Li Bang International Corporation Inc. (Nasdaq: LBGJ) completed a binding share purchase agreement on February 25, 2026, in which its wholly‑owned subsidiary, Jiangsu Li Bang Intelligent Technology Co., Ltd., will acquire a 51% controlling interest in Suzhou Yufengyuan Food Distribution Co., Ltd., a leading institutional catering provider in Jiangsu province.
The transaction is expected to close on or before May 30, 2026, subject to regulatory approvals. Management projects that Yufengyuan will bring approximately RMB 90 million (US$13 million) of ongoing contracts by the end of June 2026 and will contribute an estimated RMB 150 million (US$22 million) in total revenue to Li Bang’s consolidated results for the full calendar year 2026, nearly doubling the company’s current annual revenue of $11.1 million.
The deal marks a strategic pivot for Li Bang, which has struggled with declining revenues and a net loss of $1.01 million in the fiscal year ended June 30, 2025. By bundling its stainless‑steel kitchen equipment with Yufengyuan’s chefs and centralized kitchen operations, Li Bang aims to create a recurring‑revenue model that offsets the periodic nature of equipment sales and improves long‑term revenue visibility.
Yufengyuan operates a 4,500 m² centralized kitchen and distribution center that serves schools, government institutions and corporate clients, delivering roughly 200,000 meals daily. The company’s 25‑year zero‑incident food‑safety record and strong institutional contracts provide a stable revenue base that Li Bang can leverage to cross‑sell its equipment and maintenance services.
Analysts and investors reacted positively to the announcement, with Li Bang’s stock surging 21.57% on the day of the announcement and reaching a peak increase of 34.5% intraday. The rally reflected confidence that the acquisition will generate higher‑margin, recurring revenue streams and strengthen the company’s competitive position in the Chinese commercial kitchen market.
The acquisition also addresses Li Bang’s financial headwinds. The company’s gross margin of 29.2% in FY2025 was below the industry median, and its debt‑to‑equity ratio of 1.35 raised compliance concerns after a Nasdaq notification in November 2025. The addition of Yufengyuan’s profitable operations is expected to improve margin dynamics and provide a buffer against future market volatility.
CEO Huang Feng emphasized that “Unlike the periodic nature of equipment sales, culinary services are characterized by high frequency and strong customer retention.” The statement underscores the strategic intent to shift from a product‑centric model to a service‑centric model that delivers continuous revenue and deeper customer relationships.
The deal is expected to close by the end of May 2026, after regulatory approvals, and will be reflected in Li Bang’s 2026 financial statements. Management will monitor integration progress and assess the impact on revenue mix, gross margin, and cash flow generation.
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