Zhongji Health after relisting: tomato paste destocking still loss, pre-reorganization brings delisting risk
On June 29, Zhongji Health resumed trading after its 'ST' label was removed, with stock code changed from '*ST Zhongji' to 'Zhongji Health'. On the first day of relisting, as of press time, shares traded at RMB 3.29, up 2.17% from the close of RMB 3.22 on June 25.
Zhongji Health, headquartered in Wujiaqu, Xinjiang, focuses on tomato products, including bulk tomato paste, small-pack tomato products, and lycopene soft capsules. The company's main revenue comes from bulk tomato paste, which is primarily used as a basic raw material for food processing and restaurant supply chains, sold mainly to B-end customers.
In 2025, the company cleared two financial thresholds required for removing the delisting risk warning: (1) shareholders' equity attributable to the listed company turned positive, ending at RMB 26.12M; (2) revenue after deductions reached RMB 488M, above the RMB 300M red line. However, net profit attributable to shareholders was still a loss of RMB 46.23M, and non-recurring net loss was RMB 293M, indicating main business still not self-sustaining.
Destocking supports revenue: sales volume up, but production and inventory down
The company's 'destocking' action is reflected in production contraction, inventory decline, and sales increase. The annual report shows that in 2025, bulk tomato paste revenue was RMB 448M, accounting for 91.12% of total revenue; sales volume was 132.1K tons, up 249.47% YoY. Corresponding to the large sales increase, production that year was only 7.5K tons, down 95.61% YoY, and inventory fell to 91.0K tons, down 57.80% YoY.
Key contradiction: 90% revenue main business gross margin negative, 'sell one barrel lose one barrel'
But this is not a business that gets more profitable with more sales. Corrected data disclosed that in 2025, bulk tomato paste gross margin was -20.41%, and overall gross margin was -15.66%. That means the main business, accounting for over 90% of revenue, has a negative gross margin.
Company explains two pressures: price decline and non-linear discount due to shelf life
In the annual report and reply to the inquiry letter, Zhongji Health attributed the loss pressure to two core factors: price and shelf life.
On price, the company said in the inquiry letter that the average export price of Chinese tomato paste over 5kg fell to USD 675/ton in 2025, down 32.5% from USD 1,000/ton in 2024, hitting a recent low. Domestic bulk tomato paste prices remained low, with high industry inventory and some companies dumping at low prices, exacerbating downward pressure.
Reviewing the company's annual reports, the unit selling price of bulk tomato paste fell from RMB 7,857.91/ton in 2023 to RMB 5,866.22/ton in 2024, and further to RMB 3,395.43/ton in 2025. The company stated that the decline in selling price exceeded the decline in cost, creating a 'sell more, lose more' situation.
On shelf life, the company disclosed that bulk tomato paste has a shelf life of 720 days (two years). In actual tomato product market sales, product prices decline non-linearly as shelf life progresses, with near-expiry prices dropping sharply. Amid a sharp decline in international orders, near-saturation in the domestic market, and increasing shelf-life pressure, the company increased sales but selling prices continued to fall, resulting in a price-cost inversion.
Operationally, the company uses a 'sell at a loss' approach to relieve inventory occupation of funds and reduce further price drop, impairment, and near-expiry risks; but profit side remains pressured.
Removing 'ST' does not mean risk cleared: high debt and pre-reorganization application still uncertain
In 2025, Zhongji Health's debt-to-asset ratio was still as high as 97.79%, and the company and its wholly-owned subsidiary Red Tomato have entered pre-reorganization procedures.
According to company disclosure, in July 2025, Zhongsun Caihua Accounting Firm (special general partnership) filed a petition with the court for reorganization and pre-reorganization of the company on grounds of inability to pay due debts and obvious lack of solvency but with reorganization value. On the same day, Xinjiang Hengyuan Water Co., Ltd. also filed a similar petition for Red Tomato. The company said it is working with the interim administrator under court supervision and guidance to advance matters such as creditor review, audit, and evaluation.
However, pre-reorganization does not mean the court will necessarily accept the reorganization petition. If the court later accepts the reorganization, the company's stock may be subject to an additional delisting risk warning; if reorganization fails and the company is declared bankrupt, the stock faces termination of listing risk.
As of press time, the company had no response on related issues.
In Q1 2026, Zhongji Health achieved revenue of RMB 54.82M, down 30.33% YoY; net profit attributable to shareholders was a loss of RMB 19.63M, compared to a loss of RMB 7.26M in the same period last year; non-recurring net loss was RMB 20.50M. By end of Q1, shareholders' equity attributable to the listed company fell to RMB 6.49M, down 75.14% from RMB 26.12M at end-2025.
For Zhongji Health, relisting is only a temporary removal of the '*ST' label. The core remains whether it can find a new source of profitability after destocking.
