Core Viewpoint - Wuxi Chuangda New Materials Co., Ltd. (Chuangda New Materials) is responding to the first round of inquiries regarding the necessity and rationality of related party transactions, as well as the background and financial implications of its equity transfer involving Wuxi Shaohui Trading Co., Ltd. [1][2] Group 1: Company Overview - Chuangda New Materials was established in 2003 and specializes in the research, production, and sales of high-performance thermosetting composite materials, including epoxy molding compounds and conductive silver paste [1]. - Wuxi Shaohui, previously a wholly-owned subsidiary of Chuangda New Materials, is engaged in the trade of chemical products and raw materials [2]. Group 2: Equity Transfer and Financials - In November 2023, Chuangda New Materials transferred 15.01% of its shares in Wuxi Shaohui, reducing its stake to 4.99%, thus making it an associate company [2]. - The revenue of Wuxi Shaohui for the fiscal years 2022, 2023, and 2024 was reported as 169.12 million, 155.91 million, and 176.27 million respectively, with net profits of 11.04 million, 5.47 million, and 17.42 million [4]. Group 3: Related Party Transactions - Chuangda New Materials has engaged in purchasing transactions with Wuxi Shaohui and its affiliates, with procurement amounts increasing from 5.09 million to 8.46 million over the reporting period [2][3]. - The company clarified that the transactions with Wuxi Shaohui are necessary for its operations, and there are no other third-party suppliers that fulfill the same role [4][5]. Group 4: Control and Ownership Changes - Since April 2014, Chuangda New Materials has gradually reduced its ownership in Wuxi Shaohui, losing control over the company, with ownership percentages changing from 35.09% to 4.99% [5][6]. - The company has confirmed that it has genuinely disposed of its equity in Wuxi Shaohui and does not maintain actual control over it [6].