Honglizhihui, formerly a Chinese LED package manufacturer known as Hongliopto, forecasted its profits could plummet as much as 40% for 2016 compared to the same period last year.

The company’s projected profits range between RMB 91.31 million to RMB 129.36 million (US $13.14 million to US $18.61 million), which equals a net loss of 15% to 40% compared to the same period last year.

Honglitronic was rebranded as Honglizhihui earlier in July 2016. (Honglizhihui/LEDinside)

Smalite Optoelectronics, a subsidiary of Honglizhihui, reportedly did not reach its revenue targets for fiscal year of 2016. Meanwhile, as the parent company restructures its LED package business, Smalite Optoelectronics located in Southern Chinese province Guangdong capital Shenzhen will be move southeast to Jiangxi Honglizhihui complex. Honglizhihui estimates it will list about RMB 100 million as goodwill impairment.

Jiangxi Hongliopto has scaled up investments during second half of 2016 to test equipment, train employees and the time it takes to escalate production capacity requires longer time periods, resulting in greater expenditure.

Honglizhihui participated in Cinda New Wealth Asset Management and Shenzhen Mesada merger and asset restructure management plan, an investment plan that expired on Nov. 27, 2016. Honglizhihui was unable to obtain its Return of Investments (ROI), and had to write off the investment as an impairment of assets. The LED company’s increased investments in 2016 has amounted to higher agency fees.