China's Well-Known Toothpaste Brand Liuzho Liangmianzhen Sells Subsidiary for Survival
Liao Shumin
DATE:  Nov 20 2017
/ SOURCE:  Yicai
China's Well-Known Toothpaste Brand Liuzho Liangmianzhen Sells Subsidiary for Survival China's Well-Known Toothpaste Brand Liuzho Liangmianzhen Sells Subsidiary for Survival

(Yicai Global) Nov. 20 -- Liuzhou Liangmianzhen Co. [SHA:600249], once referred to as "the best China-made toothpaste," had to sell a profitable subsidiary company to focus on its core business, which observers say is failing. Despite the company makes efforts to revive its business, it is not easy for Liangmianzhen to restore its past glory under such market circumstances, Investor Journal Weekly reports.

Liangmianzhen's business revenues amounted to CNY1.1 billion (USD165 million), down 5 percent, and the net loss was CNY70.3 million in the first three quarters of this year, shows its financial report. This is the fourth consecutive year that Liangmianzhen suffers continuous losses.

The company tried to sell its subsidiary JK Sucralose Inc. in May. Feishang Industry Group Co. emerged as the only intended buyer, but the deal was closed at the bottom price of CNY65.5 million. Liangmianzhen has already signed the equity transfer contract with Feishang.

JK Sucralose, founded in 2006, mainly produces sucralose, an artificial sweetener and sugar substitute, with 35 percent of total shares held by Liangmianzhen. Due to the short supply of sucralose in the market, its price rapidly went up and peaked at CNY500,000 per ton. The net profit of JK Sucralose up to the third quarter of this year reached CNY66.95 million.

Liangmianzhen might still have a slim chance of survival if it invests the funds generated by the transfer of equity in the subsidiary in its main business, combined with an effective advertising campaign, believes Zhao Xianghui, a chemicals expert. However, investors are not sure whether the company will spend it on its core business.

Liangmianzhen owes CNY150 million to Liuzhou Dongtong Investment Development Co., which was due on Oct. 10, but it failed to pay, the report disclosed.

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Keywords:   Liangmianzhen,Asset Sale