8 years of hidden dealings finally exposed! This LED company received warning letters and regulatory letters consecutively

Recently, Dehao Runda disclosed an important announcement—the company received the "Decision on Taking Measures to Issue a Warning Letter to Anhui Dehao Runda Electric Co., Ltd." from the Anhui Regulatory Bureau of the China Securities Regulatory Commission. This warning letter tore open the lid on a secret capital operation in 2017: at that time, the company's former controlling shareholder, Wuhu Dehao Investment Co., Ltd., signed an agreement with relevant subscribers, promising to provide shortfall compensation for the investment principal and annualized returns of their subscription to the company's non-publicly issued shares.

However, this key "private placement with guaranteed principal and returns" agreement was not disclosed in the relevant documents for the 2017 non-public issuance. This behavior blatantly violated Article 2, Paragraph 1 of the "Administrative Measures for Information Disclosure by Listed Companies" (CSRC Order No. 40), which states that "information disclosure obligors shall disclose information truthfully, accurately, completely, and in a timely manner".

Coincidentally, on the same day, the Shenzhen Stock Exchange also issued a regulatory letter to ST Dehao, requiring the company and all directors and senior management to learn profound lessons and strictly abide by relevant laws and regulations

The violations by Dehao Runda occurred in 2017, but the regulatory authorities did not issue a warning until 2025. This eight-year time span has attracted market attention. This is not simply a case of regulatory lag, but is determined by the nature of such violations.

Normal securities issuanceinformation disclosure supervision typically focuses on whether documents are complete, formats are standardized, and whether there are obvious anomalies in financial data. However, "drawer agreements" such as "principal and return guarantee" agreements are highly concealed; they are not in the company's public accounts and are not included in regular audit processes. These agreements are usually signed privately by a few senior executives or actual controllers, operating outside the company's internal control and information disclosure systems. Therefore, routine audit and review processes rarely detect such information.

The eight-year investigation period precisely reflects the "penetrative supervision" strategy adopted by Chinese securities regulators in cracking down on complex violations. This model no longer settles for the compliance of surface documents but delves into the substance of business, fund flows, and related-party relationships to uncover hidden illegal clues.

Therefore, the warning issued to Elec-Tech International eight years later was not due to regulatory lag, but rather a strong testament to the regulators' use of deep, comprehensive, and thorough enforcement to safeguard the order of the capital market.

The development history of Elec-Tech International began with its success in the small appliance sector. The company was formerly known as Zhuhai Huarun Electrical Appliances Co., Ltd., founded in Zhuhai, Guangdong in 1996 . At its inception, Elec-Tech International's main business was the manufacturing and sales of Western-style small appliances, primarily exported to European and American markets through OEM/ODM models . Leveraging its deep expertise in the small appliance field, the company went public on the Shenzhen Stock Exchange in June 2004 .

During this phase, the company successfully accumulated core assets and market reputation by leveraging its strong R&D and manufacturing capabilities, laying the foundation for subsequent strategic expansion.

Entering LED: A Bold Cross-Industry Gamble

In 2009, Techson Industrial made a strategic choice that would determine its future destiny. The company officially entered the LED industry through mergers and acquisitions, embarking on its path of strategic transformation. At that time, Wang Donglei, then Chairman, was optimistic about the "geometric growth" of the LED industry worldwide and was committed to building an empire with a complete supply chain spanning LED chips, lighting products, and sales channels.

To realize this grand vision, Techson Industrial invested 6 billion yuan in LED projects within five years. In addition to its Dalian and Wuhu bases, it successively established industrial bases in Bengbu and Yangzhou, and planned to raise billions of yuan through private placement of shares, with the majority allocated to the LEDflip-chipproject.

Capital Operations and the Battle for Control of NVC Lighting

In the blueprint of building an LED industry empire, the acquisition of NVC Lighting was a crucial step. In 2013, Dalian Sanan Optoelectronics spent 1 billion yuan to become the major shareholder of NVC Lighting. This move was regarded by the industry as a capital operation of "offense as defense" based on misjudgment.

When Dalian Sanan Optoelectronics acquired NVC Lighting, the upstream LED chip industry was already facing a situation of "overinvestment and excess production capacity". Dalian Sanan hoped to digest its accumulated excess chip capacity in the upstream sector by gaining control of NVC Lighting, the downstream channel leader, which is a typical vertical integration strategy.

