Tomato paste destocking leads to losses: Zhongji Health resumption and pre-reorganization
On June 29, Zhongji Health resumed trading after having its special treatment label removed, changing its stock abbreviation 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 per share on June 25.
Zhongji Health, located in Wujiaqu, Xinjiang, primarily produces tomato products, including bulk tomato paste, small-pack tomato products, and lycopene soft capsules. Unlike the common small bottles of ketchup familiar to consumers, the company's main revenue comes from large drums of tomato paste, mostly used in B2B scenarios such as food processing and restaurant supply chains.
The company's 2025 revenue was supported by "bulk tomato paste," but the profit side remained under pressure. The company had been designated as a special treatment stock due to financial delisting risk warnings: in 2024, total profit, net profit, and net profit after deducting non-recurring gains and losses were all negative, revenue after deductions was below 300 million yuan, and net assets attributable to shareholders were negative, hence the "*ST" label.
By 2025, the company crossed the two financial thresholds required to lift the delisting risk warning: owner's equity turned positive, reaching 26.1223 million yuan at year-end; revenue after deductions reached 488 million yuan, exceeding the 300 million yuan red line.
However, removing the ST label does not mean profitability is restored. In 2025, net profit attributable to shareholders was still a loss of 46.2318 million yuan, and net profit after deducting non-recurring gains and losses was a loss of 293 million yuan, indicating that core profit-generation ability has not yet recovered.
Bulk tomato paste "selling more," inventory also declining
The action supporting the revenue crossing the line is obvious destocking: production reduced, inventory decreased, and sales increased. The annual report shows that in 2025, bulk tomato paste revenue was 448 million yuan, accounting for 91.12% of total revenue; sales volume was 132,100 tons, a year-on-year increase of 249.47%. Corresponding to the increase in sales, the company's bulk tomato paste production was only 7,500 tons that year, a year-on-year decrease of 95.61%, and inventory dropped to 91,000 tons, a year-on-year decrease of 57.80%.
The problem is that the increase in sales volume does not mean "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%. In other words, the main business, which accounts for over 90% of revenue, is already in a state of negative gross margin.
Price decline and shelf life pressure: reasons for selling at a loss
The core pressures mentioned by the company in the annual report and response to the inquiry letter include price and shelf life.
In terms of price, the company stated in its response that the average export price of Chinese tomato paste over 5kg in 2025 fell to $675 per ton, a 32.5% decline from $1,000 per ton in 2024, hitting a new low in recent years. Domestic bulk tomato paste prices also remained low, with high inventory levels in the industry, and some companies selling at low prices further exacerbated the downward price pressure.
After reviewing the company's annual reports, Blue Whale News found that the selling price of bulk tomato paste dropped 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."
Regarding shelf life, the company's annual report disclosed that the shelf life of bulk tomato paste is 720 days. The company stated that if products are not sold, they become "dead stock." The response also mentioned that, based on actual sales in the tomato product market, product prices decline non-linearly with shelf life, with prices dropping more sharply as products approach their expiration date. In the context of a sharp decline in international orders, a near-saturated domestic market, and increased shelf life pressure, the company needs to increase sales volume, but selling prices continue to fall, leading to a reverse price-cost situation.
From a business perspective, selling at a loss is not ideal but may be a realistic choice: not selling would continue to tie up capital and face further price drops, impairments, and even expiration risks; selling can relieve cash flow and inventory pressure, but the profit side remains under pressure.
Resumption is only a phased cleanup; pre-reorganization and asset-liability pressure remain
Removing the ST label does not mean the risks are cleared. In 2025, the company's asset-liability 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 disclosures, in July 2025, Zhongxingcai Guanghua Certified Public Accountants (Special General Partnership) applied to the court for reorganization and pre-reorganization of the company, citing the company's inability to pay off due debts and apparent lack of solvency, but with reorganization value. On the same day, Xinjiang Hengyuan Water Supply Co., Ltd. also applied for reorganization and pre-reorganization of Red Tomato on similar grounds.
The company stated that it is working with the interim administrator under the court's supervision and guidance to advance matters such as debt review, audit, and evaluation. However, pre-reorganization does not mean that the court will definitely accept formal reorganization. If the court subsequently orders reorganization, the stock trading may be subject to a delisting risk warning; if reorganization fails and bankruptcy is declared, the stock will face termination of listing.
In the first quarter of 2026, the company achieved operating revenue of 54.8219 million yuan, a year-on-year decrease of 30.33%; 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 deducting non-recurring gains and losses was a loss of 20.5002 million yuan. By the end of the first quarter, 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, the resumption is only a temporary escape from the "*ST" label. The real key remains: when 90% of revenue comes from bulk tomato paste with negative gross margins and destocking is complete, what can the company rely on to achieve profitability and improve operations?
