Leshi’s shares plunge by daily limit of 10% as trade resumes in Shenzhen

Shares of Shenzhen-listed Leshi Internet Information & Technology Corp resumed trading on Wednesday, but its shares tumbled by the daily limit of 10 percent to 13.8 yuan ($2.16).

The company’s market capitalization slumped to 55.1 billion yuan on the day, from 61.2 billion yuan as of the suspension date last April.

Jia Yueting, who has been put on a national blacklist of debt defaulters, is still the largest shareholder of Leshi. He holds 1.024 billion shares in the company, representing 25.67 percent of its total capital stock. But he has pledged 1.02 billion shares to financial institutions.

Sunac China, whose chairman is Sun Hongbin, has 8.56 percent of Leshi’s total shares.

It has been more than nine months since Leshi’s shares stopped trading on April 17, 2017.

During this period, several fund companies repeatedly lowered their valuations of Leshi, with the latest valuation standing at 3.81 yuan per share, the Beijing News newspaper reported on January 18.

This means that Leshi’s shares are likely to slump another 72 percent.

During an investor conference held online on Tuesday, Leshi announced that it cannot estimate its stock price once it resumes trading.

“If Leshi’s stock price continues to drop, Jia Yueting has to supplement security deposit to the institution to which he pledged shares or the institution has the right to dispose of those shares. But Jia Yueting didn’t present a plan about how to deal with the pledged shares,” Leshi said.

The company also said it will try to solve capital constraints and supply chain problems in order to stabilize its business.

Leshi, once the major listed arm of LeEco Group, is now seeking an equity stake in the automobile businesses of Jia, as Jia and his other firms owed a total of 7.5 billion yuan of the listed company.

In the first three quarters of 2017, the company’s lost more than 1.6 billion yuan, on the basis of what was attributable to its parent company. The year-earlier figure was a profit of 493 million yuan.