Blue Whale News, June 29 (Reporter: Dai Ziting) On June 29, Zhongji Health removed its risk warning 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 was trading at S$3.29 per share, up 2.17% from the June 25 close of S$3.22.
Zhongji Health is based in Wujiaqu, Xinjiang, and its main business is tomato products, including bulk tomato paste, small-pack tomato products, and lycopene soft capsules. Unlike the small jars of tomato paste familiar to ordinary consumers, most of the company's revenue comes from bulk tomato paste. These products are mainly basic raw materials for food processing and catering supply chains and are sold primarily to B2B customers.
Behind the Risk-Warning Removal: Revenue Crossed the Line, but the Core Business Has Not Recovered
Zhongji Health had previously been under a risk warning because it crossed the financial delisting red lines: in 2024, total profit, net profit, and net profit after extraordinary items were all negative, revenue after deductions was below S$300 million, and net assets attributable to shareholders of the listed company were negative. Under the Shenzhen Stock Exchange listing rules, the stock was therefore labeled "*ST."
By 2025, Zhongji Health had crossed the two financial thresholds required to remove the delisting risk warning: first, owners' equity attributable to shareholders of the listed company turned positive, ending the year at S$26.1223 million; second, revenue after deductions reached S$488 million, above the S$300 million red line.
But that does not mean the company is profitable again. In 2025, net profit attributable to shareholders of the listed company was still a loss of S$46.2318 million, and net profit after extraordinary items was a loss of S$293 million. In other words, the company shed the "*ST" label, but its core profit engine has not recovered.
Destocking to Boost Revenue: Bulk Tomato Paste Sales Surged
The revenue recovery was driven by a clear destocking move: production was cut, inventories fell, and sales rose. Annual report data show that in 2025, bulk tomato paste brought in S$448 million, accounting for 91.12% of total revenue; sales reached 132,100 tons, up 249.47% year on year. In line with the sales surge, production of bulk tomato paste was only 7,500 tons that year, down 95.61%, and inventory fell to 91,000 tons, down 57.80%.
The problem is that this is not a business that gets more profitable as it sells more. According to the company's corrected data, gross margin for bulk tomato paste in 2025 was -20.41%, and the company's overall gross margin was -15.66%. In other words, the main business accounting for more than 90% of revenue is already operating at a negative gross margin.
Selling at a Loss: Falling Prices and Shelf-Life Pressure
The explanation given by Zhongji Health in its annual report and its response to the inquiry points to two core pressures: price and shelf life.
First, price. In its inquiry response, the company said that in 2025 the export average price of Chinese tomato paste in packages above 5kg fell to US$675 per ton, down 32.5% from US$1,000 per ton in 2024 and the lowest level in recent years. Domestic bulk tomato paste prices have also remained weak, with industry inventories at high levels and some companies dumping products at low prices, further intensifying downward pressure.
Blue Whale News reviewed the company's annual report and found that in 2023, the selling price of bulk tomato paste had reached S$7,857.91 per ton; in 2024 it fell to S$5,866.22 per ton; and by 2025 it dropped further to S$3,395.43 per ton. The company said the decline in selling prices was larger than the drop in costs, creating a situation where the more it sold, the more it lost.
Second, shelf life. Zhongji Health disclosed in its annual report that bulk tomato paste has a shelf life of 720 days, or two years. That means unsold bulk tomato paste can quickly become dead stock. In its inquiry response, the company also said that based on actual market conditions for tomato products, prices fall nonlinearly as shelf life shortens, with especially sharp drops as expiration nears. Against the backdrop of a sharp decline in overseas orders, a nearly saturated domestic market, and growing shelf-life pressure, the company has had to increase bulk tomato paste sales, even as selling prices keep falling and product prices remain inverted relative to costs.
Resumption of Trading Only Temporarily Moves It Out of "*ST": Pre-Restructuring and Operating Pressure Remain
From an operating standpoint, selling at a loss is not ideal, but it may be the most realistic option right now. If the company does not sell, inventory continues to tie up cash and may face further price drops, impairments, or near-expiry risks. If it sells, revenue rises and cash flow and inventory pressure ease somewhat, but profit remains under pressure.
However, the removal of the risk warning does not mean the risk is gone. In 2025, Zhongji Health's debt-to-asset ratio was still as high as 97.79%, and both the company and its wholly owned subsidiary Red Tomato have entered pre-restructuring proceedings.
According to the company, in July 2025 a creditor, Zhongxing Cai Guanghua Certified Public Accountants (Special General Partnership), filed for reorganization and pre-restructuring with the court, citing the company's inability to repay debts due and a clear lack of repayment capacity, while also having restructuring value. On the same day, Xinjiang Hengyuan Water Co., Ltd. filed similar applications for Red Tomato.
At present, the company says it is advancing creditor claim review, auditing, and valuation under the supervision and guidance of a provisional administrator and the court. However, pre-restructuring does not mean the court will formally accept the reorganization application. If the court later accepts the case, the stock may again be subject to delisting risk warnings. If restructuring fails and the company is declared bankrupt, the stock will also face delisting risk.
On June 29, Blue Whale News called and sent a letter to Zhongji Health regarding the matter, but had not received a response by press time.
In the first quarter of 2026, Zhongji Health posted revenue of S$54.8219 million, down 30.33% year on year; net profit attributable to shareholders of the listed company was a loss of S$19.6295 million, compared with a loss of S$7.2557 million a year earlier; and net profit after extraordinary items was a loss of S$20.5002 million. By the end of the first quarter, owners' equity attributable to shareholders of the listed company had fallen to S$6.4928 million, down 75.14% from S$26.1223 million at the end of 2025.
For Zhongji Health, resumption of trading only temporarily moves it out of the "*ST" label. The real question remains: when 90% of revenue comes from bulk tomato paste with negative gross margin, what can the company still rely on to make money after destocking?
