More Than 60% of Revenue Recognized in December Last Year, Sida Group's Performance Forecast Attracts Regulatory Inquiries

(Source: Taizai.com)

Repost: Taizai.com

Recently, Fujian Shida Group Co., Ltd. (referred to as “Shida Group,” 600734.SH) disclosed a detailed response to the regulatory work letter issued by the Shanghai Stock Exchange. The announcement shows that the company expects to achieve operating revenue of 315 million to 365 million yuan in 2025, mainly recognized in the fourth quarter, with a single quarter forecasted to generate 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 forecasted revenue, while no project revenue was recognized in January of the same year. In response to the regulatory inquiry about whether the company has engaged in “early 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) actually exceeds the upper limit of the entire fourth quarter forecast (230 million yuan). On March 18, a staff member from Shida Group’s Securities Department told reporters from the Economic Information Daily that in the reply letter, the company’s expected 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 work letter, the Shanghai Stock Exchange requested the company to supplement disclosures on the specific composition of the full-year operating revenue, corresponding amounts, gross profit margin, 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 accordingly; also, based on relevant policies and standards, clarify whether there has been early or cross-period revenue recognition, whether 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 company’s specific work in relevant projects includes major integration steps, and that it 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 replacing the net amount method with the total 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 of Xinjiang Kelongyun Cloud Computing Digital Technology Co., Ltd., the Fuzhou Gulou Smart Home project of Fujian Yaohe Communication Engineering Co., Ltd., the Shaoguan Smart Computing Center expansion project of Ruantong Zhixuan Technology (Shaoguan) Co., Ltd., and the data circulation intelligent early warning platform of Fujian Big Data Level 1 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 acceptance and delivered to clients in December 2025, with control transferred, so the company does not have early or cross-period revenue recognition. The accounting treatment for revenue recognition complies with the ‘Enterprise Accounting Standards,’” Shida Group stated in its response.

Additionally, the Shanghai Stock Exchange also required the company to compare its business activities with the provisions of Appendix 7 of the “Guidelines for Self-Regulation of Listed Companies on the Shanghai Stock Exchange - Business Handling,” specifically regarding whether there are unrecognized revenues that should be deducted but were not, and asked the annual auditors to 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 issuing the special explanation, audit procedures are still ongoing, and the final amount will be based on the audited results. They will continue to carefully verify issues related to revenue recognition and revenue deductions as raised in the inquiry letter, and will maintain close attention during subsequent audit work. The final audit opinion will be based on the audit report issued by Huaxing for Shida Group’s 2025 fiscal year. (Economic Information Daily)