China Kunda Technology Holdings Announces Strategic Joint Venture Entry into Water Treatment Business

China Kunda Technology Holdings Limited has announced a significant strategic move that could reshape its business outlook. The company, through its wholly owned subsidiary Kunda Plastic Electronic (Shenzhen) Co., Ltd. (“Kunda Shenzhen”), has entered into a Joint Venture Agreement (JVA) with Shenzhen Yidaoshun Biotechnology Co., Ltd. (“Yidaoshun”), marking its formal entry into the fast-growing water treatment and electrolysed functional water market in China.

Key Points from the Announcement

• Strategic Diversification: The Company is diversifying into the Water Treatment Business, focusing on electrolysed water products, including both drinking water and sanitizers.
• Shareholder Approval: This move is backed by prior shareholder approval gained at the EGM held on 26 July 2016, authorising diversification into the water treatment sector.
• Timing and Rationale: The decision, previously deferred, is now being revisited due to available capital, technology, and established distribution channels, making it an opportune time for entry.
• Joint Venture Structure: The JV Company will be incorporated in Shenzhen with a registered share capital of RMB 2 million. Kunda Shenzhen will hold a 51% stake through a cash contribution of RMB 1.02 million (in two instalments), while Yidaoshun will hold a 49% stake by contributing intangible assets valued at RMB 0.98 million.
• Intangible Asset Contribution: Yidaoshun brings proprietary small-molecule water technology, trademarks (“YIDAOSHUN”, “HUOLIYOUHUO”, “CELLJOY”), online sales platforms, and experienced R&D and management teams.
• Governance: The JV’s board will consist of an Executive Director (appointed by Kunda Shenzhen and acting as Legal Representative) and a Non-Executive Director (appointed by Yidaoshun, with oversight but no voting rights).
• Technology Transfer and Non-Compete: Yidaoshun will transfer all relevant trademarks and technology within 30 days of the JVA’s effective date, and agrees to a non-compete clause for the JV’s duration plus one year after its termination.
• Perpetual Technology Rights: The JV Company is granted perpetual usage rights to the contributed technology, with ongoing technical support and strict access controls for core processes.

Potentially Price Sensitive Information for Shareholders

• Financial Impact: The JV is expected to deliver revenue and profit in the short term, with most sales conducted on a cash basis and minimal working capital requirements. This could help alleviate the Group’s current funding challenges and may have a positive impact on the company’s financial performance, especially given its reported net losses and negative liabilities.
• Market Opportunity: The small-molecule water market is described as being in a rapid growth phase, presenting substantial upside potential for the JV’s products and business model.
• Diversification Benefits: The JV diversifies the Group’s revenue streams, reduces reliance on its existing business, and supports long-term growth and shareholder returns.
• Shareholder Interests: No director, controlling shareholder, or substantial shareholder of the Company has any direct or indirect interest in the JV, other than through their shareholdings in China Kunda Technology Holdings Limited.
• Inspection and Transparency: A copy of the JVA will be available for inspection at the company’s registered office for three months following the announcement, demonstrating commitment to transparency.
• Ongoing Disclosure: The Company will issue further announcements as and when there are material developments related to the JV, and shareholders are encouraged to monitor these updates closely.

Detailed Terms of the Joint Venture Agreement

• Equity Structure:
  • Kunda Shenzhen: 1,020,000 shares (51%)
  • Yidaoshun: 980,000 shares (49%)
  • Total issued capital: RMB 2 million (2,000,000 ordinary shares)
• Board Composition:
  • 1 Executive Director (Legal Representative, appointed by Kunda Shenzhen)
  • 1 Non-Executive Director (appointed by Yidaoshun, non-voting, oversight of finance and management performance)
• Asset Transfer:
  • Yidaoshun to transfer all registered trademarks and other intangible assets to the JV within 30 days
  • Ongoing technical support with encrypted access to core processes
• Non-Compete Clause: Yidaoshun agrees not to compete directly or indirectly during the JV’s term and for one year after cessation.
• Technology Rights: JV Company receives perpetual usage rights to technology contributed by Yidaoshun.

Financial Effects

• The proposed subscription is to be funded through internal resources and is not expected to have a material impact on net tangible assets or earnings per share for the financial year ending 31 March 2026.

What Shareholders Should Know

• This JV marks a significant new business direction for China Kunda Technology Holdings Limited.
• The rapid growth of the small-molecule water market provides a compelling opportunity for revenue and profit generation, which may improve the Group’s financial health and shareholder value.
• The JV structure, asset contribution, and exclusivity terms are designed to ensure robust governance, technology protection, and competitive advantage.
• Shareholders should monitor the Company’s further announcements for updates on JV progress, financial performance, and strategic developments.

Conclusion

This announcement represents potentially price-sensitive information given its impact on future revenue streams, profit generation, and risk diversification. The entry into the water treatment business through a strategic joint venture, backed by proprietary technology and a promising market, positions China Kunda Technology Holdings Limited for growth and recovery.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should consult their own professional advisers before making investment decisions. The information contained herein is based on the company’s official announcement and may be subject to further updates or changes. China Kunda Technology Holdings Limited and its subsidiaries, directors, or officers are not responsible for any investment decisions made based on this article.

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