December 2025 Monthly Confirmed Revenue Exceeds 230 Million Yuan; Shida Group Responds to Shanghai Stock Exchange: No Early or Cross-Period Revenue Recognition Occurred

Everyday Economic News Reporter | Zhao Linan Everyday Economic News Editor | Chen Junjie

On March 16, Shida Group (SH600734, stock price 4.12 yuan, market value 8.975 billion yuan) responded to the “Supervision Work Letter” issued by the Shanghai Stock Exchange.

The “Daily Economic News” reporter noted that in December last year, Shida Group confirmed over 230 million yuan (unaudited) in revenue, accounting for more than 60% of the total annual revenue of 374 million yuan (unaudited).

This quickly drew regulatory attention to whether Shida Group had engaged in early revenue recognition or cross-period revenue recognition.

According to the latest unaudited financial data disclosed by Shida Group, its total revenue for 2025 is approximately 374 million yuan. However, this over-370 million-yuan revenue shows an uneven distribution over time.

After self-inspection and verification, the company confirmed that no revenue was recognized in January 2025, but in December 2025, the company recognized about 234 million yuan in revenue, accounting for the majority of the year’s total.

The Shanghai Stock Exchange requested Shida Group to explain, based on relevant revenue recognition policies and standards, whether there was early or cross-period revenue recognition, and whether the revenue recognition during the reporting period complied with the “Enterprise Accounting Standards.”

In response to regulatory inquiries, Shida Group listed several key projects supporting the concentrated revenue recognition in December. Among them, the largest contributor to the single-month performance was the K-Rong Cloud Computing Digital Technology Co., Ltd. client project, the K-Rong Cloud Smart Computing Center Phase II, Section 2. This major project recognized revenue of up to 204 million yuan in December.

Shida Group stated that after winning the bid for the project in September, it proceeded through design, equipment procurement, delivery and installation, system integration, and debugging stages. All hardware deployment and software integration were completed by late December 2025.

“The client completed final acceptance in late December 2025 and issued the ‘Project Handover Document’ and ‘Overall Project Acceptance Report.’ The company recognized revenue upon receiving these reports, which complies with its revenue recognition policies,” Shida Group said.

Additionally, Shida Group explained revenue recognition for other projects.

In response to the Shanghai Stock Exchange’s inquiry, Shida Group replied that all these projects completed acceptance and delivery to clients in December 2025, with control transferred, so there was no early or cross-period revenue recognition, and the accounting treatment for revenue recognition complies with the “Enterprise Accounting Standards.”

Another major focus of the Shanghai Stock Exchange concerns the company’s revenue recognition method. According to the company’s 2025 semi-annual report, its big data business achieved revenue accounting for 98.41% of total revenue in the first half of the year, but the gross profit margin for this business was only 1.91%.

The Stock Exchange asked Shida Group to explain, based on the main projects of the big data business, whether the company acted as the primary responsible party or as an agent, and whether there was a substitution of the gross method for the net method in revenue recognition.

Shida Group admitted that projects like the Xinjiang K-Rong Cloud Smart Computing Center have a high hardware component, with GPU servers, network, and security equipment typically accounting for 90% of total costs, resulting in generally low hardware gross margins and thus overall low gross profit margins.

Shida Group stated that for major projects in the big data business, the company’s quotes are formulated considering hardware costs, software costs, self-developed costs, commissioned development costs, and labor input, and the company has autonomous pricing power.

The company also said that before acceptance, it bears the risk of inventory damage or loss. During system integration, suppliers deliver goods in batches according to the company’s instructions. After goods arrive at the project site, company personnel sign for and safeguard them until client acceptance.

“The specific work undertaken by the company in these projects includes significant integration steps, and the company can control the goods before transferring them to the client. Therefore, the company acts as the primary responsible party in these projects, and there is no substitution of the gross method for the net method in revenue recognition,” Shida Group stated.

It is worth noting that the independent third-party annual audit firm, Huaxing Certified Public Accountants (Special General Partnership), has taken a cautious stance. “The audit is ongoing, and as the audit progresses, we will obtain further audit materials to support our opinion,” said the accountant.