China's No. 1 Daily Chemical Stock Reverse the Slide

"China's No.1 daily chemical stock" Guangzhou Lonkey's first half-year revenue rose 3.78% year-on-year and net profit loss narrowed 48.62% year-on-year.

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On August 30, Lonkey announced its interim financial report for 2022. In the first half of the year, Lonkey recorded revenue of 1.313 billion yuan(about $190.3 million), up slightly by 3.78% year-on-year. Its net profit attributable to the parent company was 0.34 billion yuan(about $49.3 million), narrowing by 48.62% year-on-year. Its net profit attributable to the parent company was 0.33 billion yuan(about $47.8 million), narrowing by 50.08% year-on-year. Its total assets were 2.366 billion yuan(about $343 million), down by 12.62% year-on-year.

Lonkey can be said to be a time-honored brand in China. As the "first stock of Chinese daily chemical", Guangzhou Lonkey was listed in Shenzhen Stock Exchange in 1993 and became the first batch of standardized listed joint-stock company in Guangzhou. But in 2020, Guangzhou Lonkey ushered in the “Darkest Hour” with a series of problems such as pre-loss performance, criminal involvement of its executives, investigation of the company, and exposure risk of inventory goods with a book value of 572 million yuan(about $82.9 million), etc. In early 2021, Guangzhou Lonkey received a delisting risk warning from the Shenzhen Stock Exchange.

The financial report said that on May 26, 2022, the company's stock was officially withdrawn from the delisting risk warning and other risk warnings and the stock abbreviation was changed from "*ST Lonkey" to "Guangzhou Lonkey". Overall, Lonkey's revenue and profitability have improved. Guangzhou Lonkey also said that in the future, it will keep the production and operation stable and develop its own brand become bigger and stronger. It also tends to enhance the brand value of the total brand of "Lonkey" of the company's daily chemical.

Moreover, Lonkey said it was also actively promoting the company's non-public A-share issuance project in the first half of the year. Lonkey disclosed the 2022 Non-public Issue of A-share Shares Proposal on April 30, in which Guangzhou Light Industry and Trade Group Ltd. subscribed all the shares of this issue with RMB 600 million(about $86.9 million) in cash. At present, the work of the non-public issue project is being actively and orderly promoted.

In terms of R&D, Lonkey's R&D expenses in the first half of the year were 9.01 million yuan(about $1.3 million), up 345.18% year-on-year. For daily-use chemicals, the company obtained 2 patent authorizations in the first half of the year and completed the development and listing of new products. The company launched 2 microencapsulated perfume laundry gel beads and completed the pre-development of several new products.

For the future risks faced by the company, Lonkey said, since 2022, the dramatic fluctuation of commodity market prices and ingredients prices have great uncertainty. The company faces the risk of ingredients shortage and price increase.

For this risk, Lonkey will actively strengthen cooperation and communication with ingredients manufacturers and adjust ingredients inventory in time to ensure a stable supply of raw materials. It also continuously optimizes product structure for reducing the risk of rising ingredients prices. On the other hand, it aims to make full use of the hedging function of the futures market for hedging and reducing the business risks caused by fluctuations in ingredients prices, which ensure the relative stability of product costs and reduce the impact on normal production and operation.