LeEco’s chairman reassures investors ‘company still in good shape’
Jia Yueting says raising cash still a challenge for Chinese technology giant
Jia Yueting, the billionaire chairman of Chinese technology giant LeEco, has reassured investors that the company is still in good shape, despite its difficulties in raising cash.
The company is ready and capable of making a profit, but raising funds to support the business is still a challenge, Jia told investors during a meeting in Beijing on Wednesday. Jia said LeEco had overlooked the importance of fundraising in the past, resulting in a weak capital structure.
But he said the company’s operating performance remains good, and he expects full-year revenue of the business units under LeEco’s ecosystem to surpass 50 billion yuan this year.
Investors should pay more attention to the company’s operating cash flow next year, he said.
Jia said the profit under LeEco’s listed units will see rapid growth in the next two years boosted partly by the smart television business.
“Even if we do not have new funding, our financial difficulties can be improved three to four months after the latest strategic adjustment,” Jia told investors.
LeEco’s non-listed business units, including automobiles, sports and among others, are able to attract attention from strategic and financial investors, he said.
“But we care more about these business unit’s own ability to generate cash flows,” Jia said. This is the second time this week that Jia has said the firm is facing difficulties in raising cash.
In an internal letter to the staff on Sunday, he said rapid expansion overseas and in many product directions had left the high-flying company cash-strapped.
Founded in 2004 as a video streaming platform, LeEco has expanded its businesses into smartphones, smart televisions and electric cars. The company has also outlined massive expansion plans in global markets.
It acquired US television manufacturer Vizio in a US$2 billion deal in August, and launched a slew of hardware products including televisions and smartphones last month as part of its aggressive push into those markets.
However, Jia told investors that the firm is trying to create core and new values by developing various businesses.
LeEco started selling its smartphones in the Indian and Russia markets a couple of months ago, and Jia said entering those markets will be difficult but the potential is huge.
Jia’s remarks confessing the company’s cash crunch and rumours saying that LeEco does not have enough funds to pay its suppliers has caused a tumble in the share prices of its listed entities.
Shenzhen-listed Leshi Internet Information & Technology fell 2.23 per cent to 38.12 yuan. LeEco’s Hong Kong-listed subsidiary Coolpad Group dropped 2.80 per cent to HK$1.04.
The article has been amended to say the estimated revenue of LeEco’s business units will surpass 50 billion yuan, not 50 million yuan, this year.