(Yicai Global) Dec. 4 -- Sunway's stock continued falling today after the Chinese cable maker said that it will not be buying a majority stake in the e-commerce platform used by famous live-streaming host Luo Yonghao amid a changing regulatory environment.

The mobile communication equipment maker's shares [SHA: 603333] were 2.1 percent down at CNY6.67 (USD1) by noon today after falling 5.3 percent yesterday. Once the backdoor listing plans were revealed a bit less than a month ago, Sunway's stock price rallied to reach as high as CNY12.20, almost a 70 percent increase from before the announcement.

Sunway and Xingkong Yewang Technology have failed to reach an agreement on terms including valuation, pricing and profit forecast after China's market, internet and media regulators issued new opinions which could affect the live-streaming sector, the Sichuan province-based bidder said in a statement yesterday.

On Nov. 8, Sunway said it was planning to pay CNY589 million (USD90.1 million) for a 40.3 percent stake in the Chengdu-based e-commerce firm that only started business in April. That would result in a premium of as high as 28 times, based on the target company's assets as of Sept. 30.

Soon after, the Shanghai Stock Exchange requested Sunway to motivate this high-premium acquisition and prove how Xingkong Yewang will be able to reach the set business performance goals. Sunway delayed its response three times until yesterday.

Xingkong Yewang still has a lot going for it as the young company has made CNY39.9 million (USD6.1 million) in net profit in its first five and a half months. Its revenue was CNY369 million. But the firm relies on the founder of handset maker Smartisan Digital who has been driving sales. He entered the live-streaming field in March to help repay Smartisan's CNY600 million debt.

Editor: Emmi Laine