Aug. 2 (NBD) –Shares of Han's Laser Technology Industry Group Co Ltd (Han's Laser, 002008.SZ) tumbled by 8.81 percent on Friday after it was asked by China's securities regulator to rectify issues such as insufficient information disclosure concerning the listed company's R&D center project in Europe. 

National Business Daily (NBD) learned that Han's Laser has changed the budget for building the center to 1.05 billion yuan (152 million U.S. dollars) from the initial 50 million yuan. Besides, it's been 8 years since the company set out the plan in 2011.

Photo/Shetuwang

On Thursday, when asked about the Europe R&D Center project on the phone, Gao Yunfeng, chairman of the laser solutions provider, made improper comments to a reporter with CCTV (China Central Television). Gao questioned the qualifications of the reporter, "Who are you? What is your position to question me? This is our own funds. I have every right to make business decisions."

The Shenzhen Stock Exchange criticized Gao's remarks to CCTV on Thursday evening. Shortly after, the Chinese leading laser equipment maker apologized for the inappropriate comments.

In 2011, Han's Laser bought Europäischer Hof, a hotel located in Engelberg Switzerland with a total area of 8,429 square meters, planning to convert it into the European R&D center, according to statements released by Han's Laser.

In separate inquiry letters on July 17 and 22, 2019, the Shenzhen Stock Exchange questioned the progress of the project, requesting the company to explain the rationality of the sharp rise of the investment and the fact that only 46 percent of the project was finished as of the end of 2018.

In response, Han's Laser said that the construction period was extended due to the long local construction approval process and adjustments of renovation plan. The construction phase began in 2016 and the project is scheduled to be completed by 2020.

The investment increase was caused by the purchase of a land near the hotel and the changes of design plan, the company added.

An insider in the real estate industry questioned the high cost of the project. Deducting the 91 million yuan as the expense for the purchase of land and original buildings, the cost of construction is estimated to reach 960 million yuan, equivalent to 36,000 yuan per square meter, which is excessively high for a R&D center situated in a small town with the population of around 4,000.

Moreover, some still doubt about the goal of the project in Europe, "Is it a R&D center or a hotel?"

NBD noticed that a Swiss media revealed in 2015 that Gao would rebuild the hotel Europäischer Hof into a luxury one with an investment of 100 million Swiss francs (101 million U.S. dollars).

According to media reports, a recent on-site visit found that the center's actual registered address is just a 10-meter-square room but the nearby renovation project of Europäischer Hof, part of center's construction plan, was well underway. 

In latest announcement, Han's Laser responded that it's demanded by the Swiss local government to maintain hotel functions as Europäischer Hof has a long history and the center will provide hotel services for business needs such as holding meetings, trainings and conferences.

Email: gaohan@nbd.com.cn