Chinese smartphone supplier Coolpad looks to rebound from first-half loss, backed by LeEco
With a new leader at the helm and its business restructuring completed, Chinese smartphone supplier Coolpad Group is gearing up for better days ahead after reporting an anticipated net loss in the first half of this year.
Jia Yueting, the founder and chief executive of Leshi Internet and Information Technology (LeEco), was named the new chairman at Coolpad earlier this month after its founder, Guo Deying, resigned due to an undisclosed health condition.
“The group expects the smartphone market [in mainland China] will be better in the second half of 2016 and it will achieve higher smartphone shipment volumes,” Jia said in a filing with the Hong Kong stock exchange on Tuesday.
Shenzhen-based Coolpad posted an interim net loss of HK$2.05 billion, compared with a HK$2.84 billion net profit in the same period last year, due to lacklustre 4G smartphone sales and the company’s disposal of certain interests in an e-commerce joint venture.
Revenue fell 40 per cent to HK$5.28 billion, down from HK$8.78 billion a year earlier. The company attributed the decline to restructuring efforts during the period and intense competition on the mainland, the world’s largest smartphone market.
Jia said Coolpad expected smartphone sales to improve on the back of more aggressive smartphone subsidies the mainland’s telecommunications carriers – China Mobile, China Unicom and China Telecom – will provide in the second half of this year.
The group’s distribution channel was also restructured to include a broad network of retailers across the country and major online stores. More importantly, users of Coolpad smartphones will now have access to LeEco’s streaming video and other online content, according to Jia.
Shenzhen-traded LeEco acquired in April an additional 11 per cent stake in Coolpad for HK$1.05 billion. That deal made it Coolpad’s single largest shareholder, with a 28.9 per cent shareholding.
Based in Beijing, LeEco is building a range of businesses that include an online content platform, mobile applications and various smart devices.
Hank Liu Hong, a co-founder of LeEco, recently predicted Coolpad and LeEco would ship more than 50 million smartphones this year under a dual-brand strategy that also targets international markets.
Research firm IDC said in a report that LeEco was among a group of major Chinese smartphone brands now increasing their presence in India.
Coolpad’s share price rose 2.76 per cent to close at HK$1.49 on Tuesday.