Liangmianzhen changes ownership to break the deadlock; a new chapter emerges amid segmentation in the toothpaste industry

Transmitted from: China Business News

An Economic Reporter Dang Peng, Chengdu, reports

A share transfer agreement brings a control upgrade at the state-owned asset level to the long-established traditional Chinese medicine toothpaste company Liangmianzi (600249.SH).

On the evening of March 31, Liangmianzi announced that its original controlling shareholder, Liuzhou Industrial Investment Development Group (hereinafter “Lifa Group”), and its concerted action parties signed a “Share Transfer Agreement” with Guangxi Guokong Capital Operations Group (hereinafter “Guangxi Guokong”), transferring a total of 154 million shares held by them to Guangxi Guokong, accounting for 28% of the company’s total share capital. After the transaction is completed, Liangmianzi’s controlling shareholder will be changed from Lifa Group to Guangxi Guokong, and the actual controller will also be upgraded from the Liuzhou Municipal SASAC to the Guangxi Regional SASAC.

However, Liangmianzi’s current operating situation is hard to describe as optimistic, with performance declines and idle production capacity becoming the two major pain points in its development. In response, the company’s board secretary office told reporters from China Business News that the change in the controlling shareholder is a decision made at the shareholder level, and the listed company cannot make an assessment. Regarding the issue of its performance decline, it said that in the future, with the Jiangsu plant coming online, the launch of high-gross-margin products, and the R&D of health products, there will be new breakthroughs.

Renowned strategy positioning expert Zhan Junhao, founder of Fujian Huace Brand Positioning Consulting, said that Liangmianzi’s core path to break through should prioritize brand refresh and product upgrading. With gross margin currently only 13.45%, the room to cut costs is limited. It must strengthen the “traditional Chinese medicine oral care” mindset with state-owned-asset backing, and rebuild brand premium. Strategically, it should first use the capital power of state-owned assets to complete a youth-oriented overhaul of brand visuals and the product line, and then integrate the traditional Chinese medicine raw-material industrial chain with Guangxi characteristics in parallel to achieve long-term efficiency gains, using brand dividends to drive growth in scale.

A change of hands sparks new life

On March 27, Liangmianzi released an announcement about planning a change in control, and it was suspended from trading starting March 30. The progress disclosed on March 31 showed that Liangmianzi’s original controlling shareholder, Lifa Group, and its concerted action parties, signed a “Share Transfer Agreement” with Guangxi Guokong, intending to transfer 28% of its shares to Guangxi Guokong at a price of 7.9742 yuan per share, for a total transfer consideration of 1.23B yuan. This price represented a premium of about 25% over the closing price of 6.37 yuan per share before the suspension. As a result, Liangmianzi’s actual controller has been upgraded from a city-level SASAC to a provincial/autonomous-region SASAC.

For this change in controlling shareholder, Liangmianzi did not provide a specific explanation. As for what kind of enablement Guangxi Guokong will provide to the company in the future, it also provided no response. However, after Liangmianzi resumed trading on April 1, the stock price hit the daily limit. On April 2, at the close, it was still up 1.65%, with a closing price of 7.14 yuan per share.

For Liangmianzi, the performance decline is exactly what it is urgently awaiting new enablement for. Liangmianzi’s recently disclosed 2025 annual report shows that operating revenue was 1.06B yuan, up 0.9%; net profit attributable to the parent was 9.8461 million yuan, down sharply by 87.86% year over year; non-recurring profit net of non-recurring items was 4.2798 million yuan, down 52.17% year over year.

In 2023 and 2024, Liangmianzi’s non-recurring profit net of non-recurring items were 14.23 million yuan and 8.95M yuan, respectively. Obviously, Liangmianzi’s non-recurring profit net of non-recurring items has continued to decline significantly.

