China’s Old-established Daily Chemical Company LONKEY Gives Up Daily Chemical Business

Chinese old-established cleaning products manufacturer LONKEY announced divesting its daily chemical business by assets exchange with its controlling shareholder Guangzhou Consumer Goods and Services Group Ltd.

Recently, LONKEY announced a major asset swap plan in which it will dispose of its daily chemical assets and acquire park operation assets. According to the announcement, LONKEY plans to exchange its 100% equity in Nansha LONKEY, 100% equity in Shaoguan LONKEY, 100% equity in Liaoning LONKEY, and 60% equity in its daily chemical subsidiary for 60% equity in Xinshicheng held by its controlling shareholder, Guangzhou Consumer Goods and Services Group Ltd (GCGS). The difference will be supplemented by GCGS in cash. The proposed inbound assets are priced at 614 million yuan ($86 million), while the proposed outbound assets are priced at 717 million yuan ($100.43 million).

After the transaction is completed, LONKEY will no longer operate its daily chemical business and will transform into a dual main business of food and park operations. In the draft, LONKEY stated that although the Chinese daily chemical market is large and growing, domestic daily chemical brands have a low market share, the industry’s entry barriers are low, there are numerous daily chemical companies, product homogeneity is severe, and the market competition is fierce.

In addition, the basic research, technical research, and industrial research in the daily chemical industry are seriously disconnected, the overall profit margin is not high, the supply chain is single, and as raw material prices rise, the company’s daily chemical sales face significant obstacles, and it will take a long time for the daily chemical business to turn losses into profits.

LONKEY’s financial data shows that since 2018, reported losses for several years, and in the first half of 2022, its daily chemical product revenue fell by more than 20% year-on-year.

In this transaction, GCGS made performance commitments for the inbound assets. With the agreement of both parties, from 2023 to 2025, Xinshicheng’s net profit for each year cannot be less than 59.91 million yuan ($8.39 million), 73.95 million yuan ($10.35 million), and 79.87 million yuan ($11.18 million), respectively.

If Xinhicheng fails to achieve the net profit amount, LONKEY has the right to notify GCGS in writing to fulfill its performance compensation obligations. The transaction parties also confirmed that the total amount of impairment compensation and performance compensation paid by GCGS to Guangzhou LONKEY shall not exceed the total transaction price of the inbound assets.

From a financial data perspective, this transaction is expected to improve LONKEY’s financial situation. According to the independent financial advisor report issued by CITIC Securities, LONKEY reported a net loss of 71.546 million ($10.02 million) yuan in 2022, and its asset-liability ratio at the end of 2022 was 58.5%. After simulating the asset swap transaction, LONKEY’s asset-liability ratio at the end of 2022 will increase to 68.26%, and its net profit for 2022 will be 155 million yuan ($21.7 million).



Subscribe for unlimited readership of the most professional, comprehensive and unbiased articles backed by data.
Starting at $8.33 per month if you subscribe a Pro Annual Plan


Beauty News

Industry News, Broadcast and Breakings

Industry Stats

In-depth Statistics from all aspects to dig out the sales, up and downs.

Consumer Research

Exclusive service to survey numerous consumers across the country and get the best expected results

Brand Analysis

Examine and analyse a brand in details to conclude a report showcasing the desired information

Niche Market Research

Study into the niche product market, producing whitepaper helpping business to understand the potential, development of a product and make decisions.


Retail / Distributor Finder

Help brand distribute in China.

Cosmetics/ Makeup Compliance

Help make your product legal in China

OEM/ODM Manufacturers

Know what's trending or find the best possible material / ingredient / product supplier

Scroll to Top

Subscribe Yearly Member to Read More