China Dili : (1) MAJOR ACQUISITION AND CONNECTED TRANSACTION INVOLVING THE ACQUISITION OF TARGET SHARES IN AN AGRICULTURAL AND FOOD PRODUCE RETAIL CHAIN; (2) CONTINUING CONNECTED TRANSACTION IN RELATION TO A LOAN TO TARGET GROUP; AND (3) NOTICE OF EGM

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about this circular or as to the action you should take, you should consult your stockbroker, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your Shares in China Dili Group, you should at once hand this circular together with the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company and neither this circular nor anything herein forms the basis for any contract or commitment whatsoever.

(formerly known as Renhe Commercial Holdings Company Limited人和商業控股有限公司*)

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1387)

1. MAJOR ACQUISITION AND CONNECTED TRANSACTION INVOLVING THE ACQUISITION OF TARGET SHARES IN

AN AGRICULTURAL AND FOOD PRODUCE RETAIL CHAIN;

(2) CONTINUING CONNECTED TRANSACTION IN RELATION

TO A LOAN TO TARGET GROUP;

AND

(3) NOTICE OF EGM

Independent Financial Adviser to the Independent Board Committee and

the Independent Shareholders

A letter from the Board is set out on pages 7 to 34 of this circular. A letter from the Independent Board Committee containing its recommendations to the Independent Shareholders is set out on pages 35 to 36 of this circular. A letter from Grand Moore Capital Limited, the independent financial adviser, containing its advice and opinion to the Independent Board Committee and the Independent Shareholders is set out on pages 37 to 75 of this circular.

A notice convening the EGM to be held at 3:00 p.m., on Tuesday, 29 October 2019 at Chatham Room, Level 7, Conrad Hong Kong, One Pacific Place, 88 Queensway, Admiralty, Hong Kong is set out on pages EGM-1 to EGM-2 of this circular. Whether or not you are able to attend the EGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company's branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong, as soon as possible but in any event not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

• For identification purpose only

30 September 2019

	CONTENTS
		Page
DEFINITIONS	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . .	35
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . . .	37
APPENDIX I	- FINANCIAL INFORMATION OF THE GROUP . . . . . . . . . . . .	I-1
APPENDIX II - FINANCIAL INFORMATION OF
	THE TARGET GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
APPENDIX III - ACCOUNTANTS' REPORT OF
	THE TARGET GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
APPENDIX IV - UNAUDITED PRO FORMA FINANCIAL
	INFORMATION OF THE ENLARGED GROUP . . . . . . . . .	IV-1
APPENDIX V	- BUSINESS VALUATION OF THE TARGET GROUP . . . . . .	V-1
APPENDIX VI - GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI-1
NOTICE OF THE EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

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DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions shall have the following meanings:

''Acquisition''	the acquisition of 19% of the entire issued share capital of
	the Target Company
''Acquisition Agreement''	the conditional sale and purchase agreement dated 29
	August 2019 entered into between Yield Smart and the
	Vendor in respect of the Acquisition
''Announcement''	the announcement of the Company dated 29 August 2019 in
	relation to, among other things, the Transaction
''Beijing Dili''	北京地利農副產品經營有限公司 (Beijing Dili Agricultural
	Produce and Side Products Operation Co., Ltd.**), a
	company incorporated in the PRC which is wholly-owned
	by the Target Company
''Beijing Dili F&B''	北京地利舌尖餐飲有限公司 (Beijing Dili Shejian Food and
	Beverage Co., Ltd.**), a company incorporated in the PRC
	which is wholly-owned by the Target Company
''Beijing Dili Supply Chain''	北京地利鮮供應鏈管理有限公司 (Beijing Dili Fresh
	Agricultural Produce Supply Chain Management Co.,
	Ltd.**), a company incorporated in the PRC which is
	wholly-owned by the Target Company
''Board''	the board of Directors
''Business Day''	a day (other than a Saturday or a Sunday, any public
	holiday in Hong Kong or a day on which a tropical cyclone
	warning signal No. 8 or above or a black rainstorm warning
	signal is hoisted in Hong Kong at any time between 9:00
	a.m. and 4:00 p.m.) on which banks generally are open for
	business in Hong Kong
''BVI''	the British Virgin Islands
''CAGR''	compound annual growth rate
''Call Option''	the right granted by the Vendor to Yield Smart to purchase
	the Remaining Shares from the Vendor pursuant to the
	Acquisition Agreement
''Company''	China Dili Group (Stock Code: 1387), a company
	incorporated in the Cayman Islands whose members'
	liability is limited, the shares of which are listed on the
	Stock Exchange

