Leshi Internet Shares Fell More Than 40% in Half Year; Jia Yueting’s Equity Pledge May be at Risk

Yang Jiao / Yicai

2016-12-08

(Yicai Global) Dec. 8 – The massive amount of equity pledges made earlier by Leshi Holdings founder Jia Yueting may be at risk if the shares of Leshi Internet Information & Technology [SHE:300104], an affiliate of Leshi Holdings Group, continue to fall, a market participant told Yicai Global.

Leshi shares closed at CNY35.8 (USD5.20) on Dec. 6, down more than 40 percent from its highest point in early June. The shares were suspended yesterday.

Jia and other shareholders repeatedly pledged Leshi shares to obtain loans in the past, some sources claimed. The maximum loan-to-value ratio was set at 40 percent and additional deposits or pledges would be needed if the ratio reaches or exceeds 60 percent.

An examination of public data reveals that Jia made nearly 30 equity pledges in the four years between July 2011 and October last year. 571 million shares were pledged as of the end of September this year. Price of Leshi shares averaged CNY48-53 when Jia pledged 64.81 percent of his stake in October last year.

Yicai Global called Leshi's board secretary Zhao Kai yesterday to verify the advance warning line and position-closing line of Jia's aforementioned equity pledge. However, the person answering the call said the company's public relations department is responsible for such matters, yet declined to give the department’s contact details, saying the company has made statements via official channels.

According to available data made public, CNY422 million worth of funds had still been used to buy shares in Leshi through margin trading as of Dec. 6. Such leveraged funds could help push down its share price once there are new market developments.