The announcement shows that in 2025, Liangmianzi’s household toothpaste production volume was 34.7372 million boxes (or units), and sales volume was 31.4395 million boxes (or units). Meanwhile, the designed annual production capacity of the company’s Liuzhou plant for household toothpaste is 138.6 million units per year, and its capacity utilization rate in 2025 was only 34.58%.

In Chengdu, in community supermarkets such as Meiyijia and Wudongfeng, the reporter did not see Liangmianzi on the shelves—there were only two products sold by Hongqi Chain.

Even so, Liangmianzi told reporters that its Jiangsu base will be officially put into operation this year. On November 25 last year, Liangmianzi announced that its controlling subsidiary, Liangmianzi (Jiangsu) Industrial Co., Ltd., plans to invest and expand in Yangzhou, Jiangsu, to build a production base for Liangmianzi traditional Chinese medicine functional oral care products, with an expected total investment of 68.8522 million yuan.

According to local media in Yangzhou, in fact, the smart factory project for Liangmianzi oral care products, which started construction in February 2025, has a total investment of 1 billion yuan, building an integrated production base that covers oral care, daily chemical products, and hotel daily necessities. After completion, it will form production capacities of 500 million units of oral care products, 4 billion units of oral care products for hotels, and 200 million sets of hotel daily necessities. It is expected to reach ticketed sales of 1.5 billion yuan and value-added tax (or related tax) revenue of more than 50 million yuan.

Strategy positioning expert Xu Xiongjun, chairman of Joude Positioning Consulting, believes Liangmianzi’s core issue is that it missed the industry’s development peak. As a long-established traditional Chinese medicine toothpaste brand, it has long suffered from a lack of brand positioning. It has failed to convert traditional Chinese medicine resources into clear differentiated efficacy perceptions, and has gradually fallen behind amid fierce market competition, unlike Yunnan Baiyao.

Zhan Junhao said that the advantage of traditional domestic brands lies in their assets of traditional Chinese medicine culture; the shortcoming is that the brand’s cultural context is outdated. New domestic brands are stronger in marketing innovation but lack a research and development foundation. Liangmianzi should leverage Guangxi’s location advantage facing ASEAN and, with the help of the RCEP trade network, use “natural herbal ingredients” as a differentiated barrier. When going overseas, it needs to avoid rigid “output” and adopt a “localized expression of efficacy ingredients” strategy to reduce the risks of cultural adaptation, thereby building a professional, Eastern-style oral care image.

The rise of domestic toothpaste

Although Liangmianzi’s performance is showing a downward trend, the rapid rise of domestic toothpaste is nonetheless an undisputed fact.

According to publicly available financial reports: Yunnan Baiyao toothpaste has continued to secure the top spot as the first domestic toothpaste brand by virtue of its mid-to-high-end positioning and differentiated efficacy in stopping bleeding with traditional Chinese medicine. Its 2025 financial report shows that the health products business group—including toothpaste—achieved operating revenue of 6.75B yuan. The toothpaste business continues to rank first in terms of domestic full-channel market share, while the company’s overall revenue, net profit attributable to the parent, and non-recurring profit net of non-recurring items all hit historical highs. Dengken Oral Care (Lengsuanling), another representative traditional domestic brand, has also performed strongly. In 2024, revenue from adult toothpaste business was about 1.25 billion yuan. In the first three quarters of 2025, the company’s revenue, net profit attributable to the parent, and non-recurring profit net of non-recurring items recorded year-over-year growth of 16.66%, 15.21%, and 19.78%, respectively. Adult toothpaste’s share of total revenue exceeds 80%, becoming the core growth engine.

According to Frost & Sullivan materials, in terms of retail sales in 2025, the top five brands by market share are, in order, Yunnan Baiyao, Colgate, the Xiaoquo Group旗下拥有参半品牌, the Weimeizi brand operating Shuike, and Dengken Oral Care under Lengsuanling. Their market shares are 11.8%, 6.7%, 6.5%, 5.2%, and 3.1%, respectively.

