Loctek Ergonomic Technology announced it will not exercise the downward revision right on the conversion price of its convertible bonds, defying widespread market expectations. The conversion price stands at 32.61 yuan, while the underlying stock trades near 10 yuan, implying a premium of 216 percent and making conversion almost impossible. First-quarter net profit attributable to the parent fell 98.44 percent year on year to just 800,000 yuan, with a loss of 10.4 million yuan after excluding non-recurring items. The company attributed the decline mainly to foreign exchange losses of about 40 million yuan and increased losses of about 12 million yuan in its US offline distribution channel. However, warehousing and logistics services revenue rose to 49.29 percent of total revenue in 2025, with a gross margin of only 11.79 percent, far below the roughly 42.3 percent for its smart home business. The shift in business mix has boosted revenue without boosting profit. As of the end of 2025, the company had interest-bearing debt of 5.059 billion yuan and cash of 2.17 billion yuan, showing a pattern of high deposits alongside high debt. Its interest coverage ratio fell to 0.3 times in the first quarter of 2026. In addition, the company plans to acquire a 32 percent stake in Suzhou Yisibesi Technology for 18.656 million yuan. The target's appraisal premium rate is as high as 506.28 percent, with no performance commitment, and the deal will create tens of millions of yuan in goodwill.
Loctek Ergonomic Technology Corp Class ARefusal to lower conversion price, 98% profit drop, high debt, and risky acquisition signal financial distress.