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	DEFINITIONS
''Completion''	the completion of the Acquisition
''Completion Date''	the date of Completion
''Dalian Dili Fresh''	大連地利生鮮農產品企業管理有限公司 (Dalian Dili Fresh
	Agricultural Produce Enterprise Management Co., Ltd.**),
	a company incorporated in the PRC which is wholly-owned
	by the Target Company
''Deposit''	the deposit in the aggregate sum of RMB400 million
	(equivalent to approximately HK$443.1 million) paid
	pursuant to the memorandum of understanding dated 11
	September 2018 entered among Mr. Dai, Harbin Dili and
	Dili Fresh and extended by a supplemental agreement dated
	7 March 2019
''Dili Fresh''	哈爾濱地利生鮮農產品企業管理有限公司 (Harbin Dili
	Fresh Agricultural Produce Enterprise Management Co.,
	Ltd.**), a company incorporated in the PRC which is
	wholly-owned by the Target Company
''Dili Fresh Stores''	all of the retail stores operated by the Target Group and the
	franchise stores operated by the Franchisees
''Director(s)''	the director(s) of the Company
''EBITDA''	earnings before interest, taxation, depreciation and
	amortisation
''EGM''	the extraordinary general meeting of the Company to be
	convened and held at 3:00 p.m., on Tuesday, 29 October
	2019 at Chatham Room, Level 7, Conrad Hong Kong, One
	Pacific Place, 88 Queensway, Admiralty, Hong Kong, at
	which, among others, the Transaction and the transactions
	contemplated thereunder together with the terms of the
	Acquisition Agreement and the Loan Agreement (including
	the proposed annual caps), will be considered, and if
	thought fit, approved by the Independent Shareholders
''Enlarged Group''	the Group as enlarged by its acquisition of interest in the
	Target Group upon Completion
''Franchise Agreements''	the franchise agreements between members of the Target
	Group as franchisors and the Franchisees which govern the
	rights and obligations under the franchise arrangements
''Franchisees''	independent third-party operators of 30 franchise stores of
	''Dili Fresh'' across the PRC selling primarily vegetables
	and also fruits, seafood, meat and other food produce

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	DEFINITIONS
''GFA''	gross floor area
''GMV''	gross merchandise value
''Group''	the Company and its subsidiaries from time to time
''Guizhou Dili Fresh''	貴州地利生鮮農產品企業管理有限公司 (Guizhou Dili
	Fresh Agricultural Produce Enterprise Management Co.,
	Ltd.**), a company incorporated in the PRC which is
	wholly-owned by the Target Company
''Harbin Dili''	哈爾濱地利農副產品有限公司 (Harbin Dili Agricultural
	Produce and Side Products Co., Ltd.**), a company
	incorporated in the PRC which is wholly-owned by the
	Company
''HK$''	Hong Kong dollars, the lawful currency of Hong Kong
''HK HoldCo''	Speed Up Development Limited, a company incorporated in
	Hong Kong which is directly wholly-owned by the Target
	Company
''Hong Kong''	the Hong Kong Special Administrative Region of the PRC
''Independent Board	independent board committee established by the Company
Committee''	consisting of all independent non-executive Directors to
	advise the Independent Shareholders as to whether the
	terms and conditions of the Transaction are on normal
	commercial terms or better, fair and reasonable, in the
	ordinary and usual course of business of the Group and in
	the interests of the Company and the Shareholders as a
	whole, and to make a recommendation to the Independent
	Shareholders on how to vote at the EGM, taking into
	account the advice from the Independent Financial Adviser
''Independent Financial	Grand Moore Capital Limited, a corporation licensed by the
Adviser''	SFC to conduct Type 1 (dealing in securities) and Type 6
	(advising on corporate finance) regulated activities under
	the SFO, which is the independent financial adviser to the
	Independent Board Committee and the Independent
	Shareholders in respect of the Transaction
''Independent Professional	I n t er n a ti o n al V a lu at i o n Li m i t e d , a n in d e p e n d e n t
Valuer''	professional valuer appointed by the Company

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