Xu Xiongjun said that previously, foreign toothpaste brands held more than half of China’s domestic market. Now that proportion has dropped to 40%. Local leading brands have increased their market share to over 35%, while the remaining 15% to 25% is occupied by emerging brands focused on young consumers, such as Can half and Bingquan. The rise of Gen Z consumer power is driving the rapid growth of emerging “亚 brand” labels focused on new technologies and online operations, further disrupting the traditional market landscape. The market advantages of foreign giants such as Colgate, Crest, and Colgate (Black) are continuing to weaken, and the rise of domestic brands has become an irreversible industry trend.

Zhan Junhao said that the differentiation logic in the toothpaste industry is that channels have shifted from shelf-driven purchase to interest-driven purchase. Emerging brands precisely reach consumers through short videos. Product value has moved from single-function cleaning to oral care and beauty-related needs, matching Gen Z’s preferences for aesthetics and social etiquette.

Build corporate moats through R&D

The reporter noted that among emerging brands, Can half’s parent company, Xiaoquo Group, submitted its prospectus to the Hong Kong Stock Exchange on March 27, aiming to hit the Hong Kong market’s first oral care company.

Its prospectus shows: in terms of revenue, from 2023 to 2025, Xiaoquo Group’s revenue was 1.1B yuan, 1.37B yuan, and 2.5B yuan, respectively, with a three-year compound annual growth rate of 51%. Among them, 2025 revenue surged year over year by 82.5%.

On the profit side, Xiaoquo Group’s adjusted net profit over the past three years was 54M yuan, 66M yuan, and 1.55 billion yuan, respectively, with a compound growth rate of 70%.

But the reporter noted that although Xiaoquo Group’s performance growth is rapid and it already has more than 500 SKUs and has more than 300 SKUs in reserve, by the end of 2025 it had entered over 110k offline outlets nationwide. However, in 2025, its R&D expenditure was only 19.39 million yuan, accounting for just 0.8% of revenue. From 2023 to 2025, Can half’s marketing expenses were 570 million yuan, 720 million yuan, and 155M yuan, respectively; the proportion of revenue increased from 52% to 55%. This means that over the past three years, Can half has spent nearly 2.7 billion yuan on marketing alone.

Even so, the reporter, on platforms like Xiaohongshu and the Black Cat Complaint 【下载黑猫投诉客户端】, saw many consumers questioning Can half’s whitening effects. “A single use removes stains by 170%, and whitening improves by 271% in three days.” This is precisely Can half’s core selling point.

Zhan Junhao believes that Can half’s high growth relies on traffic dividends and heavy marketing with light R&D hides a crisis. High marketing expenses erode profits; disputes over efficacy shake the foundation of trust; and the scale cannot be sustained. After the IPO, it needs to cut back on traffic spending and increase efficacy R&D and clinical validation. It should expand into offline pharmacy and convenience store channels; shift from internet celebrity hit products to professional oral care, using product power to replace marketing power and build a long-term moat.

Xu Xiongjun pointed out that Can half’s growth is highly dependent on large-scale marketing expenditure inputs, which also causes problems faced by some new-consumption brands such as increasing revenue without increasing profit and low return on investment for input and output. This also tests Can half: how to turn from an internet celebrity brand into a sustainably thriving brand and build enduring brand competitiveness is an even more critical issue than merely rushing for an IPO.

Relatively speaking, Liangmianzi’s R&D expenses in 2025 increased year over year by 10.24% to 110k yuan, accounting for 1.8% of revenue, showing the intensity of innovation investment. Liangmianzi told reporters that this year it will extend into the health sector by relying on an academician workstation.

Even so, the reporter noted that the R&D expense ratio of Dengken Oral Care—the parent company of Lengsuanling—has long remained stable at 3.0% to 3.5% of revenue.

Zhan Junhao predicts that in the next 1 to 2 years, traffic dividends will experience marginal diminishing returns, and the industry will enter a game of stock. Brands that have strong control across multiple channels and a mindshare hold in specific subcategories will raise concentration.

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