Core Viewpoint - The Shanghai Stock Exchange has issued an inquiry letter to He Feng Co., Ltd. regarding the financial data in its 2025 semi-annual report, focusing on the mismatch between cash funds and interest income, as well as the significant increase in short-term borrowings [1] Financial Data Summary - As of the end of the reporting period, He Feng Co. held cash funds of 1.398 billion yuan, while the interest income for the same period was only 6.8617 million yuan, resulting in a semi-annual yield of just 0.49% [1] - The balance of short-term borrowings surged to 1.925 billion yuan, representing a substantial increase of 239.51% compared to the end of 2024 [1] Company Response Summary - He Feng Co. explained that its cash management primarily utilizes agreed deposits and current deposits, with funds distributed across 208 subsidiaries to ensure daily operations [2] - The average cash balance for the first half of 2025 was approximately 1.261 billion yuan, with an average interest rate of 0.53%, which the company stated aligns with market interest rate trends [2] - The sharp increase in short-term borrowings was attributed to two main factors: the acquisition of 13 poultry business subsidiaries in April 2025, contributing 745 million yuan in short-term borrowings, and a significant rise in working capital needs due to business expansion, particularly a 748 million yuan increase in inventory [2] - The company noted that the new borrowings primarily consist of debts with interest rates below 3%, indicating that financing costs are within a reasonable range and the borrowing growth aligns with actual business expansion needs [2] - He Feng Co. acknowledged a net cash outflow of 512 million yuan from operating activities, worsening by 992% year-on-year, mainly due to differences in purchase and sales settlement models and cash flow pressures from acquisitions [2]