(Yicai Global) July 23 -- Han’s Laser Technology Industry Group has defended the lower-than-expected CNY1 billion (USD147 million) price tag on its European research center project, which is being sold to its controlling shareholder after nine years of construction to avoid further losses. 

The project's net assets are CNY121 million (USD17.3 million) lower than the total investment, but since the building work is incomplete, the price is fair, the Shenzhen-based lasers manufacturer said in response to an inquiry from the Shenzhen Stock Exchange yesterday.

It will sell wholly owned subsidiary Han's Transmission Technology to Han's Holdings Group, its largest shareholder, and receive an investment income of about CNY1.4 million (USD200,000), the seller said in a statement on July 16. Shares of Han's Laser [SHE:002008] fell 3.2 percent on July 17.

Founded in April last year, Han's Transmission oversees the construction of the R&D center in Switzerland, the authenticity of which was questioned by Chinese media outlets, including Yicai Global, last year.

The stock exchange had asked to know the total investment in the project and the reasons behind the sale. 

Kicked off in 2011, the project had consumed a total of CHF143.7 million (USD154.6 million) by the end of May with audited net assets of CNY1 billion, the firm disclosed. The CNY121 million impairment loss should not affect Han's Laser's operating performance this year nor after that, it added. 

Han’s Laser also said that after such a long time the project could no longer serve its original purpose and the divestment was aimed at avoiding further depreciation costs while the recovered funds would improve its capital use.

The project has been sitting idle for many years due to changes in the parent company's strategy and business environment, Han's Laser said yesterday. The project’s outlook had also deteriorated due to the coronavirus pandemic, it added. Even after the center is finished, it would cause more than CNY30 million in annual depreciation costs to the new parent.

Today, Han’s Laser’s stock price fell 2 percent to close at CNY41.86 (USD5.98), after gaining 9.2 percent yesterday.

Editor: Emmi Laine