(Yicai Global) Aug. 31 -- Leshi Internet Information and Technology,the listed arm of debt-ridden Chinese tech conglomerate LeEco,has warned that it could be ejected from the Shenzhen bourse if it continues to log negative net assets in the second half of the year.

"If the company were to have negative net assets for the year after auditing, the Shenzhen Stock Exchange could suspend its listing,"Leshi Internet said in an interim earnings report published on Aug. 29. "The board of directors and management are trying to solve the company's current operational difficulties, but further losses are possible due to financing problems caused by the related party's debt."

Beijing-based Leshi'snet assets attributable to shareholders turned red at CNY477 million (USD70.93 million) in the first half, the report showed.Current liabilities totaled CNY13.6 billion (USD2 billion) against total assets of CNY17 billion.

Set up in 2004 by controversial Chinese businessman Jia Yueting, the firm also reported a first-half net loss of CNY1.1 billion,while revenue slid 82 percent to CNY1 billion.Total liabilities widened 2.7 percent in the period to CNY19 billion.

The company's bleak financial data is in sharp contrast to a share price [SHE:300104] that has gained 50 percent since an all-time low closing price of CNY2.08 on Aug. 20. The stock climbed by the daily 10 percent limit yesterday, and gained more than 9 percent today to end at CNY3.12.

Leshi stock also soared in June after China's largest real estate developer China Evergrande Group pledged to buy a 45 percent stake in Faraday Future for HKD6.7 billion (USD853 million). The target is a US electric car startup also founded by Jia Yueting, who fled China last year after racking up billions of debt at LeEco.

Despite the stock price gains, Leshi Internet is still trading at a fraction of what it was worth this time two years ago, before Jia mismanaged overly ambitious expansion plans across a broad range of sectors.

Editor: William Clegg