Video streaming provider Leshi, once touted as a Chinese tech titan, edges closer to delisting after reporting huge losses for third straight year

Daniel Ren

Leshi Internet Information and Technology, once seen as a potential Chinese technology titan, is well on its way to being expelled from the stock market after reporting huge losses for a third consecutive year.

The video streaming service provider founded by embattled Chinese entrepreneur Jia Yueting said on Thursday that its loss for last year widened to 11.3 billion yuan (US$1.6 billion) from 4.1 billion yuan in 2018. Revenue slumped 69 per cent to 490 million yuan.

“It is edging closer towards a delisting and collapse,” said He Yan, a hedge fund manager with Shanghai Shiva Investment. “The sorry saga is a rude reminder to Chinese stock investors that it will still be a long journey for the country’s stock market to find its own Apple or Microsoft.”

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Leshi made its trading debut on the ChiNext, a technology board for Chinese start-ups on the Shenzhen Stock Exchange, in 2010.

It was once the most expensive stock on the market with capitalisation hitting 170 billion yuan in 2015.

But its debts have mounted since 2017 amid Jia’s ambitious expansion efforts.

In 2017, the company posted its first annual loss, of 11.6 billion yuan.

The company’s listing status was suspended in May 2019 after it booked negative assets of 3 billion yuan for the previous year.

At that time, Leshi was valued at 6.7 billion yuan.

According to the market rules, it will be expelled from the stock market if it fails to regain positive net worth in the next financial year.

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Sunac China Holdings, one of the mainland’s largest developers, spent US$2.2 billion to buy an 8.6 per cent stake in Leshi through a share placement in 2017, becoming its second-largest shareholder.

It also dispatched personnel to help with reorganise the company, but failed in an attempt to bail out the video streaming service.

China’s leadership has been encouraging capital market watchdogs to lower listing thresholds for technology start-ups as a way of bolstering innovation.

Last year, the Shanghai Stock Exchange launched the Star Market, a technology innovation board ordered into existence by President Xi Jinping.

The market for the first time allowed unprofitable companies and firms backed by foreign funds to raise money on the domestic stock exchanges.

China’s biggest technology companies like Tencent and Alibaba, owner of the South China Morning Post, are all listed outside mainland China.

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