First Stock of Chinese Daily Chemical Lonkey Regains its Life
- Chaileedo Press
- May 27, 2022
- 3 min read
Chinese traditional daily chemical company Lonkey was able to complete the restructuring quickly and efficiently, despite all the difficulties, and finally regained its life. And it will focus on its main business in the future.
On the evening of May 24, *ST Lonkey issued an announcement, that the company's stock will be suspended for one day on May 25. From May 26, it will resume trading to withdraw the delisting risk warning and other risk warnings and the stock abbreviation changed to "Guangzhou Lonkey", the daily limit of stock price increase or decrease from 5% to 10%.
This also means that in the past 2021, Guangzhou Lonkey was able to complete the restructuring quickly and efficiently, despite all the difficulties, and finally regained its life.
"Lonkey" can be said to be a household name of Chinese traditional brand. As the "first stock of Chinese household brand", Guangzhou Lonkey was listed on the Shenzhen Stock Exchange in 1993 as a joint-stock company restructured from a state-owned enterprise, and became one of the first companies listed on the Guangzhou Stock Exchange.
Lonkey indicated that the implementation of the company's reorganization plan has been completed, and the situation that the company's shares were subject to delisting risk warning due to the previous reorganization application being legally accepted has been eliminated. At the same time, the company's 2021 annual audit report shows that the net assets attributable to shareholders of the listed company at the end of 2021 is $154 million, and the company's stock trading has been eliminated due to the implementation of the delisting risk warning because the audited net assets at the end of 2020 is negative.
It is noteworthy that on May 13, the Shenzhen Stock Exchange published an inquiry letter on Lonkey's annual report, asking questions about whether Lonkey meets the conditions for the removal of the delisting risk warning and details of the company's operations. On May 24, Lonkey also answered other operational questions in the inquiry letter, saying that there were no problems with the company's operations and restructuring.
In 1994, Guangzhou Lonkey and P&G set up a joint venture to "divide" the Chinese laundry market, but the two sides broke up completely in 2001 due to the gradually widening differences.
Public information shows that before the joint venture with P&G, Guangzhou Lonkey's market share ranked second in the country after Shanghai Bai Mao. During the joint venture, P&G's own brands Ariel and Tide became more and more famous, while Guangzhou Lonkey's brands started to go downhill. After the breakup with P&G, Guangzhou Lonkey tried to rely on the main brand Lonkey to regroup, but Tide, Diao Pai, Liby, NICE, etc. had already taken over Lonkey's position, and Blue Moon, unexpected competitors in the same field, has also emerged.
In 2021, Guangzhou Lonkey fought for win or die. It overcame many adverse effects, made every effort to ensure the steady development of the production and operation of the two segments of green household chemicals and health food, and suspended the chemical bulk trading business. On April 30, *ST Lonkey released its annual results report, saying that the company's revenue in 2021 was about $384 million, down 22.01% year-on-year. Its net profit attributable to the parent company was about $216 million, compared with a loss of about $701 million in the same period of the previous year, turning a loss into a profit.
In the past year, Guangzhou Lonkey focused on the strategic business layout adjustment of the green daily chemical segment, improving the level of intelligent and automated operation, optimizing resource allocation, taking a number of measures to reduce costs and increase efficiency, further increasing market development efforts, and steadily increasing the market share of its main products, laundry gel, laundry detergent and various types of disinfection products.
Data show that in 2021, the sales of the leading product Lonkey Laundry Gel increased by 176% compared with the previous year, becoming a fast-growing superspecies in the industry. The sharp rise in sales of laundry gel also confirms the company's forward-looking vision in the daily chemical sector.
However, although Lonkey turned a loss into a profit in 2021, the main business is still facing a loss. According to the company's financial report in the first quarter of this year, Q1 achieved net profit attributable to shareholders of the listed company -$1.91 million, deducting non-net profit of -$1.9 million.
From the current point of view, Lonkey is still in various ways to boost the development of the enterprise. On April 30, Lonkey released the "2022 Non-public Issue of A shares Proposal" which intends to raise not more than $89.16 million of funds to supplement the working capital at the issue price of $0.4/share, and the controlling shareholder GLIG intends to subscribe for all the shares of this issue in cash. According to Lonkey, the proposal will help optimize the capital structure of the company, improve its core competitiveness of the company and promote its sustainable development of the company.
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