A Company Listed on China’s New Third Board Net Profit Down 257% On the Crypto Bear Market
A company listed on the China’s National Equities Exchange and Quotations, an over-the-counter market known as the New Third Board, has suffered a significant decline in its cryptocurrency-related revenue due to the ongoing cryptocurrency bear market, according to qqtanzhang.
Guangzhou Ehangcom Vianet Communications, a communication equipment manufacture, saw its revenue grow 140% from bitcoin mining and ethereum investment in 2017. But since cryptocurrencies have started to tumble down from January 2018, the company’s net profit plummeted 257% , reporting a loss of 2.39 million yuan in the first half of this year sliding down from a profit of 1.51 million yuan in the same period last year, according to its semi-annual report.
It is reported that Ehangcom’s operating income continued to fall in the past three years, from 32.57 million yuan in 2015 to 20.47 million yuan in 2017. However, when the Guangzhou-based company jumped into cryptocurrency in 2016, the net profit turned positive the following year. And its revenue of 3.7 million yuan in the first half of 2017 was contributed by the two investments in digital currency business.
One of the Ehangcom’s affiliates poured 5 million yuan into Ethers, the token for the Ethereum blockchain in July, 2016 with the approval of the board of directors. It successively sold out the tokens from March to November 2017, earning roughly 6.98 million yuan.In addition, the company also earned 1.79 million yuan from bitcoin mining in the same year. These two investments brought them over 8 million yuan in total, an impressive profits for a company listed on the New Third Board.
However, the massive slump in the cryptocurrency market and the escalated crackdown on crypto trading and ICO in China since September 2017 make the excessive profits from crypto space impossible. The mining project Ehangcom has invested known as Bitbank has suspended because its 3-day revenue failed to offset the costs of electricity and maintenance.
To date, both Shenzhen and Shanghai stock exchanges in the country have questioned many listed companies which are involved in blockchain and cryptocurrency business, requiring them to clarify the purpose and the effects of their crypto journey. Using blockchain and cryptocurreny to drive up the public company’s stock price and its revenue becomes an uphill task in China now.