However, this strategy had serious scale and market matching problems from the very beginning. The company's founder reflected afterwards that even if NVC Lighting adopted all of Dalian Sanan's chips, it would only account for 5%-6% of its chip production capacity. The huge capital investment did not solve the core problem of supply-demand mismatch, but instead exacerbated the company's financial difficulties.

Continuous huge losses and the battle to "avoid delisting"

During the expansion period of its LED business, Dalian Sanan Optoelectronics encountered multiple difficulties. In addition to vicious competition caused by industry overcapacity, the company also faced patent litigation from international LED giants, which directly affected its business expansion in important overseas markets such as the United States.

Financial data quickly reflected the strategic results: a net loss of 970 million yuan in 2017; a net loss of 581 million yuan in 2018. Two consecutive years of huge losses led to the company being labeled ST. Since then, Dehao Runda has failed to reverse the downturn and has fallen into a quagmire of continuous losses—since its IPO in 2004,its net profit after deducting non-recurring gains and losses has been negative for 13 consecutive years from 2012 to 2024.

To cope with financial difficulties and the pressure to "maintain listing status," the company carried out various capital operations, including selling shares of NVC Lighting to obtain "lifeline" dividends. However, these self-rescue measures had little effect,and ultimately failed to turn the tide.

Learning from painful lessons, after the failure of LED industry expansion, Dehao Runda shut down its LED display business and remaining domestic LED lighting business, strategically contracting to twocore main businesses: small home appliances and LED packaging.

This strategic contraction and business focus indicate that the company has shifted from aggressive expansion aimed at vertical integration of the entire supply chain to a pragmatic return to its original core businesses and specific high-growth segments. According to AAC Technologies' 2024 annual financial report, the small home appliance business and LED business accounted for 55.39% and 41.41% respectively.

These figures indicate that after the failure of its bold bet on the LED industry, AAC Technologies has quietly returned to the foundations upon which it was established, marking a reluctant transformation from an "ambitious empire builder" to a "pragmatic survivor."

小家电业务：依然以OEM/ODM模式出口欧美为主，但该行业在2024年呈现“量增、价跌、额缩”的特点。为此，德豪润达放弃部分低毛利的厨房家电产品，将资源集中投向以智能咖啡机为代表的高附加值产品。

LED Business: Benefiting from the vigorous development of the domestic new energy vehicle industry, the penetration rate of AAC Technologies' LED automotive light packaging products has increased significantly, promising dual growth in revenue and profit in this sector .

This strategic adjustment indicates that the company has learned from past mistakes of blind expansion and is now focusing on more promising niche markets.

The core of this violation lies in the undisclosed “principal and return guarantee” agreement, which distorts the core principle of “risk sharing and benefit sharing” in the capital market. It transfers market risks, which should be borne by investors themselves, to specific related parties through private agreements, effectively constituting a form of hidden benefit transfer and improper guarantee.

The existence of this agreement means that the private placement was not entirely based on market principles but was dominated by hidden interest arrangements. The presence of such “drawer agreements” seriously undermines the order of the capital market.

First, it deceives public investors. Since the agreement was not disclosed, the market could not obtain complete and truthful information, thereby preventing an accurate assessment of the true value of the company’s stock and the issuance risks. This infringes upon the right to know and the right to fair trading of all investors.

Secondly, it masks potential financial risks and governance deficiencies behind the company. Once the controlling shareholder fails to fulfill the obligation to make up the difference, this hidden liability may transform into an explicit risk for the company at some point in the future, causing unpredictable losses to the listed company and its shareholders.

The thirty-year rise and fall of Dehao Runda serves as a cautionary inscription for all listed companies.

1. Don't play "hide and seek" with regulators:Any attempt to manipulate the capital market by concealing "drawer agreements" or other information cannot escape the penetrating investigations of regulatory authorities. Integrity is the cornerstone of the capital market, and any form of violation will face severe legal and regulatory accountability.

II. Strategy is not "pie in the sky": A grand strategic vision, if lacking a deep understanding of industry fundamentals, market supply and demand dynamics, and internal capabilities, will only push the company into an abyss through blind massive capital investment.