Far East Cable publicly refuted the US Department of Commerce, saying it did not accept its accusations and its response "will not be affected"

China Times (www.chinatimes.net.cn) reporters Tao Wei and Ge Aifeng reported from Nanjing

After being accused again by the U.S. Department of Commerce on August 8, Far East Cable, a wholly-owned subsidiary of Far East Co., Ltd. (600869.SH), published on its official website on August 11, "Regarding the Public Press Release and the Attached Letter of Charge to the U.S. Department of Commerce" Statement", stating that "the content stated in the press release of the U.S. Department of Commerce and its related accusations violate the principles and spirit of fairness and justice, etc., and Far East Cable will not accept it!"

This accusation by the U.S. Department of Commerce is a resumption of old matters, pointing to ZTE's previous exports to Iran of products mixed with software and hardware of U.S. technology companies from 2012 to 2016. The Far East Cable is considered by the United States to be between ZTE and Iran. between third parties. The U.S. Department of Commerce made accusations against Far East Cable in 2019, and then dropped the accusation in June 2021 after Far East Cable communicated. However, on August 8, the U.S. Department of Commerce raised the relevant accusations again, and Far East Cable chose to publicly refute it.

"According to the information I have learned so far, the possible sanctions from the United States are mainly fines. But our company itself has no business or assets in the United States, and our overseas business is generally only in the order of tens of millions. In addition, our supply chain system is relatively stable and our research and development capabilities are strong, so it should not be greatly affected." A staff member of the Securities Affairs Department of Far East Co., Ltd. said in an interview with a reporter from China Times.

The U.S. Department of Commerce’s accusations were publicly refuted by Far East Cable

On August 8, the U.S. Department of Commerce issued a charge on its official website, claiming that Far East Cable, China’s largest wire and cable manufacturer, violated U.S. export controls on goods shipped to Iran. Far East Cable is a wholly-owned subsidiary of the listed company Far East Cable. capital subsidiary. According to a press release posted on the U.S. Department of Commerce website, the U.S. Bureau of Industry and Security (BIS) believes that Far East Cable signed contracts with ZTE and multiple Iranian telecommunications companies to ship U.S.-produced equipment to Iran between September 2014 and Violated U.S. export controls 18 times during January 2016.

According to its charges, Far East Cable signed an agreement worth approximately $164 million in late 2013 to purchase telecommunications equipment from ZTE. Afterwards, Far East Cable signed a contract with the Iranian company, promising to provide them with ZTE hardware for a total of $189.5 million. The United States accuses Far East Cable of violating U.S. export control regulations on goods shipped to Iran by exporting U.S.-led technology to Iran on 18 separate occasions between September 24, 2014, and January 29, 2016. EAR).

The reporter noticed that the U.S. Department of Commerce had previously punished ZTE based on relevant matters. ZTE was fined hugely and only ended its compliance observation period in March this year. In 2019, the U.S. Department of Commerce also charged Far East Cable on this matter, but the charge was dropped in June 2021 after communication with Far East Cable. Now, the U.S. Department of Commerce has brought up the old matter again.

"The content stated in the press release of the U.S. Department of Commerce and its related accusations violate the principles and spirit of fairness and justice, etc., and Far East Cable will not accept it! Since the first accusation from the U.S. Department of Commerce in September 2019, Far East Cable has maintained a long-term relationship with the U.S. Department of Commerce. After active communication, the U.S. Department of Commerce also dropped the charges in June 2021; however, more than a year after the U.S. Department of Commerce withdrew the charges, Far East Cable has now been charged again by the U.S. Department of Commerce. Previously, Far East Cable invested huge resources to continuously improve itself Compliance system and top-down compliance awareness, but the U.S. Department of Commerce’s failure to clarify the facts and inconsistent attitudes and actions make Far East Cable incomprehensible and unacceptable!” On August 11, Far East Cable stated on its official website Released the "Statement on the Disclosure of the Press Release and the Attached Letter of Charge to the U.S. Department of Commerce" to provide a public response to the U.S. Department of Commerce. In addition, Far East Cable also stated that after Far East Cable’s comprehensive assessment of the incident, the incident will not have a major adverse impact on Far East Cable.

Limited impact on Far East Holdings

According to a press release from the U.S. Department of Commerce, Far East Cable, as a wire and cable supplier, may also be subject to further sanctions, and BIS has given Far East Cable 30 days to respond. "If it fails to do so, a judge can accept the allegations as fact without a hearing. The agency will then be able to impose maximum fines against the company for flouting export control regulations," the release said.

However, the above-mentioned staff of the Far East Securities Affairs Department told the China Times reporter that they did not think this would have a big impact on the company. "According to the information I have learned so far, the possible sanctions from the United States are mainly fines. But our company itself has no business in the United States and no assets in the United States. Looking at our overall overseas business, the overall overseas business It’s only on the order of tens of millions of dollars in revenue.” The staff said that Far East Co., Ltd.’s supply chain system is relatively stable, its own research and development capabilities are also very strong, and it is unlikely to be stuck. In other words, the material impact on the company will be limited.

Judging from the performance of the secondary market, Far East Shares' stock price rose by the daily limit on Thursday and was not affected by the accusations by the U.S. Department of Commerce. "As the largest and most influential leading cable company in the country, the company has a full backlog of orders. In 22H1, it won bids/signed over 10 million contract orders worth 9.967 billion yuan, a year-on-year increase of 47.57%. At the same time, the company's Far East Yibin Intelligent Industrial Park project, The construction of the Nantong Far East High-end Marine Cable Industry Base Project and the Far East Communications Optical Fiber Optic Project has been accelerated, and each plan has been effectively implemented. It is expected that part of the project will be completed and put into production within the year and the full production will be accelerated." Guoyuan Securities analyst Deng Yongkang expressed his views on Far East shares are optimistic.

"The wire and cable industry is the second largest supporting industry in our economy, second only to the automobile industry, with an annual market size exceeding one trillion yuan. In terms of market space, we estimate that the national cable market space will be approximately 243.1 billion yuan from 2021 to 2025, with a 4-year CAGR About 12%, of which the high-voltage cable market above 110kV will total approximately 82.7 billion yuan in the five-year period from 2021 to 2025, accounting for 34%, and the four-year CAGR is about 18%." Guolian Securities analyst He Zhaohui believes.