Zhongji Health Tomato Paste De-stocking: Volume Up, Revenue Up, But Losses Widen
On June 29, Zhongji Health removed its ST label and resumed trading, with its stock abbreviation changed from '*ST Zhongji' to 'Zhongji Health'. On the first day of resumption, as of press time, the stock price was 3.29 yuan per share, up 2.17% from the closing price of 3.22 yuan on June 25.
Zhongji Health, located in Wujiaqu, Xinjiang, primarily produces tomato products, including bulk tomato paste, small-packaged tomato products, and lycopene softgel capsules. The company's main revenue comes from bulk tomato paste, which is mainly used as a basic raw material in food processing and restaurant supply chains, primarily sold to B2B customers.
In 2024, the company's financial indicators hit the delisting risk warning red line, with all three indicators—total profit, net profit, and net profit after deducting non-recurring gains or losses—being negative, and its revenue after deductions falling below 300 million yuan, and net assets attributable to shareholders of the listed company being negative, thus it was marked with '*ST'.
By 2025, Zhongji Health had crossed the two financial thresholds required to remove the delisting risk warning: the net assets attributable to shareholders of the listed company turned from negative to positive, ending the year at 26.1223 million yuan; the revenue after deductions reached 488 million yuan, well above the 300 million yuan red line.
But removing the ST label does not equate to restoring profitability. In 2025, the net profit attributable to shareholders of the listed company was still a loss of 46.2318 million yuan, and net profit after deducting non-recurring gains or losses was a loss of 293 million yuan, indicating that the main business's cash-generating ability has not yet recovered.
De-stocking Drives Sales Growth, But Profits Remain Negative
The annual report shows that in 2025, Zhongji Health's bulk tomato paste revenue was 448 million yuan, accounting for 91.12% of total revenue; sales volume was 132,100 tons, up 249.47% year-on-year. Corresponding to the sharp sales increase, the company's production of bulk tomato paste that year was only 7,500 tons, down 95.61%, and inventory fell to 91,000 tons, down 57.80%.
However, this is not a business where selling more makes more money. According to the company's corrected data, the gross margin of bulk tomato paste in 2025 was -20.41%, and the company's overall gross margin was -15.66%. That is to say, the main business of bulk tomato paste is already in a state of negative gross profit.
Pressure of Selling at a Loss: Price Decline and Shelf-Life Constraints
In its annual report and reply to the inquiry letter, the company pointed to two core pressures: price and shelf life.
On the price front, the company mentioned that the average export price of Chinese tomato paste over 5kg fell to $675 per ton in 2025, down 32.5% from $1,000 per ton in 2024, hitting a new low in recent years. Domestic bulk tomato paste prices remained low, with high industry inventory levels, and some companies selling at low prices further exacerbated the downward pressure.
The company's annual report data also shows that the selling price of bulk tomato paste fell from 7,857.91 yuan per ton in 2023 to 5,866.22 yuan per ton in 2024, and further to 3,395.43 yuan per ton in 2025. The company stated that the decline in product selling prices was greater than the decline in costs, creating a situation where 'the more you sell, the more you lose'.
On the shelf-life front, Zhongji Health's annual report disclosed that bulk tomato paste has a shelf life of 720 days, i.e., two years. In its reply to the inquiry letter, the company explained that according to actual market sales of tomato products, product prices decline non-linearly with shelf life, with prices dropping particularly sharply for products nearing their expiry date. Against the backdrop of a sharp decline in international orders, near saturation of the domestic market, and increasing shelf-life pressure, the company needs to increase sales, but selling prices continue to fall, creating a situation where production and sales prices are inverted.
Removing ST Label is Only a Temporary Escape from Risk: High Asset-Liability Ratio and Pre-Restructuring Progress
From an operational perspective, selling at a loss may be the more realistic choice: if not sold, inventory continues to tie up capital, and may face further price drops, impairment, or even expiry risks; if sold, revenue rises, cash flow and inventory pressures are somewhat alleviated, but the profit side still suffers.
However, removing the ST label does not mean risk elimination. The asset-liability ratio in 2025 was still as high as 97.79%, and the company and its wholly-owned subsidiary Red Tomato have entered pre-restructuring proceedings.
The company disclosed that in July 2025, creditor Zhongxingcai Guanghua Accounting Firm (Special General Partnership) applied to the court for restructuring and pre-restructuring of the company on the grounds that the company was unable to pay off its due debts and was clearly insolvent but had restructuring value. On the same day, Xinjiang Hengyuan Water Co., Ltd. also applied for restructuring and pre-restructuring of Red Tomato on similar grounds.
Currently, the company said it is working with the interim administrator under the supervision and guidance of the court to advance matters such as debt review, audit, and evaluation. However, pre-restructuring does not mean the court will definitely accept the restructuring application. If the court subsequently accepts the restructuring application, the company's stock trading may be subject to an additional delisting risk warning; if the restructuring fails and the company is declared bankrupt, it will also face the risk of being terminated from listing.
In the first quarter of 2026, the company achieved operating revenue of 54.8219 million yuan, down 30.33% year-on-year; net profit attributable to shareholders of the listed company was a loss of 19.6295 million yuan, compared with a loss of 7.2557 million yuan in the same period last year; net profit after deducting non-recurring gains or losses was a loss of 20.5002 million yuan. By the end of the first quarter, net assets attributable to shareholders of the listed company fell to 6.4928 million yuan, a decrease of 75.14% from 26.1223 million yuan at the end of 2025.
For Zhongji Health, resuming trading is only a temporary step out of the '*ST' label. The core issue remains: when 90% of revenue comes from bulk tomato paste with negative gross margin, what will the company rely on to make money after de-stocking?
