Zhongji Health Removes ST and Resumes Trading: Tomato Paste Destocking but Negative Gross Margin

June 29, Zhongji Health removed ST and resumed trading

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, Zhongji Health's stock price was 3.29 yuan per share, up 2.17% from the closing price of 3.22 yuan on June 25.

Zhongji Health is located in Wujiaqu, Xinjiang, primarily engaged in 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 serves as a basic raw material for food processing and catering supply chains, targeting B-side customers.

Removed ST 'Over the Line,' but Main Profit Generation Not Yet Repaired

Zhongji Health previously wore the '*ST' label due to financial delisting risk warning thresholds: in 2024, the company's total profit, net profit, and net profit after deducting non-recurring gains and losses were all negative, and its revenue after deductions was below 300 million yuan, while net assets attributable to shareholders of the listed company were negative. According to the Shenzhen Stock Exchange's listing rules, the stock was thus marked as '*ST'.

In 2025, Zhongji Health crossed the two financial thresholds required to lift the delisting risk warning: first, owner's equity attributable to shareholders of the listed company turned from negative to positive, reaching 26.1223 million yuan at year-end; second, revenue after deductions reached 488 million yuan, exceeding the 300 million yuan red line.

However, the company still posted a loss in 2025: net profit attributable to shareholders was a loss of 46.2318 million yuan, and net profit after deductions was a loss of 293 million yuan. In other words, after removing the '*ST' label, the main business profitability still needs repair.

Destocking Drives Sales Volume Increase: Sales 132,100 Tons, Production 7,500 Tons

Behind the company's revenue crossing the line is a clear 'destocking' move: production contraction, inventory decline, and sales increase. 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% YoY. Corresponding to the large sales increase, the year's bulk tomato paste production was only 7,500 tons, down 95.61% YoY; inventory decreased to 91,000 tons, down 57.80% YoY.

But this is not a case of selling more and earning more. Corrected data shows that the gross margin of bulk tomato paste in 2025 was -20.41%, and the company's overall gross margin was -15.66%. That is, the main business accounting for over 90% of revenue is in a state of negative gross margin.

Reasons for Selling at a Loss: Price Decline and Shelf-Life Pressure

Zhongji Health cited two core pressures in its annual report and response to the inquiry letter: price and shelf life.

First, price. The company's response to the inquiry letter noted that in 2025, China's export average price of tomato paste over 5kg fell to 675 USD per ton, down 32.5% from 1,000 USD per ton in 2024, hitting a recent low. Domestic bulk tomato paste prices remained low, with industry inventories at high levels, and some companies engaging in low-price dumping, exacerbating downward price pressure.

A Blue Whale reporter reviewed the company's annual report and found that the unit selling price of bulk tomato paste has been declining: 7,857.91 yuan per ton in 2023, 5,866.22 yuan per ton in 2024, and further down to 3,395.43 yuan per ton in 2025. The company stated that the decline in product selling prices was greater than the reduction in costs, leading to a situation of 'selling more, losing more.'

Second, shelf life. The annual report disclosed that the shelf life of bulk tomato paste is 720 days, or two years. The company said product prices decrease non-linearly with shelf life, with near-expiry products seeing particularly sharp price declines. Against the backdrop of a sharp decline in international orders, near-saturation in the domestic market, and increasing shelf-life pressure, the company needed to boost sales, but selling prices continued to fall, creating a situation of inverted production and sales prices.

Pre-Restructuring Progress: Asset-Liability Ratio 97.79%, Delisting and Bankruptcy Risks Exist

The company stated that removing the ST label does not mean risk has been cleared. As of 2025, Zhongji Health's asset-liability ratio was still as high as 97.79%, and the company and its wholly-owned subsidiary Red Tomato had entered pre-restructuring procedures.

According to disclosures, 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 due debts and was clearly lacking solvency 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 court supervision and guidance to advance matters such as creditor claims review, audit, and evaluation. However, pre-restructuring does not mean the court will formally accept the restructuring application; if the court later accepts restructuring, the company's stock may face an additional delisting risk warning; if restructuring fails and the company is declared bankrupt, the stock will face the risk of being terminated from listing.

Still Loss in Q1 2026: Owner's Equity Continues to Decline

In the first quarter of 2026, Zhongji Health achieved revenue of 54.8219 million yuan, down 30.33% YoY; net profit attributable to shareholders was a loss of 19.6295 million yuan, compared to a loss of 7.2557 million yuan in the same period last year; net profit after deductions was a loss of 20.5002 million yuan. By the end of the first quarter, the company's owner's equity attributable to shareholders fell to 6.4928 million yuan, a decrease of 75.14% from 26.1223 million yuan at the end of 2025.

For Zhongji Health, resumption of trading only temporarily takes it out of the '*ST' label. Attention still needs to be paid: when 90% of revenue comes from bulk tomato paste with negative gross margin, what will the company rely on to achieve profitability after destocking?