SDAI Limited Forms Joint Venture with Hubei Qiai Group to Expand Moxibustion Market in ASEAN

Comprehensive Details of the Joint Venture Agreement and Strategic Implications

Introduction & Background

SDAI Limited has officially announced its entry into a Joint Venture Shareholders’ Agreement (JVSHA) with Hubei Qiai Group Co., Ltd., a prominent Chinese manufacturer and retailer of moxibustion products. This follows the signing of a non-binding Memorandum of Understanding (MOU) between the two parties in December 2025. The JV is aimed at creating an international operations platform to expand the moxibustion products market within the ASEAN region.

Key Points of the Joint Venture Agreement

• Incorporation of JVCo: The JV Parties will incorporate a Singapore-based JV company, QCM Holdings Pte. Ltd. (JVCo), with an initial issued share capital of S\$100,000, comprising 100,000 ordinary shares. SDAI Limited will hold 55,000 shares (55%), while Hubei Qiai (via its Singapore subsidiary QCM International Pte. Ltd., yet to be formed) will hold 45,000 shares (45%).
• Business Scope: The JVCo will focus on global brand promotion, international channel development, pricing system design, and sales conversion for moxibustion products. A commercial agreement is anticipated between JVCo and Hubei Qiai regarding supply and distribution.
• Share Subscription & Capital Structure: SDAI will subscribe for its shares at S\$1 each, funded by internal resources. Hubei Qiai’s shares will be credited as unpaid until regulatory approvals in China are obtained, after which its Singapore subsidiary (QCMI) will pay up and hold the shares.
• JV Board Composition: The JVCo’s board will have up to three directors: two nominated by SDAI, one by the Hubei Group. Board decisions require a simple majority, including the QCMI Director, with no casting vote for the chairman.
• Operational Control: All expansion in the ASEAN market must be conducted through the JVCo and its subsidiaries. The JVCo is obligated to maintain all necessary licenses and comply with applicable laws.
• Funding: Additional funding, if required, may be sourced from banks or the shareholders on a pro-rata and several basis, but shareholders are not obliged to provide additional financing or guarantees without written consent.
• Pre-emption Rights & Dividend Policy: Shareholders have pre-emption rights over new securities issued. Dividends will be distributed proportionally as determined by the board, subject to necessary reserves and obligations.
• Transfer Restrictions: Shares cannot be transferred, mortgaged, or disposed of without prior written consent from the other shareholder, except transfers to affiliates.
• Non-competition & Non-solicitation: SDAI and its affiliates are restricted from competing with the JV in the ASEAN region or soliciting JV clients/employees for two years after ceasing to hold JVCo shares.
• Governing Law: The agreement is governed by Singapore law.

Strategic Rationale & Financial Implications

This JV marks a pivotal step in SDAI’s long-term strategy to diversify into biomedical and medical supplies trading, leveraging Hubei Qiai’s expertise and supply chain. The transaction is expected to open new revenue streams and boost regional and global growth for SDAI. Importantly, the initial subscription of shares by SDAI is not expected to materially impact the company’s net tangible assets or earnings/loss per share for the financial year ending 31 December 2026. Further announcements will be made if there are material developments.

Price Sensitive and Shareholder-relevant Information

• Material Developments Pending: The completion of the JV and payment for Hubei Qiai’s shares depend on regulatory approvals in China. Any delay or inability to secure these approvals could affect the JV’s progress and SDAI’s business outlook.
• No Immediate Impact: As of this announcement, there is no immediate material impact on SDAI’s financials. However, the successful execution and future commercial performance of the JV could potentially move share price once further details or financial results are disclosed.
• Trading Suspension: Shares in SDAI have been suspended since July 2021. Investors are cautioned that, while the JV announcement is promising, trading remains suspended and further developments are uncertain.
• Inspection of Agreement: Investors may inspect the full JVSHA at SDAI’s principal office for three months, offering transparency into the agreement’s terms.
• No Director/Substantial Shareholder Interest: None of SDAI’s directors or major shareholders have a direct or indirect interest in the JV, except via their shareholdings in SDAI.

Investor Caution

Shareholders and prospective investors are strongly advised to exercise caution regarding any actions on SDAI securities and to consult their professional advisers if in doubt. The JV’s completion, commercial success, and any subsequent changes to terms remain uncertain as of this announcement.

Conclusion

The formation of the JV between SDAI Limited and Hubei Qiai Group represents a significant strategic move into the ASEAN medical supplies market, leveraging Chinese expertise in moxibustion products. While the announcement sets a strong foundation for future growth and expansion, investors should remain attentive to future disclosures and regulatory developments, as these may materially affect the company’s prospects and share price upon trading resumption.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should refer to official company announcements and seek advice from professional advisers before making investment decisions. The Singapore Exchange Securities Trading Limited assumes no responsibility for the contents of this article.

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