Dida Inc. Reports Major and Discloseable Transactions, Listing Rules Non-Compliance and Remedial Actions

Key Highlights

• Dida Inc. discloses a series of major and discloseable transactions involving the subscription and disposal of wealth management products since its listing.
• The company failed to comply with the Hong Kong Listing Rules regarding timely disclosure of certain transactions, which could be price sensitive and affect shareholder value.
• Remedial actions have been announced to prevent future breaches and restore investor confidence.
• Details about the scale, nature, and realized returns of the investments have been provided, including a supplemental announcement regarding the annual report for 2024.

Comprehensive Details for Investors

1. Summary of Wealth Management Products Transactions

Since its listing, Dida Inc. (the “Company”) and its subsidiaries, Beijing Changxing and WFOE, have engaged in numerous subscriptions and disposals of wealth management products offered by four major institutions: PingAn Wealth Management, Hua Xia Wealth Management, CITIC Wealth Management, and CMBC Wealth Management. These products are primarily low-risk, non-guaranteed return cash management products, intended for treasury management to maximize returns on surplus cash derived from business operations.

• PingAn Wealth Management: Maximum aggregate outstanding principal reached RMB650 million (as of December 31, 2024, fair value RMB100.7 million, 5.2% of total assets). As of the announcement date, only RMB20 million remains outstanding, which can be redeemed any time after January 19, 2026. The Company realized gains from these investments.
• Hua Xia Wealth Management: Maximum aggregate outstanding principal was RMB130 million. As of the announcement, the Company holds no outstanding products. Fair value as of December 31, 2024 was RMB110.6 million (5.7% of total assets), with realized gains reported.
• CITIC Wealth Management: Maximum aggregate outstanding principal was RMB100.5 million. No outstanding products remain. Fair value as of December 31, 2024 was RMB31.1 million (1.6% of total assets), with realized gains reported.
• CMBC Wealth Management: Maximum aggregate outstanding principal was RMB100 million. No outstanding products remain.

These transactions were funded by the Group’s surplus cash reserves and were aimed at optimizing treasury management while not affecting working capital or operations.

2. Non-Compliance with Listing Rules

• The investments in wealth management products, when aggregated by issuer as required under Rule 14.22 of the Listing Rules, resulted in certain transactions being classified as major or discloseable transactions.
• Certain subscriptions and redemptions exceeded the relevant percentage ratios (5% and 25%) for notifiable transactions under Chapter 14 of the Listing Rules, but were not announced in a timely manner as required by the Rules.
• The Company admits the non-compliance was due to a misunderstanding by management, who viewed wealth management products as akin to fixed deposits and did not appreciate the disclosure obligations under the Listing Rules.
• The Company deeply regrets these breaches, emphasizes that the non-compliance was inadvertent, and had no intention to withhold information from shareholders or the market.

3. Supplemental Disclosure to 2024 Annual Report

As of December 31, 2024, Dida Inc. recorded financial assets at fair value through profit or loss (FVTPL) of RMB242.4 million (12.4% of total assets), including unlisted wealth management products. Net gain from these assets in 2024 was approximately RMB3.8 million. Notably, investments in PingAn and Hua Xia Wealth Management were individually significant, and most of these investments have since been redeemed.

4. Remedial Actions to Ensure Future Compliance

• Internal Communication: An internal memo was issued to all directors, department heads, and employees, emphasizing strict compliance with notifiable transaction requirements under Chapter 14 of the Listing Rules, especially with respect to wealth management products.
• Training: Company-wide training on the Listing Rules, including a mandatory 18-hour online training program for directors and senior management, with similar training for finance and accounting staff. This will be repeated regularly with external professional advisers.
• Internal Controls: Implementation of a pre-approval process for all investment-related activities (Investment Application Form, review by Finance and Compliance, CFO and CEO approval as appropriate), and periodic post-transaction reviews.
• Compliance Oversight: Closer work with compliance and legal advisers, and independent internal control review by Acclime Consulting (Hong Kong) Limited. Results and further recommendations will be disclosed in the 2025 annual report.
• Timely Disclosure: New procedures for pre-approval and announcement preparation for notifiable transactions, including Board review, and cross-checks to ensure no material omissions in annual reporting.

Key Considerations for Shareholders and Potential Price Sensitivities

• Regulatory Breach: The Company’s admission of non-compliance with the Listing Rules regarding disclosure of major transactions is a material governance issue that could impact investor confidence and the Company’s reputation.
• Internal Controls and Remediation: The adoption of comprehensive remedial measures and independent reviews are positive steps, but investors should monitor future compliance closely.
• Liquidity and Risk Profile: The Company’s use of surplus cash for low-risk wealth management products has generated returns, but shareholders must remain alert to changes in treasury policy or product risk profiles.
• Future Announcements: The Company’s commitment to enhanced disclosure may result in more timely and detailed communications, which could affect market perceptions and share price in the event of future notifiable transactions.

Conclusion

The Company’s proactive disclosure of past non-compliance, coupled with detailed remedial actions and supplemental financial information, is significant and price-sensitive. It signals management’s efforts to rebuild trust, address regulatory risks, and enhance transparency. Shareholders should pay close attention to management’s execution of these remedial actions and any future regulatory disclosures.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult their financial advisers before making investment decisions. The author and publisher assume no responsibility for any actions taken based on the information provided above.

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