SGX Mainboard: Zhongji Health Removes *ST; Tomato Paste Destocking Still Loss

On June 29, Zhongji Health resumed trading after removing the *ST designation, changing its stock abbreviation from "*ST Zhongji" to "Zhongji Health". On the first day, as of press time, the stock price was 3.29 yuan per share, up 2.17% from the June 25 close of 3.22 yuan.

Zhongji Health, located in Wujiaqu, Xinjiang, is mainly engaged in tomato products, including bulk tomato paste, small-pack tomato products and lycopene soft capsules. Revenue is primarily from bulk tomato paste, sold to B-end customers.

Behind the *ST Removal: Financial Threshold Crossed but Profitability Still Pressured

The company was tagged *ST for triggering financial-based delisting risk warnings. In 2024, total profit, net profit, and recurring net profit were all negative, and revenue after deductions was below 300 million yuan, with net assets attributable to shareholders negative.

By 2025, the company crossed two financial thresholds required for removing the *ST marking: net assets attributable to shareholders turned positive to 26.12 million yuan at year-end; revenue after deductions reached 488 million yuan, above the 300 million yuan red line.

But core profitability has not been restored. In 2025, the company still recorded a loss: net profit attributable to shareholders was -46.23 million yuan, and recurring net profit was -293 million yuan.

Destocking Effective in Volume but Gross Margin Remains Negative

In 2025, Zhongji Health relied on destocking to support revenue: production decreased, inventory fell, and sales volume increased. Annual report shows bulk tomato paste revenue of 448 million yuan, accounting for 91.12% of total revenue; sales volume of 132,100 tons, up 249.47% year-on-year. Correspondingly, production volume was only 7,500 tons, down 95.61%; inventory decreased to 91,000 tons, down 57.80%.

The operational problem: it's not a profitable business. According to the company's corrected data, the gross margin of bulk tomato paste in 2025 was -20.41%, and overall gross margin was -15.66%. Bulk tomato paste, accounting for over 90% of revenue, is selling at a negative margin.

Why Selling at a Loss: Price Decline and Shelf Life Pressure

The company cited two core pressures in the annual report and response to exchange inquiries: price and shelf life.

On price, the company noted that in 2025, China's export price of tomato paste over 5kg fell to US$675/ton, down 32.5% from US$1,000/ton in 2024, hitting a recent low. Domestic bulk tomato paste prices also remained low, with high industry inventory, and some enterprises' low-price dumping further exacerbated the decline.

Blue Whale News compiled annual report data showing that the average selling price of bulk tomato paste fell from 7,857.91 yuan/ton in 2023 to 5,866.22 yuan/ton in 2024, and further to 3,395.43 yuan/ton in 2025. The company said the decline in sales price was greater than the decline in costs, creating a situation of "the more you sell, the more you lose."

On shelf life, the company disclosed that bulk tomato paste has a shelf life of 720 days (two years). If products are not sold, they risk being written off. The company stated that based on market reality, product prices decrease non-linearly with shelf life, with sharp declines near expiration. Amid sharp declines in international orders, near-saturated domestic market, and increased shelf life pressure, the company needs to boost sales, but sales prices continue to fall, resulting in a price-cost inversion.

Removing *ST Does Not Mean Risk Cleared: High Debt Ratio and Pre-reorganization

As of 2025, Zhongji Health's debt ratio was still as high as 97.79%, and the company and its wholly-owned subsidiary Red Tomato have entered pre-reorganization proceedings.

The company disclosed that in July 2025, creditor Zhongxingcai Guanghua Certified Public Accountants (Special General Partnership) applied to the court for reorganization and pre-reorganization of the company on the grounds that the company is unable to pay due debts, obviously lacks solvency but has reorganization value. On the same day, Xinjiang Hengyuan Water Affairs Co., Ltd. also applied for reorganization and pre-reorganization of Red Tomato on similar grounds.

The company said it is working with the temporary administrator under court supervision to advance debt review, audit and valuation matters. But pre-reorganization does not mean the court will necessarily accept the reorganization petition. If the court later accepts, stock trading may be subject to additional delisting risk warning; if reorganization fails and bankruptcy is declared, the stock may face termination of listing.

On June 29, Blue Whale News called and wrote to Zhongji Health on related issues, but received no response by press time.

Still Loss in Q1 2026: Resumption Only Temporary Exit from *ST

In Q1 2026, Zhongji Health achieved revenue of 54.82 million yuan, down 30.33% year-on-year; net profit attributable to shareholders was -19.63 million yuan, compared to -7.26 million yuan in the same period last year; recurring net profit was -20.50 million yuan. By end of Q1, net assets attributable to shareholders fell to 6.49 million yuan, down 75.14% from 26.12 million yuan at end-2025.

For Zhongji Health, resuming trading is only a temporary exit from the *ST label. The core question remains: after destocking, with 90% of revenue from negative-margin bulk tomato paste, what will support profitability?