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I ask you, can one ascend to the heavens by stepping on one's right foot with the left?

The answer is yes, at least for the actual controller of Dia Shares (301177.SZ), it can be done with ease.

First, they borrow money from their own company, then lend out the funds to invest in their own company, thereby ensuring an extremely high shareholding ratio.

Then, they have the company distribute generous dividends and pay themselves high salaries, completing the cash-out cycle. They can disregard the new regulations on shareholding reduction that restrict cashing out.

Before and after going public, the actual controllers of Dia Shares, a couple, have managed to amass nearly 170 million yuan. Meanwhile, as of the closing price on August 19, Dia Shares has fallen by 83.5% from its issue price.

1. No reduction allowed after a price drop? The actual controller of Dia Shares masters dividend distribution.

In August 2023, the China Securities Regulatory Commission (CSRC) issued new regulations on shareholding reduction, prohibiting listed companies with price drops or net asset value breaks from reducing their shares.

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This poses no challenge to Dia Shares, as a company with a very small float and an extremely high shareholding ratio controlled by the actual controller, who mainly cashes out through dividends.

Dia Shares is primarily engaged in the brand operation, custom sales, and research and development design of jewelry and accessories.

The company's prospectus shows that before going public, the actual controllers, Zhang Guotao and Lu Yiwen, held a combined indirect shareholding of 98.245% in the company.After going public, the total share capital of Dia Corporation increased from 360 million shares to 400.01 million shares, resulting in the actual controller's equity being diluted to 88.42%.

It can be seen that both before and after the listing, the control rights of Zhang Guotao and Lu Yiwen are highly concentrated.

It is worth noting that before the listing, the actual controller used a closed loop of borrowing from the company for capital contribution and repaying through dividends, thus not relying on the introduction of external shareholders, ensuring a very high shareholding ratio.

In April 2015, Zhang Guotao borrowed 10 million yuan from Dia Corporation for direct capital contribution; in June 2015, Zhang Guotao borrowed another 20 million yuan from the company for capital contribution; in January 2016, Zhang Guotao borrowed 18 million yuan from the company through the controlled Dia Investment for capital contribution. In June 2016, Zhang Guotao and Dia Investment repaid the aforementioned loans, with the repayment source being the dividends of Dia Corporation in June 2016.

Speaking of dividends, Dia Corporation can be described as very "generous".

How high was the dividend amount in June 2016? It is impossible to know from public information. However, according to the company's prospectus, from 2017 to the first half of 2020, the cash dividend amount of Dia Corporation reached 80 million yuan, 150 million yuan, 90 million yuan, and 120 million yuan. Calculated based on a 98.245% shareholding ratio, almost all of this money went into the accounts of the actual controller's couple. The total amount is about 432 million yuan.

After going public, the dividends of Dia Corporation became even more exaggerated. The dividend plan for 2021 was "a cash dividend of 20 yuan for every 10 shares," with a total cash dividend of 800 million yuan. In 2022, Dia Corporation proposed a dividend plan of "a cash dividend of 10 yuan for every 10 shares," with a total dividend of 400 million yuan. In 2023, the total cash dividend was 200 million yuan. According to the actual controller's 88.42% shareholding ratio, the total dividend amount is about 1.238 billion yuan.

In addition to the generous dividends, Zhang Guotao and Lu Yiwen also gave themselves high salaries.

In 2020, Zhang Guotao and Lu Yiwen received remuneration of 2.3932 million yuan and 1.8702 million yuan from Dia Corporation; in 2021, they were 2.4898 million yuan and 1.8893 million yuan respectively; in 2022, they were 4.0771 million yuan and 1.9045 million yuan respectively; in 2023, they were 4.1772 million yuan and 1.908 million yuan respectively.

Since 2020, the actual controller Zhang Guotao and Lu Yiwen have received a total of 20.7093 million yuan in salaries through Dia Corporation.Dividends before listing + dividends after listing + compensation since 2020, it is calculated that the controlling couple has cumulatively cashed out about 1.7 billion yuan through the company before and after going public.

In this way, Di A shares not only perfectly evaded the new regulations on shareholding reduction that prohibit reduction when the stock price is broken, but also can actually ignore the decline in stock prices.

We see that the stock price has broken through more than 83%, but Di A shares do not repurchase, do not increase, but instead take out a large amount of cash for financial management.

2. Tens of billions are used for financial management every year.

On December 15, 2021, the company was listed on the A-share market, and 4.676 billion yuan of fundraising was obtained. Half a month later, on the evening of December 31, 2021, Di A shares announced a "big move": it is planned to use 3.5 billion yuan of idle fundraising funds and 4 billion yuan of self-owned funds for cash management. The total is 7.5 billion yuan.

On the evening of December 30, 2022, the company announced again the plan to use 3 billion yuan of idle fundraising funds and 6 billion yuan of self-owned funds for cash management, with a total of 9 billion yuan.

The company's latest financial plan disclosed in December 2023 is 7.8 billion yuan.

On the interactive platform, many investors called on the company to repurchase. Di A shares replied that its IPO issued 40.01 million shares, accounting for about 10.002% of the total share capital of 400.01 million shares after the issue. According to the "Shenzhen Stock Exchange Growth Enterprise Market Stock Listing Rules" stipulates that "when the total share capital of the company exceeds 400 million yuan, the proportion of publicly issued shares is more than 10%". If the company repurchases or increases, it may face the situation of not meeting the listing conditions.

Because the controlling shareholder's shareholding ratio is too high, it can evade the obligation to repurchase;

Also because the controlling shareholder's shareholding ratio is too high, it can cash out through dividends, evading the restrictions of the new regulations on cashing out.Has the logic formed a closed loop again?

However, there is a truth behind this: the actual controller of the company and small and medium investors have almost no common interests. For small and medium investors, a decline in stock prices means losses, while for the actual controller of Dia Shares, the rise and fall of stock prices are already trivial; cash in hand is the key.