(Yicai Global) Aug. 21 -- Liangmianzhen, the maker of the popular Chinese toothpaste brand LMZ, has reported annual operating losses for 12 years in a row, but has avoided being delisted from the Shanghai exchange by selling lucrative stock assets to stay in the black. But it may be running out of ammunition.

The company, based in Liuzhou in Guangxi Zhuang Autonomous Region, has only 15.12 million shares remaining of CITIC Securities, a leading Chinese brokerage, just four-fifths of the 95.12 million it owned after several reductions, public data shows. It intends to sell CITIC Securities shares again to avoid being flagged for 'special treatment' on the stock market for losing money over two straight years.

The firm's board plans to sell up to 12 million shares of CITIC Securities, which will net proceeds of nearly CNY200 million (USD29 million) based on the July 3 closing price of CNY16.32 a share. The funds raised will go to repay loans, replenish working capital and develop the company's main business, it said in a statement on July 3.

Despite its poor business performance (Liangmianzhen just logged a CNY12 million first-half operating loss on an 18 percent drop in revenue), the company amassed a fortune in stock investments. Buying CITIC Securities shares in 1999 enabled it to turn a total profit of more than CNY2 billion (USD293 million) over the years from dividends and divestments of those shares, per its own figures.

Based on CITIC Securities share price of CNY16.07 per share at the close of yesterday's trading, Liangmianzhen holds around CNY243 million worth, making up a bit over 10 percent of Liangmianzhen's CNY2.24 billion market value.

Founded in 1941, Liangmianzhen pioneered toothpaste with traditional Chinese medicine and was once a leader in the country's dental care market, but foreign competition and brand aging have slowly sapped its main business. The company has invested in medicine, paper, real estate and other areas, but these are also losing money. The firm had an operating loss of CNY144 million last year.

Shares of Liangmianzhen [SHA:600249] closed at CNY4.08 yesterday, down 0.73 percent, having fallen more than 80 percent from a high of CNY31.80 in early 2008.

The company has cut its stake in CITIC Securities many times in order to become profitable. It posted a net loss of CNY116 million in the first three quarters of 2014, but turned a CNY22 million profit for the whole year after selling 10 million CITIC Securities shares that December to reap CNY258 million.

Liangmianzhen played this game again in 2016. It booked a net loss of CNY78.1 million in the first half. Prior to the release of its semi-annual report (ending June 2016), its board authorized the sale of up to 11.6 million shares for the rest of the year. It sold them, securing CNY157 million, which undoubtedly was a decisive factor in its net profit of CNY27 million that year.

Editor: Ben Armour