Is Konka's 7 announcements a precursor to a big leap?

According to a review by the China State Grid Corporation reporter, the seven announcements of Konka Lianfa mainly focused on two things: First, it planned to publicly transfer 22.935% of the equity held by Yingrui Optoelectronics Co., Ltd. on the state-owned equity exchange; Apply for an entrusted loan with an amount not exceeding RMB 10 billion to OCT Group.

Konka Group stated that the transfer of shares in the company's listed companies to optimize the asset allocation and recovery of funds to enhance the liquidity of assets and improve the company's overall efficiency, which is consistent with the company's development strategy to develop its main business.

It is understood that Yingrui Optoelectronics (Shanghai) Co., Ltd. is an equity participation company of Konka Group. Its main business is the design, R&D and manufacturing of LED and related industrial chain. Konka Group Co., Ltd. holds 22.935% of its shares, which is the largest shareholder. As of December 31, 2016, the book value of the 22.935% equity of Yingrui Optoelectronics was 58.04 million yuan (audited). After the listing transfer is completed, Konka will no longer hold the equity of Yingrui Optoelectronics.

According to an announcement issued by Konka Group, the "Proposal on the Transfer of Stock Rights of the Listed Companies of Ruiru Optoelectronics Co., Ltd." was passed at the 30th meeting of the 8th Board of Directors. In addition, in order to meet the company’s existing business development needs and reduce financing costs, the board of directors also reviewed and approved the “Proposal on Applying for Entrusted Loan to OCT Group”, and agreed that the company’s application to OCT Group should not exceed 10 billion yuan. The entrusted loan for Renminbi is between 2017 and 2025. When it is specifically used, the specific loan amount will be withdrawn according to business needs at different times and in different time periods, and an entrusted loan contract can be signed with banks and OCT Group within a sum of RMB 10 billion.

Konka Group believes that the application of entrusted loan quotas to Overseas Chinese Town Group Corporation will help meet the capital needs of the company's existing business development and realize the sustainable development of the company's businesses. The entrusted loan interest rate is not higher than the loan interest rate for the corresponding period of the bank corresponding to the withdrawal period agreed upon by the company at the time of withdrawal, which is beneficial for the company to reduce the capital cost.

In fact, the OCT Group and its subordinate controlling subsidiaries currently hold a combined 29.99% stake in Konka Group, which is the largest shareholder and actual controller. This transaction constitutes a connected transaction. Konka Group will hold the 2nd Extraordinary Shareholders' General Meeting on June 9th to review the "Proposal on Applying for Entrusted Loan to OCT Group Corporation".

It is understood that when Zhou Bin, the president of Konka Group, interviewed the media, he repeatedly mentioned that "Konka is not just a color TV company in the future." According to Zhou Bin, this year, Konka hopes to complete the restructuring of the big color TV business, and strive for implementation at the end of this year and early next year. In addition to the color TV business, Konka is also making drastic changes in organizational framework, manufacturing efficiency, and marketing channels.

In Zhou Bin’s plan, the future Konka will be a combination of “hardware + software”, “user + terminal”, and “investment control + finance”, forming an ecosystem around the home Internet. It is understood that Zhou Bin competed for appointment in March this year, the term of office is three years, he hopes to allow Konka to enter the rapid development of the rising channel.

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