San'an Optoelectronics' "storm" continues: the actual controller is placed under investigation, and major shareholder holdings are frozen in multiple regions

Ask AI · Why did an investigation into Lin Xiucheng quickly trigger a freeze of shares?

Produced by｜Damo Finance

On March 29, Sanan Optoelectronics (600703.SH) issued an announcement stating that all the shares held by its indirectly controlling shareholder Sanan Group and its controlling shareholder Sanan Electronics were completely judicially frozen, corresponding to 29.47% of the company’s total issued share capital. In addition, shares subject to follow-on freezing covering nearly 58% of the total shares held by the above major shareholders were also frozen in anticipation, corresponding to 17.04% of the total issued share capital.

This sudden storm was only 8 days after the company’s actual controller, “LED king” Lin Xiucheng, was taken into custody by China’s National Supervisory Commission for an investigation.

On March 21, Sanan Optoelectronics received a notice from the group stating that the group, recently, received a notice issued by the National Supervisory Commission regarding Lin Xiucheng, the company’s actual controller, being taken into custody and placed under a filing for investigation. After that, the incident prompted creditors to take judicial preservation measures. The announcement shows that the applicants for this share freeze include multi-level courts in places such as Chongqing, Xiamen, and Ezhou.

The company specifically mentioned that since July 2017, Lin Xiucheng has not held any position at the company. At present, the company’s production and operations management is normal, and the above matters will not have a major impact on the company’s production and operations.

As the key figure behind the Sanan group, Lin Xiucheng started out with scrap steel trading. In 2000, he expanded into the LED space across industries. In 2008, he achieved a backdoor listing, turning Sanan Optoelectronics into a global leader in LED chips, with a peak market value exceeding RMB 200 billion. In 2017, Lin Xiucheng stepped down as chairman of the listed company, with his eldest son Lin Zhiqiang taking over, while he moved back into the shadows to exercise control over Sanan Group.

Behind this share freeze is Sanan Optoelectronics’ operational and financial predicament. On the performance front, the company has fallen into a cycle of “increasing revenue but not increasing profit.” From 2022 to 2024, its non-recurring profit/loss net profit has been loss-making for three consecutive years, with total losses exceeding RMB 1.9 billion. The company’s 2025 performance forecast shows that full-year net profit attributable to shareholders is expected to be a loss of RMB 200–300 million, with non-recurring losses of RMB 750–850 million, signaling four straight years of losses.

On March 30, Sanan Optoelectronics and Sanan Group respectively held press conferences to respond to the impact of the recent case in which their actual controller, Lin Xiucheng, was taken into custody and placed under filing for investigation, as well as the event that the controlling shareholder’s shares of Sanan Optoelectronics were frozen, and their next steps.

At the remarks at the press conference, Lin Zhidong, a director of Sanan Group, said, “Regarding the difficulties and impacts that the current situation has brought to project partners in various places and to creditors, Sanan Group sincerely apologizes!”

The company’s general manager Lin Kichuang said that, currently, everything regarding Sanan Optoelectronics’ production, operations, and management is normal, and all businesses are steadily advancing according to the established plans. Meanwhile, Sanan Group has set up a dedicated team to address the matter of the frozen shares. The government has also stepped in to coordinate actively and push for resolving the debt problem as soon as possible. At the group level, it is also actively seeking strategic cooperation partners.

Lin Kichuang further explained that since the incident occurred, the company has conducted extensive communications at the operational level. Customers and suppliers have both said they support the company. Banks have also expressed concern and support, and local government agencies have clearly stated that they will ensure the company’s normal, stable operations.

Faced with the current difficulties and crisis, Sanan Group has taken multiple response measures: it has established a “Risk Disposal Working Group,” formulated the “Sanan Group Risk Disposal Plan,” and has its key leaders personally take charge—strengthening overall coordination, with each party responsible for its own duties and implementing clear division of work. It has also proactively reported to relevant national ministries and commissions, governments at all levels, and financial regulatory authorities to reflect the situation and seek support. At present, the government and relevant authorities have stepped in to coordinate actively and to push for resolving the debt problem as soon as possible. It is also actively seeking strategic cooperation partners, and under the premise that risks are controllable and business is commercially sustainable, it will introduce funding to ensure the normal operations of Sanan Group.