**Overview** Fengshan Group, a company engaged in a diverse range of biochemical technologies, has released its recent announcement concerning the provision of guarantees for its wholly-owned subsidiary, Jiangsu Fengshan Biochemical Technology Co., Ltd. The report outlines the progress of the guarantees and highlights significant financial changes and risks associated with this decision.

**Key Financials** Fengshan Group has stated that they have provided a maximum guarantee amounting to 100 million yuan for many of Jiangsu Fengshan's debts. However, by the disclosure date of this announcement, the actual guarantees provided have reached 162.26 million yuan. Financially, Jiangsu Fengshan's performance has seen substantial shifts: as of December 31, 2024, they reported total assets of approximately 1.60 billion yuan, total liabilities of about 710.35 million yuan, a net asset increase to roughly 894.46 million yuan, and a revenue of nearly 973.39 million yuan, although they posted a net loss of 7.58 million yuan. By March 31, 2025, their financial health displayed improvement with total assets standing at 1.54 billion yuan, total liabilities decreasing to about 622.09 million yuan, a net asset position of 917.73 million yuan, and a shift in profit with considerable net income of 22.55 million yuan against a revenue of 281.36 million yuan.

**Management Commentary** Management’s decision-making process for the guarantees underwent rigorous scrutiny, receiving approvals from the board of directors, supervisory committee, and shareholders' meeting. The tone of management appears cautiously optimistic, recognizing that the implementation of this guarantee not only supports Jiangsu Fengshan's operational plans but also allows for enhanced decision-making efficiency.

**Trends and Drivers** The financial turnaround for Jiangsu Fengshan has been attributed to strategic operational adjustments, likely improving their cash flow and overall efficiency, which is illustrated by transitioning from a loss to meaningful profitability within a quarter. Macro-economic factors, including regional support for biochemicals and increasing demand for products within this sector, may also be crucial in driving this positive trend. The company's efforts to stabilize and grow revenue provide a foundation for optimistic future growth.

**Risks and Outlook** While the additional guarantees could facilitate more liquidity for Jiangsu Fengshan, they do present undeniable risks for Fengshan Group. The lack of collateral on these guarantees might amplify financial exposure. Should Jiangsu Fengshan not meet its operational targets or face fiscal difficulties, it could jeopardize Fengshan Group's financial stability. Furthermore, the company has earmarked a total guarantee capacity across consolidated subsidiaries of 131.80 million yuan, with existing actual guarantees at 18.60 million yuan; thus, careful monitoring of these figures remains critical.

**Conclusion** In conclusion, Fengshan Group is strategically positioning itself to support its subsidiary through substantial financial guarantees, which has already led to improved financial performance for Jiangsu Fengshan. Yet, the undertaking comes with potential risks that need vigilant management to safeguard the overall financial health of Fengshan Group in response to any operational setbacks faced by its subsidiaries.