Controlling shareholder's holdings frozen; San'an Optoelectronics' Chairman and General Manager announce share purchase plan

Recently, the LED and compound semiconductor leader Sanan Optoelectronics (SH600703, stock price 12.56 yuan, market value 62.662 billion yuan) seems to be facing a tumultuous period.

On March 22, Sanan Optoelectronics announced that the company’s actual controller, Lin Xiucheng, was placed under detention and is being investigated by the National Supervisory Commission.

On the evening of March 29, Sanan Optoelectronics announced that it received a notification on March 28, stating that a total of more than 1.47 billion shares of the company held by its indirect controlling shareholder and controlling shareholder have been judicially frozen and pending freezing, accounting for as much as 29.47% of the company’s total share capital.

Also on the evening of March 29, Sanan Optoelectronics announced that its executives proposed a share buyback plan. The current chairman, Lin Zhiqiang (son of Lin Xiucheng), and the vice chairman and general manager, Lin Kechuang, both announced that they intend to spend up to 50 million yuan to buy back the company’s A-shares from the secondary market within the next six months.

Controlling Shareholder’s Shares Frozen

Public information shows that Lin Xiucheng, born in Anxi County, Fujian Province, holds a university degree and is a senior economist. He is not only the founder and major investor of Sanan Group and Xiamen Sanan Electronics Co., Ltd. (hereinafter referred to as Sanan Electronics) but also the capital operator who led Sanan Optoelectronics’ backdoor listing.

After managing the listed company for many years, Lin Xiucheng handed over the position of chairman to his eldest son, Lin Zhiqiang, in July 2017. Since then, Lin Xiucheng has not held any position at Sanan Optoelectronics for nearly nine years.

Shortly after the news of the actual controller’s detention was announced, on March 28, Sanan Optoelectronics received a notice from its indirect controlling shareholder, Sanan Group, stating that the shares held by Sanan Group and its controlled Sanan Electronics in the listed company had been judicially frozen and pending freezing.

Sanan Optoelectronics’ announcement indicated that the number of shares frozen this time is massive. Among them, approximately 1.2 billion shares held by Sanan Electronics were fully frozen, accounting for 100.00% of its held shares and 24.33% of the total share capital of the listed company; approximately 257 million shares held by Sanan Group were also fully frozen, also accounting for 100.00% of its held shares and 5.14% of the total share capital of the listed company. The total shares judicially frozen for the two shareholders account for 29.47% of the total share capital of the listed company.

Within just a few days from March 25 to March 27, 2026, the Chongqing First Intermediate People’s Court, Chongqing High People’s Court, Xiamen Intermediate People’s Court, and Hubei Ezhou Intermediate People’s Court issued freezing orders.

At the same time, approximately 850 million shares held by the aforementioned shareholders (accounting for 17.04% of the total share capital of the listed company) were also subject to pending freezing by the Chongqing High People’s Court, Xiamen Intermediate People’s Court, and Hubei Ezhou Intermediate People’s Court.

Sanan Optoelectronics stated in the announcement that as of the date of disclosure, Sanan Electronics and Sanan Group had not received any legal documents, notifications, or other information regarding the aforementioned judicial freezing and pending freezing. Sanan Optoelectronics emphasized that the controlling shareholder and the company maintain independence in terms of assets, business, and finance, and there are no instances of non-operating fund occupation or illegal guarantees that harm the interests of the listed company.

Chairman and General Manager Propose Share Buyback Plan

According to Sanan Optoelectronics’ previous announcement of its “2025 Annual Performance Forecast” and its supplementary announcement, the financial department estimated that the company’s net profit attributable to the shareholders of the listed company for the fiscal year 2025 is expected to show a loss of 200 million to 300 million yuan. Additionally, it is expected that the net profit attributable to the shareholders of the listed company after deducting non-recurring gains and losses will result in a loss of 750 million to 850 million yuan.

Regarding the main reasons for the expected performance loss in 2025, Sanan Optoelectronics provided an explanation in the announcement. Sanan Optoelectronics stated that during the reporting period, the proportion of the company’s high-end LED products further increased, and both the revenue scale and profitability of the integrated circuit business improved year-on-year. However, the integrated circuit businesses of filters and silicon carbide still significantly burden the company’s profits; at the same time, government subsidies received decreased year-on-year; research and development expenses increased year-on-year; the temporary price of precious metal waste sales adjusted due to differences from the price trends of the Shanghai Gold Exchange led to reduced investment income; and according to the “Enterprise Accounting Standards,” the provision for inventory write-downs increased year-on-year for inventories with net realizable values lower than cost.

On the evening of March 29, Sanan Optoelectronics announced that based on confidence in the company’s future development prospects and recognition of the company’s long-term investment value, as well as to enhance investor confidence and protect investor interests, the company’s chairman Lin Zhiqiang and vice chairman and general manager Lin Kechuang intend to implement a share buyback plan.

According to the buyback plan, Lin Zhiqiang and Lin Kechuang will increase their holdings of the listed company’s A-shares through the Shanghai Stock Exchange system via concentrated bidding within six months starting from March 31, 2026 (inclusive) until September 30, 2026. In terms of the amount of buyback, Lin Zhiqiang intends to buy back no less than 20 million yuan and no more than 40 million yuan; Lin Kechuang intends to buy back no less than 5 million yuan and no more than 10 million yuan, with both of their buyback funds coming from their own or self-raised funds.

It is noteworthy that before the disclosure of this buyback announcement, Lin Zhiqiang did not hold any shares in the company (the number of shares held is 0), while Lin Kechuang held approximately 1.75 million shares of the company, accounting for 0.04% of the company’s total share capital.

According to the announcement from Sanan Optoelectronics, both executives also promised that during the implementation of the buyback plan, they will strictly comply with relevant regulations and will not reduce their directly held shares in the company during the implementation period and the statutory period.

However, Sanan Optoelectronics also warned of risks: during the implementation of this buyback plan, there may be significant changes in policies or the securities market that could lead to the inability to implement or delays in implementation. If such risk situations arise during implementation, the buyback entities will take practical measures to respond, and the company will also timely fulfill its information disclosure obligations.

(Source: Daily Economic News)