Precious Metals News Perspective: Zhongji Health's delisting-risk removal and relisting still leave losses from bulk ketchup inventory reduction, alongside pre-restructuring risk
On June 29, Zhongji Health had its delisting-risk warning removed and resumed trading, with its stock abbreviation changed from "*ST Zhongji" to "Zhongji Health." On the first day back, as of press time, the stock was at RMB 3.29 per share, up 2.17% from the June 25 close of RMB 3.22.
Zhongji Health is based in Wujiaqu, Xinjiang, and mainly produces tomato products, including bulk ketchup, small-pack tomato products and lycopene soft capsules. Its main revenue comes from bulk ketchup, which is used more as a basic ingredient in food processing and catering supply chains, mainly serving B2B customers.
In 2025, the company crossed the two financial thresholds needed to remove its delisting risk warning: equity attributable to shareholders of the listed company turned positive, ending the year at RMB 26.1223 million; revenue after deductions reached RMB 488 million, above the RMB 300 million red line. However, the company still did not become profitable in 2025, with net profit attributable to shareholders of the listed company at a loss of RMB 46.2318 million and net profit excluding non-recurring items at a loss of RMB 293 million.
Surging sales and falling inventories go hand in hand: behind 132,100 tons lies unrelenting cost pressure
The main reason revenue cleared the line was the company's "destocking" effort. The annual report shows that in 2025 bulk ketchup generated RMB 448 million in revenue, accounting for 91.12% of total revenue; sales volume was 132,100 tons, up 249.47% year on year. In line with that growth, production volume was only 7,500 tons, down 95.61% year on year, while inventory fell to 91,000 tons, down 57.80%.
But the corrected data disclosed by the company show that bulk ketchup's gross margin was -20.41%, and the company's overall gross margin was -15.66%. In other words, its core business, which contributes more than 90% of revenue, was still in negative gross-margin territory.
"Selling at a loss" explained: falling prices and shelf-life pressure create a production-sales inversion
In its annual report and reply to the exchange's inquiry letter, the company pointed to two core factors behind the losses: price and shelf life.
On price, the company said that in 2025 the average export price of Chinese ketchup above 5 kg fell to $675 per ton, down 32.5% from $1,000 per ton in 2024 and the lowest level in years. Domestic bulk ketchup prices also remained weak, industry inventories were high, and some firms dumping stock at low prices intensified downward pressure. Blue Whale News found that the unit selling price of bulk ketchup fell from RMB 7,857.91 per ton in 2023 to RMB 5,866.22 per ton in 2024, and then further to RMB 3,395.43 per ton in 2025. The company said the drop in selling prices was larger than the drop in costs, creating a situation where "the more it sells, the more it loses."
On shelf life, the company disclosed that bulk ketchup has a shelf life of 720 days. It said product prices decline nonlinearly as shelf life shortens, with prices falling more sharply as expiration approaches. Combined with a sharp drop in international orders, a nearly saturated domestic market and mounting shelf-life pressure, the company needed to boost sales, but selling prices kept falling, creating a production-sales price inversion.
From an operating standpoint, the company believes that in the current environment, "selling at a loss" may be the more realistic choice: not selling keeps capital tied up and exposes the company to further price drops, impairment and even near-expiry risk; selling helps ease cash-flow and inventory pressure, although profitability remains under strain.
Removing the warning does not mean risk is gone: leverage remains high and pre-restructuring has begun
Although the warning was removed, the risks are not over. In 2025, the company's asset-liability ratio was still as high as 97.79%, and both the company and its wholly owned subsidiary, Red Tomato, have entered pre-restructuring.
According to the disclosure, in July 2025, creditor Zhongxing Cai Guanghua Certified Public Accountants LLP filed a petition with the court for reorganization and pre-restructuring, arguing that the company was unable to repay debts due and clearly lacked repayment capacity, while still having restructuring value. That same day, Xinjiang Hengyuan Water Services Co., Ltd. filed a similar petition for Red Tomato. The company said it is moving forward with creditor review, audit and valuation work under the supervision and guidance of an interim administrator and the court.
Pre-restructuring does not mean the court will definitely accept a formal reorganization petition. If the court later rules to accept reorganization, the company's stock may be subject to an additional delisting-risk warning; if reorganization fails and bankruptcy is declared, the stock will also face the risk of delisting.
In the first quarter of 2026, the company posted revenue of RMB 54.8219 million, down 30.33% year on year; net profit attributable to shareholders of the listed company was a loss of RMB 19.6295 million, compared with a loss of RMB 7.2557 million a year earlier; net profit excluding non-recurring items was a loss of RMB 20.5002 million. By the end of the quarter, equity attributable to shareholders of the listed company had fallen to RMB 6.4928 million, down 75.14% from RMB 26.1223 million at the end of 2025.
For the company, relisting only means it has temporarily stepped away from the "*ST" label. The key question still to be answered is: when more than 90% of revenue comes from bulk ketchup with negative gross margin, what can the company rely on to return to profitability after destocking?
