Memory Maker Bolsters Offshore Funding Backing
Shenzhen Longsys Electronics Co., a manufacturer of memory storage products, has announced new parent-company guarantees to support financing for its international operations. The company is backing a 100 million yuan loan for its Hong Kong subsidiary and has established a $9 million standby letter of credit guarantee for a semiconductor unit in Brazil.
Guarantee Levels and Market Reaction
Following these arrangements, Longsys reports its total approved external guarantee quota stands at 11 billion yuan, which represents approximately 170% of its latest audited net assets. The outstanding guarantee balance is 5.81 billion yuan, or nearly 90% of net assets. The company emphasized all guarantees are for consolidated subsidiaries and remain within pre-authorized limits, requiring no additional shareholder approval.
The company's Class A shares closed Friday's session at 288 yuan, marking a decline of 1.6% for the day. This underperformance occurred even as the broader semiconductor sector gained over 1%. The stock is set to resume trading on Monday.
Investor Scrutiny on Funding and Macro Risks
This disclosure arrives as markets closely examine liquidity demands and offshore exposure among Chinese technology firms. While such guarantees are a common corporate funding mechanism, analysts note the elevated level relative to net assets introduces risk. Should financing costs rise, currency exchange rates fluctuate, or demand for memory products soften, the company's financial flexibility could face pressure.
Investor attention now pivots to broader economic indicators. China is scheduled to release January consumer and producer price index figures on Wednesday, followed by credit data, including new yuan loans and total social financing, on Friday. These metrics could significantly influence sentiment toward the technology and semiconductor sectors. Longsys is expected to provide further clarity on its financial position when it reports earnings in late April.