China

Leshi Said to Lay Off 10% of Employees

Summary:

 

  • Leshi Internet Information & Technology Corp. (300104.SZ) will reportedly lay off 10% of its employees, according to Sohu

 

  • The company currently has more than 8,000 employees.

Why It Matters:

  • Leshi has been aggressively expanding its business lines, and the company’s cash flow cannot keep pace with the expansion. Consequently, liquidity issues have recently emerged at the company. The company has reportedly delayed payments to its suppliers, and it has attracted investors’ concerns.
  • Although the company received a US$ 600 million rescue investment from friends of Jia Tingyue’s, the chairman of Leshi, the amount is far less than sufficient. Leshi is cutting costs as a result.
  • From its financial report, Leshi recorded RMB 16.7 billion in revenue for the first nine months of the year, but its cash flow from operations was merely RMB 543 million. The company has RMB 4.38 in accounts payable, and its inventory stands at RMB 1.84 billion. In terms of its liquidity, Leshi is in a dangerous position.