(Yicai Global) Jan.31 -- Leshi Internet Information & Technology Corp. [SHE:300104] forecast it will report a net loss of CNY11.6 billion (USD1.8 billion). This would make it the first group listed in mainland China that is not a central state-owned enterprise to post such a significant loss in more than a decade.

The effects of a capital shortage, associated parties' liquidity problems and expanding public doubt about the company impacted the its reputation and creditworthiness, Leshi said.

Aluminum Corporation of China Ltd., COSCO Shipping Holdings Co. and China Eastern Airlines Corp. were the only firms listed on the A-share market to post annual losses of more than CNY10 billion from 2006 to 2016.

Leshi's advertising, terminal-end and membership revenues substantially declined. Daily operating expenses and increasing financing costs led to an operating loss of about CNY3.7 billion for the company during the reporting period.

The Growth Enterprise Market of Shenzhen Stock Exchange will delist a company that records losses for three consecutive years, meaning Leshi has two years to turn things around.

Leshi made provisions of CNY4.4 billion for bad debts and CNY3.5 billion for long-term asset impairments, but an Yicai Global analysis shows these estimates may be low and this year may be tough for the company.

Leshi Internet Information & Technology said on Jan. 19 that affiliates controlled by LeEco founder Jia Yueting owed it more than CNY7.5 billion as of Nov. 30 last year. Less than CNY100 million of this debt had been resolved when trading of the group's shares resumed this month. The relatively small provision for bad debts indicates that Sun Hongbin, Leshi's new board chairman, expects Jia and related parties will pay down their debts.

Leshi's intangible assets amortization method has been the focus of criticism. Leshi's intangible assets include films and television copyrights, system software and non-proprietary technologies

The revenue characteristics of the film and TV video content industry are such that user traffic and the resulting membership fees, advertising income and copyright distribution revenue are concentrated in the first year of release of the copyright license and user flow sharply declines over time, experts told Yicai Global, adding that Leshi did not use appropriate accounting practices when amortizing related assets.

Jia and his companies have been embroiled in controversy since the LeEco conglomerate approached rock bottom last year, amassing debts of over CNY20 billion. They have been on the receiving end of several lawsuits after missing repayments, and Chinese courts have labeled Jia a "dishonest debtor" for not repaying loans he can afford to.