Sanan Optoelectronics Co.,Ltd. (600703) finds itself entangled in a series of difficulties, ranging from a subsidiary's tax liability to the controlling shareholder's bankruptcy restructuring application, compounding pressure on its already strained financial performance.

On the evening of July 31, the company disclosed that its wholly-owned subsidiary, Quanzhou Sanan, conducted a self-inspection of tax matters in accordance with relevant regulations. The inspection revealed that Quanzhou Sanan is required to pay back taxes and late fees totaling approximately 86.41 million yuan. As of the announcement date, 54.74 million yuan has been paid, with the remaining amount under discussion with tax authorities. The matter does not involve administrative penalties and is not expected to disrupt normal operations. The company stated that the payment of around 86.41 million yuan will be recorded in the current period's profit and loss for 2026, with the exact impact on net profit attributable to shareholders determined by the audit of an accounting firm.

Sanan Optoelectronics Co.,Ltd. primarily engages in the research, development, production, and sale of compound semiconductor materials and devices, with main products including LED epitaxial wafers, LED application products, and integrated circuit chips. While revenue has grown annually in recent years, profitability has persistently declined. After net profit fell for three consecutive years, the company recorded a significant loss in 2025, with revenue of 17.949 billion yuan (up 11.45% year-on-year) and a net loss attributable to shareholders of 353 million yuan, compared to a profit of 253 million yuan in the prior year. Non-recurring items-adjusted net loss widened to 828 million yuan, marking the fourth consecutive year of losses, with cumulative losses exceeding 2.7 billion yuan.

On July 13, the company issued a profit warning, forecasting a net loss attributable to shareholders of between 90 million yuan and 135 million yuan for the first half of 2026, reversing from a profit in the same period last year. The adjusted net loss is expected to range from 490 million yuan to 550 million yuan, widening year-on-year. The company attributed the expected losses to ongoing optimization of product structure and increased share of high-end LED products, while profitability in integrated circuit segments, including filters and silicon carbide, remains under pressure. Additionally, foreign exchange losses increased due to exchange rate fluctuations, and interest income from bank deposits decreased, raising financial costs. Provisions for inventory impairments, based on net realizable value below cost under accounting standards, also increased year-on-year.

The additional tax payment and late fees of over 80 million yuan will further worsen the company's already challenging financial outlook for the year.

Beyond operational difficulties, Sanan Optoelectronics Co.,Ltd. faces other significant issues. On the evening of June 11, the company announced that it received notice from its controlling shareholder, Sanan Electronics, that a creditor, Lin Suzhen, had applied to the Xiamen Intermediate People's Court in Fujian Province for bankruptcy restructuring of Sanan Electronics. The company noted that as of the announcement date, Sanan Electronics had not received formal documents from the court regarding the acceptance of the bankruptcy restructuring application. Whether the application will be formally accepted and whether Sanan Electronics will enter the restructuring process remains uncertain. If the application is accepted and restructuring proceeds, it may impact the company's equity structure and control.

On the evening of July 23, the company announced that 8.7 million shares held by Sanan Electronics were placed under successive freezing orders. As of July 22, 2026, a total of 1.312 billion shares held by Sanan Electronics and Fujian Sanan Group Co., Ltd. were judicially frozen, representing 100% of their combined holdings. The company stated that the freezing was due to tax-related matters involving Sanan Electronics, following a tax enforcement decision from the Xiamen Torch High-tech Industrial Development Zone Tax Bureau.

Earlier, both the company's actual controller and general manager were placed under investigation. On March 21, the actual controller, Lin Xiucheng, was detained and placed under investigation by the National Supervisory Commission. On April 7, the company received a notice from the Chongqing Yuzhong District Supervisory Commission regarding the detention and investigation of its vice chairman and general manager, Lin Kechuang.