

Additionally, the Shanghai Stock Exchange also requested the company to compare its operations with the provisions of Appendix 7 of the “Guidelines for Self-Regulation of Listed Companies on the Shanghai Stock Exchange No. 2 - Business Handling,” specifically regarding whether the company has omitted any revenue that should have been deducted according to the relevant regulations. The company was also asked to have its annual auditors provide clear opinions on these issues. Shida Group expects that, after deducting revenues unrelated to its main business and those lacking commercial substance, its operating revenue for 2025 will be 374 million yuan.

However, Huaxing Certified Public Accountants (Special General Partnership), responsible for the annual audit, stated that as of the date of the special explanation, the audit procedures are still ongoing, and the final amount will be subject to audit confirmation. They will conduct prudent verification of issues related to revenue recognition and deductions of operating revenue as raised in the inquiry letter and will maintain close attention to these matters during subsequent audit work. The final audit opinion will be based on the audit report issued by the firm for Shida Group’s 2025 financial year.