Envicool: Q1 2026 Net Profit Margin Decline Primarily Due to Increased Financial Expenses and Higher Impairment Losses on Credit Assets; First Quarter Orders Abundant but Failed to Achieve Higher Shipments and Revenue Recognition

According to the Investor Relations Activity Record Table of Envicool, an investor asked what the main reason was for the relatively low net profit margin attributable to shareholders in Q1 2026 disclosed in the company's "Q1 2026 Report". The company responded as follows:

Increased Financial Expenses: Some of the company's overseas business projects are settled in local currencies. Due to RMB appreciation, exchange losses were incurred. Additionally, the increase in financing scale led to higher interest expenses.

Year-on-Year Increase in Impairment Losses on Credit Assets: This was mainly due to a slower pace of domestic IDC construction and longer project implementation cycles, which resulted in slower settlement and collection cycles, thereby triggering an increase in provisions for bad debts.

Due to changes in the revenue mix in the first quarter, the gross margin declined by 2.16% year-on-year. Although orders were abundant in the first quarter, higher shipments and revenue recognition were not achieved