Zhongxin Fruit and Juice Limited FY2025 Financial Analysis: Strong Revenue Growth Amid Uncertain Outlook

Zhongxin Fruit and Juice Limited, a Singapore-listed subsidiary of China’s SDIC Zhonglu Fruit Juice Co., Ltd, has released its unaudited condensed interim financial statements for the year ended 30 June 2025. Below is a structured analysis of the report, highlighting key financial metrics, year-on-year (YoY) and quarter-over-quarter (QoQ) performance, dividends, operational insights, and strategic outlook.

Key Financial Metrics and Performance Comparison

Historical Performance and Trends

• Annual Revenue: Jumped 76.4% YoY to RMB 238.7 million in FY2025, mainly due to a surge in customer purchases in the first half of the year.
• Net Profit: Rose to RMB 29.7 million in FY2025 from RMB 2.3 million in FY2024, a substantial turnaround driven by higher volumes and improved margins.
• Gross Profit Margin: Improved from 14.8% in FY2024 to 17.2% in FY2025, attributed to technical and technological upgrades and better cost optimization.
• Cash & Cash Equivalents: Decreased from RMB 31.4 million to RMB 11.6 million, reflecting heavy working capital outflows and increased notes receivables.
• Inventories: Drawn down from RMB 105.1 million to RMB 36.1 million to support higher sales activity.
• Borrowings: Increased significantly to RMB 78.9 million, mainly to support raw material procurement and working capital needs.

Exceptional and Unusual Items

• Exceptional Revenue Spike: The company experienced a dramatic increase in sales in 1H2025 (up ~188% YoY), likely due to customers building up inventories.
• Related Party Transactions: Sales to the immediate holding company, SDICZL and its associates, accounted for RMB 238.1 million, the bulk of FY2025’s revenue. Interest income from overdue receivables and interest paid on working capital loans were also material.
• No Dividend Declared: No interim or final dividend was declared for FY2025 or FY2024 as the company cited insufficient retained profits and a focus on conserving funds for business needs.
• Idle Assets and Relocation: The company continues to hold idle property, plant, and equipment, including assets subject to a government relocation notice. No asset revaluation or impairment was recognized this period as negotiations on compensation are ongoing.

Macroeconomic, Regulatory, and Operational Risks

• Trade Tensions: The company faces uncertainty due to increased tariffs on exports to the U.S. While some relief was negotiated, the risk remains high once temporary measures expire.
• Cost Pressures: Rising shipping costs, intense competition, and volatile raw material prices due to climate change are key operational headwinds.
• Working Capital Strain: Large related party receivables and increased borrowings signal potential liquidity risks if collections are delayed.

Chairman’s Statement

“While the Group recorded strong growth in revenue and profitability in FY2025, which could be driven by end customers looking to increase its inventory levels, the Group is cognisant that there is significant uncertainty as to whether this level of performance can be sustained in the next reporting period. The Group expects to continue facing a range of headwinds, including elevated tariffs, ongoing trade tensions, rising shipping costs, fluctuating market demand, intensifying competition, and the unpredictable impact of climate change which could affects harvesting conditions and reduces the supply of quality raw materials, leading to the volatility in raw material prices.

Exports to the United States have become increasingly challenging due to unilateral trade protection measures. Since the beginning of 2025, a sharp escalation in tariffs has weighed on the Group’s cost competitiveness. Although a partial rollback was achieved through trade negotiations, substantial uncertainty remains once the temporary relief window expires. The Group will continue to monitor policy developments closely and will adapt its strategies to navigate evolving tariff-related cost pressures.

The current global economic environment, coupled with the aforementioned operational challenges, is expected to contribute to continued uncertainty and may affect the Group’s performance. To mitigate these risks, the Group will maintain a disciplined focus on strengthening its core operations, enhancing cost efficiency and productivity, and pursuing market and product diversification strategies. By leveraging the resources and network of its parent company, SDICZL, the Group aims to build greater resilience in its operations and to strengthen its position in the concentrated fruit juice industry.”

The tone is cautious, recognizing strong past results but emphasizing significant external risks and a focus on risk management and operational resilience.

Conclusion and Investor Recommendations

Overall Financial Performance: Zhongxin Fruit and Juice Limited delivered exceptional top- and bottom-line growth in FY2025, mainly due to a one-off spike in customer restocking. Gross margins improved, and the company turned a substantial profit. However, sustainability is in question given heavy reliance on related party sales, working capital pressures, and macroeconomic headwinds such as tariffs and cost inflation. The company remains highly vulnerable to U.S. trade policy shifts and raw material price swings.

• If you are currently holding the stock: Consider taking profits or reducing exposure, especially if your portfolio is sensitive to regulatory and liquidity risks. While the company remains operationally sound, the large jump in revenue may not repeat, and ongoing headwinds could pressure future results. Continued monitoring of receivable collections, tariff developments, and working capital is advised.
• If you are not currently holding the stock: Exercise caution before initiating a new position. Wait for evidence of sustainable non-related-party revenue growth, improved cash generation, and greater clarity on the tariff situation. The risk-reward profile is currently skewed by external uncertainties and related party concentration.

Disclaimer: This analysis is based strictly on the information provided in Zhongxin Fruit and Juice Limited’s FY2025 financial report. It does not constitute investment advice. Investors should perform their own due diligence and consider their own financial situation and risk tolerance before making investment decisions.

View Zhongxin Fruit Historical chart here