Thai Stock Market Focus: Zhongji Health Faces Losses from Ketchup Destocking After Delisting Warning Removed
On June 29, Zhongji Health resumed trading after its delisting warning was removed, with its stock name changed from "*ST Zhongji" to "Zhongji Health." On the first trading day after resumption, the stock was at 3.29 yuan per share, up 2.17% from the June 25 close of 3.22 yuan per share.
Zhongji Health is based in Wujiaqu, Xinjiang, and mainly produces tomato products, including bulk ketchup, small-pack tomato products, and lycopene softgels. Most of its revenue comes from bulk ketchup, which is usually used as a basic ingredient in food processing and catering supply chains and is mainly sold to B2B customers.
The company's prior delisting risk warning came from financial red flags: in 2024, total profit, net profit, and net profit after non-recurring items were all negative, adjusted revenue fell below 300 million yuan, and net assets attributable to shareholders were negative. Under the Shenzhen Stock Exchange listing rules, the stock was therefore labeled "*ST."
In 2025, the company crossed the two financial thresholds required to remove the delisting warning: shareholders' equity turned positive and ended the year at 26.1223 million yuan; adjusted revenue reached 488 million yuan, above the 300 million yuan threshold.
But the company still wasn't profitable. In 2025, net profit attributable to shareholders was a loss of 46.2318 million yuan, and net profit after non-recurring items was a loss of 293 million yuan. In other words, even after shedding the "*ST" label, the core earnings engine still had not recovered.
The annual report shows clear destocking in 2025: production was cut, inventory fell, and sales increased. Bulk ketchup revenue was 448 million yuan, accounting for 91.12% of total revenue; sales volume reached 132,100 tons, up 249.47% year on year. By contrast, production of bulk ketchup was only 7,500 tons, down 95.61%, and inventory fell to 91,000 tons, down 57.80%.
While destocking, the company still faced pressure from negative margins. According to the corrected data, bulk ketchup gross margin in 2025 was -20.41%, and overall gross margin was -15.66%. That means the core business, which accounts for more than 90% of revenue, was already operating at a negative gross margin.
Why sell at a loss: price and shelf life
The main pressure points cited by the annual report and the regulatory inquiry response are price and shelf life.
On price, the inquiry response said that in 2025 the export price of China's ketchup above 5kg dropped to 675 dollars per ton, down 32.5% from 1,000 dollars per ton in 2024 and a new low in recent years. Domestic bulk ketchup prices also stayed weak, inventories were high across the industry, and some companies sold at low prices, intensifying downward price pressure.
According to the company's annual report, the selling price of bulk ketchup 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 price decline outpaced the cost decline, creating a situation where "the more it sells, the more it loses."
On shelf life, the annual report disclosed that bulk ketchup has a shelf life of 720 days, or two years. If it doesn't sell, it gets stuck. The company also said that in the real market, tomato product prices decline nonlinearly with remaining shelf life, and prices drop especially sharply as expiration approaches. With overseas orders shrinking, domestic demand nearing saturation, and shelf-life pressure rising, the company had to increase sales volume even though sales prices kept falling, resulting in an inverted price-cost structure.
Removing the warning does not mean risks are gone: debt pressure and pre-restructuring
From an operating perspective, selling at a loss is not ideal, but it may be the more realistic choice right now. If the company doesn't sell, cash keeps getting tied up and it faces further price drops, impairments, or expiry risk. Selling helps ease cash-flow and inventory pressure, but profits remain under strain.
In addition, removing the warning does not mean risks are gone. In 2025, the company'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 procedures.
According to disclosures, in July 2025, creditor Zhongxing Caihua Accounting Firm (special general partnership) applied to the court for reorganization and pre-reorganization on the grounds that the company could not repay its due debts and clearly lacked repayment ability, but still had restructuring value. On the same day, Xinjiang Hengyuan Water Co., Ltd. also applied for reorganization and pre-reorganization of Red Tomato on similar grounds.
The company said it is working with the interim administrator under court supervision and guidance on creditor review, audit, and valuation. However, pre-restructuring does not mean the court will definitely formally accept the reorganization request. If the court accepts reorganization, the stock may again be subject to delisting risk warnings; if reorganization fails and bankruptcy is declared, the stock will also face delisting risk.
Performance remains under pressure after trading resumes: Q1 2026 still in the red
In the first quarter of 2026, Zhongji Health posted revenue of 54.8219 million yuan, down 30.33% year on year; net profit attributable to shareholders was a loss of 19.6295 million yuan, versus a loss of 7.2557 million yuan a year earlier; and net profit after non-recurring items was a loss of 20.5002 million yuan. At the end of Q1, shareholders' equity fell to 6.4928 million yuan, down 75.14% from 26.1223 million yuan at the end of 2025.
For Zhongji Health, resuming trading only means it has temporarily left the "*ST" label. The core problem remains: with 90% of revenue coming from bulk ketchup that has negative gross margin, and after destocking is completed, what can the company rely on to return to profitability?
