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LeEco's listed arm set to resume trading

By Fan Feifei | China Daily | Updated: 2018-01-23 08:44
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Leshi Internet Information& Technology Corp, the listed arm of debt-laden internet conglomerate LeEco, is expected to resume trading this week, but experts say its stock price will inevitably plummet and its profitability remains worrisome.

The company said on Friday it has suspended the planned purchase of Le Vision Pictures, a filmmaking arm of LeEco, and will hold a briefing on Tuesday related to the termination of a reorganization of the company's major assets and operating situation.

Leshi said in its statement that it expects a net loss in 2017. The company also identified potential risks, such as the change of actual controllers, tight cash flow due to LeEco founder Jia Yueting and his sister Jia Yuefang failing to fulfill loan commitments as well as a sharp decline and great uncertainty in the company's performance.

Although the company has yet to disclose the accurate time of its stock trading resumption, industry insiders said Leshi has no reason to continue the suspension of trading, and will resume trading as soon as possible.

It is likely that Leshi will resume trading in the next three trading days, which is likely to happen on Thursday, according to Securities Times.

Shen Meng, director of boutique investment bank Chanson & Co, said a slump in Leshi's share prices has definitely been settled since the company resumed trading on the Shenzhen Stock Exchange.

"Leshi has suspended trading for a long period of time, and even though Sunac China Holdings has strategically invested in LeEco, its business performance has not yet improved obviously," Shen said. But he added it is unlikely that Leshi will exit the stock market, as the listed arm has not conducted any illegal activity.

Economist Song Qinghui said the market has almost lost confidence in Leshi, as it has suspended stock trading for about nine months, during which market speculation that is not beneficial for the company has continued to emerge.

Song said he is not optimistic about the future profitability of Leshi and the company lacks core competitiveness, and even if the reorganization efforts succeed, it will not make much difference to Leshi. The company's revenue reached 6.15 billion yuan ($960 million) in the first three quarters of last year, down 63 percent year-on-year. It reported a net loss of 2.28 billion yuan, a decline of 173 percent compared with same period in previous year.

Leshi will face delisting warning risks if it reports net losses for two consecutive years.

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