(Yicai Global) Sept. 28 -- Lonkey Industrial's shares tumbled by the daily trading limit after the Chinese detergents maker said CNY572 million (USD83.8 million) of inventory had simply "vanished" and it had defaulted on debt repayments.

The Guangzhou-based company [SHE: 000523] fell 10 percent today to close at CNY5.13 (75 US cents), the lowest since last November. The shares have declined 38 percent since reaching a 52-week high of CNY8.29 in December.

The inventory was stored by Hongshen Logistics and Huifeng Petrochemical, two warehousing firms based in Jiangsu province, Lonkey said in a statement yesterday. But after Lonkey asked them to set up inspection visits, Huifeng said on Sept. 16 that it had never agreed to store Lonkey's products, it was not storing the products and that the documents Lonkey presented were forged. 

Huifeng and Hongshen denied ever seeing the goods even after Lonkey sent inspectors to both companies and held talks with their legal teams. Lonkey said it is gathering evidence to submit a report with the police and file a lawsuit.

Lonkey has also failed to repay overdue debts due to tight liquidity, the company said in a statement on Sept. 25. Twelve of its bank accounts, containing a total of CNY2.6 million (USD381,220), have been frozen as a result.

The company's business performance took a hit in the first half of this year due to the novel coronavirus pandemic. Lonkey had a net loss of CNY115 million in the six months ended June 30 after reporting a net profit of CNY26.2 million in the year-earlier period, according to its earnings reports. First-half revenue slid 43 percent to CNY3.9 billion (USD570 million) amid declining sales of industrial raw materials.

Hongshen was listed as a dishonest debtor in 2018, according to business data platform Tianyancha. Its registered capital is CNY11.9 million. Huifeng, which is a unit of listed Huifeng Bio Agriculture, has CNY500 million in registered capital. Its parent company's shares [SHE: 002496] fell 0.9 percent today. 

Editor: Emmi Laine