The company intends to sell shares of the company to profitability in the recovery of NVC losses

Since May 25th Elec-Tech received the Shenzhen Stock Exchange in 2015 annual report of the inquiry letter, the company disclosed on June 1st evening announcement reply. Inquiry letter, the Shenzhen Stock Exchange raised 18 questions about the company's operations, financial treatment. The focus of the company's gross margin decline, including a huge asset loss provision and further affect the NVC event. On these issues, the company one by one reply.

LED price cut gross margin

The first concern is the changes of Shenzhen Elec-Tech company in 2015 LED industry gross margin, gross margin was 17.23%, down 8.72%, the Shenzhen stock exchange requires companies to disclose the reasons of a substantial decline in gross margin and rationality.

Elec-Tech pointed out that 2014 to 2015, LED chip company gross margin fell from 30.34% to 6.80%. The sharp decline in the original because: in 2015 by the global economic fluctuations and the impact of LED market competition, LED industry chain prices generally fell 30% to. Price war and product homogeneity fierce competition, a large number of small and medium enterprises to withdraw from the LED, the enterprises have to sell off inventory, the impact on the market, forming a vicious cycle. In order to maintain market share and maintain the stability of the main customers and dealers, the company has to follow the market to reduce the price of the products, which leads to the decline of the gross profit margin. At the same time, the price decline is far greater than the decrease in the cost of making the industry gross margin showed varying degrees of decline, Sanan optoelectronics, HC semitek, changelight decline.

But on the other hand, the recent LED industry has emerged signs of warmer. After the March LED packaging manufacturers prices, Taiwan LED chip leading EPISTAR part series LED chip prices will rise. Analysts believe that the price to rise from packaging manufacturers chip manufacturers, can see the overall supply and demand of LED industry is gradually improved, LED prices will not be a few years ago cliff downwards, the industry boom continued to improve. With the boom in the industry, the company's operating environment is expected to improve.

In view of the above situation, the company is also actively adopt various strategies to deal with: the first is the use of capital financing advantages, planning to obtain non-public offering of shares of equity capital; in addition, through improving technology, development of new products mainly to flip LED; stable customers, improve quality, broaden the product line in small appliances, and open and stable the Russian market, the India market and other emerging non-traditional markets; finally, through revitalize the stock of assets, accelerate the recovery of funds sold inefficient assets. Wang believes that the company expects to improve operating conditions in 2~3.

Intends to sell the loss of shares of the company

Another focus of concern is the Shenzhen Stock Exchange in 2015, impairment losses on assets of 480 million yuan, an increase of 1086%, mainly is the provision of Weimei spectacular investment impairment and provision for inventories increased. The Shenzhen stock exchange requires supplemental disclosure of company provided spectacular Weimei meter investment impairment and rationality.

Elec-Tech said, while Weimei business model is in Sinopec gas station to install LED display as the advertisement carrier, through advertising and advertising fees charged to customers to obtain benefits, the key of this business model is the scale effect, covering enough high value of advertising audience to attract advertisers, while another key factor is the development of advertising owners the.

The company is mainly relying on the Air Media signed a strategic cooperation agreement with Sinopec and advertisers resource. The business model after 3 years of operation, the parties did not reach the expectations of shareholders, the shareholders concerned about the sustained and rapid development of business, increase LED display landing, Sinopec gas station monopoly scale did not achieve good. One is the implementation of the cooperation agreement is difficult; on the other hand is the parent company of the Air Media has been spectacular Weimei by Nasdaq delisting, and announced the transition to the railway and aviation WIFI operators, and began to sell part of the advertising media assets, resulting in Limited advertising resources Weimei roads can continuously obtained; in addition, mobile Internet advertising investment more accurate and flexible, to form a very large impact on the traditional hard advertising, essentially make traditional advertisers the monopoly of the original resources but become a burden (take lease fee).

The spectacular Weimei in recent 3 years are not up to the expected performance and development prospects are uncertain, the original can not be implemented through the way of capital operation in the stock market listing plan, the company holds equity value is expected to produce great pressure. In view of the above reasons, the company believes that the company is facing greater uncertainty about the business, and the price of the transfer of equity is facing greater downward pressure, should be prepared for impairment. At present, the company is seeking the sale of the equity investment assets.

NVC no provision for impairment

As the largest shareholder of NVC, Elec-Tech had occurred in 2014, former NVC CEO Wu Changjiang have been implicated in cases of misappropriation of funds. As of the end of 2015, Wu Changjiang due to illegal guarantee makes NVC 550 million yuan bank huakou, so NVC special provision for losses of about 300 million yuan, Elec-Tech has been in the 2014 annual report on the above matters identified investment losses. The Shenzhen stock exchange requires companies to disclose the progress of the supplementary events, and supplemental disclosure of NVC company long-term equity investment has been impaired.

Elec-Tech said, approved by the Huizhou people's Procuratorate, Wu Changjiang