Only Two Out of Seven Business Arms of LeEco Are Profitable, Says Report
Xu Wei
DATE:  Jul 11 2017
/ SOURCE:  Yicai
Only Two Out of Seven Business Arms of LeEco Are Profitable, Says Report Only Two Out of Seven Business Arms of LeEco Are Profitable, Says Report

(Yicai Global) July 11 -- The information disclosed by listed companies and those obtained from other sources indicates that only LeTV [SHE:300104] and the company's content business among seven business arms of LeEco are profitable, while other businesses are losing money, the 21st Century Business Herald reported today.

LeEco consists of three systems, including the listed company LeTV, non-listed domestic and foreign equity holding platform, and LeSEE. It can also be divided into seven business arms, including internet, content, cell phone, big screen, sports, car and finance, involving as many as one hundred or so companies which are intricately connected.

By the end of September 2016, LeEco registered total assets of approximately CNY67 billion (USD9.85 billion) and total liabilities of CNY63 billion, and it achieved operating income of approximately CNY40 billion in the first three quarters, with losses reaching as high as CNY9.73 billion, the newspaper cited a due diligence report on LeEco released by a financial institution. LeEco's cell phone business reported the biggest loss of about CNY5.66 billion, followed by Le Sports with a loss of CNY2.63 billion and the money-burning LeSEE with a loss of CNY1.34 billion.

Since last year, problems such as overdue accounts of cell phone supply chain, US factory shutdown and capital chain tension facing LeEco have been exposed. The financial institution quoted summed up the root causes of LeEco's crisis as the money-burning internet model and LeEco's financing capacity failing to match its high-intensity investments when it simultaneously invested heavily in its businesses.

LeEco's financing methods include not only equity financing, but also bank loans, trusts, and bonds. Among them, the most common means is to include quality assets into listed companies, push up share prices by releasing new strategies constantly, and then pledge the equity of listed companies to obtain financing. LeEco achieved flow and delivery of funds among various segments through a large number of related transactions, guarantees and inter-bank lending.

Follow Yicai Global on
Keywords:   Leshi,TECHNOLOGY,LeEco. LeTV,FINANCING,CRISIS,Bank Loan,Investment,Subsidiary,PROFIT,Loss