The Shanghai Stock Exchange recently issued an annual report inquiry letter to Chenghe Technology, focusing on the reasonableness of the company holding large wealth management products, monetary funds, and high short-term borrowings simultaneously. The inquiry letter pointed out that at the end of 2025, the company had book monetary funds of 660 million yuan, debt investments maturing within one year of 204 million yuan, time deposits of 108 million yuan, and additional debt investments of 867 million yuan, while at the same time maintaining short-term borrowings of 854 million yuan, which further increased to 973 million yuan by the end of the first quarter of 2026. In addition, restricted assets at period-end reached 676 million yuan, and total overseas assets amounted to 694 million yuan, of which overseas monetary funds were 152 million yuan. The Shanghai Stock Exchange required the company to explain the reasons and reasonableness of holding large short-term borrowings while having substantial monetary funds and wealth management products, as well as the reasonableness of keeping large monetary funds overseas. Chenghe Technology replied that the short-term borrowings were mainly formed by discounting bank acceptance bills with recourse. The company needs to retain a large amount of monetary funds to lock in raw material costs. At the same time, the yields on large-denomination certificates of deposit and wealth management products, ranging from 1.65 percent to 3.00 percent, are higher than the bill discount rates of 0.86 percent to 1.65 percent, creating a reasonable interest rate spread. Therefore, supplementing cash flow through loans and purchasing wealth management products to earn returns is commercially reasonable. The overseas monetary funds are mainly deposited with international banks such as Citibank Hong Kong and HSBC. In 2025, overseas revenue grew 52.61 percent year-on-year to 263 million yuan. To match the operational and settlement needs arising from overseas business expansion, the company allocates corresponding overseas funds, with the scale matching the volume of overseas business.
GCH Technology Co. Ltd. AShanghai Stock Exchange inquiry questions financial prudence; company's explanation may not fully reassure investors.