200,000 USD Investment in Shouguang, Luss Holdings Establishes Procurement Platform for Overseas Loss-Making Subsidiary

Source: Taishan Finance

Taishan Finance Reporter Zhang Runbang

Recently, Shandong Lush Pet Food Co., Ltd. (referred to as “Lush Co., Ltd.”; 920419.BJ) announced that it has established a domestic procurement platform to support the operation of its Cambodia project and help its subsidiaries reduce losses.

The announcement states that the new company is Shouguang Luheng International Trading Co., Ltd. (“Shouguang Luheng Trading”), wholly owned by Lush Co., Ltd.'s subsidiary Cambodia Luheng Pet Food Co., Ltd. (“Cambodia Luheng”). The company is located in Shouguang City, Shandong Province, with a registered capital of $200,000. Its business scope includes import and export of goods, retail and wholesale of pet food and supplies, sale of feed raw materials, and technical services. It has now completed business registration.

Lush Co., Ltd. said that the establishment of this subsidiary mainly serves as a procurement platform for the Cambodia subsidiary, aiming to “further improve raw material procurement efficiency and ensure production and operation needs.”

According to information, the direct investment entity, Cambodia Luheng, was established in August 2023 as a joint venture between Lush Co., Ltd. and Wenzhou Jinheng Pet Supplies Co., Ltd. The initial purpose was to optimize capacity layout and accelerate international market expansion. Lush Co., Ltd. is the controlling shareholder, with an initial capital of $3 million.

According to the formation announcement, after its establishment, Cambodia Luheng will serve as the project company for the “3,000-ton pet food annual production project.” The project plans to rent an existing factory in Cambodia of about 10,000 square meters. The construction period is expected to be one year, with full capacity expected in two years. The project’s production capacity is 3,000 tons of pet snacks per year at full operation.

In December of the same year, both shareholders injected significant capital into the Cambodia company, increasing its registered capital to $20 million to build an annual 7,500-ton pet food project. Lush Co., Ltd. aims to gradually expand its development in the U.S. market through overseas subsidiaries and expects to secure more U.S. orders in the future.

Two years later, according to Lush Co., Ltd.'s recent annual report, the performance and capacity utilization of the Cambodia company are still in the ramp-up phase. The report shows that in 2025, Lush Co., Ltd. achieved operating revenue of 861 million yuan, a year-on-year increase of 10.73%; net profit attributable to shareholders was 61.89 million yuan, down 21.02% year-on-year.

Regarding the reasons for profit decline, Lush Co., Ltd. believes that the Cambodia subsidiary’s pet snack project is in the market development stage after commissioning. The related business mainly targets the U.S. market. Although business progress is smooth, low capacity utilization has led to operating losses. Additionally, the gross profit margins of dried meat, meat powder, and canned products have decreased, and foreign exchange gains have also declined year-on-year, dragging down overall profitability.

Industry insiders believe that Lush Co., Ltd.'s establishment of Shouguang Luheng International Trading can directly serve the Cambodia base, helping overseas projects quickly reach breakeven through cost optimization. It may also further support the domestic market and create synergy with other product lines.

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