(Yicai Global) June 19 -- Zotye Automobile's stock price fell today after the Chinese firm said that it probably lost even more money than earlier expected last year, partly due to an impairment loss.
Zotye's shares [SHE:000980] touched CNY1.76 (US 25 cents) intraday today, the lowest since late May. The equity price peaked at CNY18.16 (USD2.60) in 2016.
The car company's net loss should stand between CNY10.8 billion and CNY11.5 billion (up to USD1.6 billion) for 2019 because of reduced production and pending client payments, the Zhejiang province-based firm said in a statement yesterday.
Zotye has postponed reporting its 2019 earnings till June 23 due to the virus outbreak. On April 25, it had suggested that its net loss would come in at CNY9.3 billion. In 2018, the firm made a net profit of 800 million (USD112.8 million).
Since the second half of 2019, production of most of Zotye's car models was suspended either temporarily or for good due to funding issues, the firm responded to the Shenzhen Stock Exchange's inquiry in March.
When car companies sell little, they have a hard time maintaining their production scale and investing in research and development, resulting in a vicious cycle, China Securities Journal reported, citing a report by China International Capital.
Due to limited funds amid the epidemic, Zotye lowered its output while taking a CNY1.3 billion impairment loss, yesterday's statement added. Meanwhile, its clients' liquidity deteriorated and hence, the firm added CNY327 million in credit loss.
The problems have spread to the company's suppliers. Zotye reportedly owes one of them, BAK Power, as much as CNY621 million.
Since the end of last year, the car firm's Chairman Jin Zheyong has been labeled as a dishonest debtor in China while the company has been involved in more than 20 legal cases, according to corporate information platform Tianyancha.
Editor: Emmi Laine