The shares of the controlling shareholder are fully frozen, and senior executives of Sanan Optoelectronics plan to increase their holdings by up to 50 million shares of the company.

On the evening of March 29, Xiamen San’an Electronic Co., Ltd. (600703.SH), a leading company in China’s LED chip industry, announced that its controlling shareholder, Xiamen San’an Electronic Co., Ltd. (hereinafter “San’an Electronic”), as well as its indirectly controlling shareholder, Fujian San’an Group Co., Ltd. (hereinafter “San’an Group”), had their shares in the company judicially frozen and were also subject to applications for reserve freezes. One week earlier, the company had issued an announcement stating that its actual controller, Lin Xiucheng, was placed under detention for investigation.

This announcement states that on March 28, the company received a notice from San’an Group that the company shares held by San’an Group and San’an Electronic had been judicially frozen and subjected to reserve freezes. The applications for the freezing of the shares held by San’an Electronic were filed by the Chongqing First Intermediate People’s Court and the Chongqing Higher People’s Court; the applicants for the freezing of shares held by San’an Group were the Xiamen Intermediate People’s Court and the Ezhou Intermediate People’s Court in Hubei Province.

At present, San’an Electronic has cumulatively frozen 1.214 billion shares, accounting for 100% of the shares it holds, and 24.33% of the company’s total share capital; San’an Group has cumulatively frozen 257 million shares, accounting for 100% of the shares it holds, and 5.14% of the company’s total share capital. Together, the two shareholders have cumulatively frozen 1.47 billion shares, accounting for 29.47% of the company’s total share capital.

The controlling shareholder also confirmed that San’an Electronic and San’an Group have not yet received legal documents, notices, or other information regarding the above-mentioned judicial freeze and reserve freeze. The controlling shareholder and the company remain independent from each other in terms of assets, business, finance, and other aspects, and there are no situations that infringe upon the interests of the listed company, such as non-operating capital occupation or illegal guarantees.

At present, the company’s production and operations and management are operating normally, and the above matters will not have an adverse impact on the company’s production and operations. San’an Group has formed a dedicated team to resolve the matters related to the frozen shares.

On the same day, the company also issued another announcement stating that its Chairman, Lin Zhiqiang, and its Vice Chairman and General Manager, Lin Kechuang, intend, within a 6-month period beginning March 31, 2026 (including that date), to use their own funds, with a total investment of up to RMB 50 million at most, to increase their holdings of the company’s shares through the Shanghai Stock Exchange system using centralized competitive bidding.

On March 22, the company announced that San’an Group recently received a notice issued by the National Supervisory Commission regarding Lin Xiucheng, the company’s actual controller, being placed under detention and put on file for investigation.

Lin Xiucheng is the founder of San’an Group. He established San’an Optoelectronics in 2000, headquartered in Xiamen City, Fujian Province. In 2008, it was listed through a backdoor listing. It is a company engaged in R&D, manufacturing, and services for compound semiconductors. Its main businesses include LED, microwave RF, power electronics, and optical technologies. Its products are applied in fields such as lighting, infrared sensing, new energy vehicles, charging piles, and photovoltaic inverters.

Lin Xiucheng has long served as Chairman of San’an Group and San’an Optoelectronics and other roles. In 2017, Lin Xiucheng handed over the reins of San’an Optoelectronics to his eldest son, Lin Zhiqiang. In 2010, Lin Xiucheng was also listed among the Forbes billionaires list as Xiamen’s richest person.

San’an Optoelectronics’ 2021 net profit attributable to shareholders previously exceeded RMB 1.3 billion, but its performance has faced pressure recently. In 2025, it is expected that the net loss attributable to shareholders of listed companies will be between RMB 200 million and RMB 300 million, and that the net profit after excluding non-recurring items will be a loss of between RMB 750 million and RMB 850 million. This will be the first year-on-year loss since the company listed through a backdoor listing in 2008. While revenue increased in 2024, net profit fell by 31.02%.

Possibly due to the influence from the company’s controlling shareholder, in the past week the market value of San’an Optoelectronics has evaporated by nearly RMB 20 billion. As of last Friday’s close, the stock price was RMB 12.56 per share, down 2.71%.

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