Leshi ends 10 percent daily tumble
Shenzhen-listed Leshi Internet and Technology surged almost 7 percent in the morning session today, ending a consecutive 10 percent daily tumble over the past 11 trading days.
Leshi, which used to be a flagship firm in the Nasdaq-like GEM or Growth Enterprise Market, halted trading in April over heavy debt and cash flow problems. It then fell by the maximum 10 percent daily limit over 11 trading days since resuming trading.
Leshi’s end of share tremble may bring confidence and liquidity to the market, especially to GEM shares, analysts said.
Leshi closed at 5.08 yuan (79 US cents) today, climbing 5.39 percent from yesterday.
Comparatively, the GEM market gained 1.55 percent today.
Investors used about 400 million yuan to purchase Leshi yesterday but they failed to end the 10 percent daily tremble, Xinhua reported. Shares lost about 70 percent in value since resuming trading on January 24. Meanwhile, the company still faces problems including heavy debts and business loss.
It expected to post a loss of 11.6 billion yuan in 2017, compared with a net profit of 554.8 million yuan in 2016, because of “capital shortage and liquidity problems,” the company said in a statement to the Shenzhen Stock Exchange.
Jia Yueting, Leshi’s former chairman, is seen as being responsible for the heavy debt after an aggressive business expansion into the electric car and smartphone markets.
Jia, who is now in the United States, is still the top shareholder of Leshi with a 26 percent stake. But his stake is likely to shrink with the price tremble, said analysts.
Sun Hongbin, chairman of property developer Sunac China, is now chairman of Leshi after Sunac invested about 15 billion yuan in the firm last year.