Zhongxin Fruit and Juice Limited: Interim Financial Analysis for HY2026

Zhongxin Fruit and Juice Limited, a Singapore-incorporated investment holding company with subsidiaries engaged in fruit juice concentrate production, has released its unaudited interim financial statements for the six months ended 31 December 2025 (“HY2026”). The following analysis highlights key financial metrics, performance trends, business developments, and outlook to inform investors’ decisions.

Key Financial Metrics & Performance Table

Historical Performance Trends

• Revenue: Revenue declined sharply year-on-year, primarily due to weaker demand following strong customer purchasing in the previous year.
• Gross Margin: Despite lower sales, gross margin improved from 16.3% to 19.2%, attributed to technical upgrades and cost optimisation.
• Net Profit: Profit after tax fell by 37.8% YoY, in line with declining sales volume.
• EPS: EPS declined proportionally with net profit, reflecting reduced earnings for shareholders.
• Inventory: Inventory levels increased significantly, mainly due to stable production but softer sales activity.
• Net Asset Value: NAV per share rose, reflecting retained earnings and asset growth.

Exceptional Earnings/Expenses

• Interest income increased by RMB1.1 million, stemming from outstanding receivables from the immediate holding company.
• No exceptional items or early/delayed expense recognition noted.

Asset Revaluation and Delays

• Management is awaiting compensation for a government-mandated relocation of subsidiary Xuzhou Zhongxin’s building and land (carrying value RMB16.4 million). No adjustments have been made pending finalisation of terms.
• Idle production machinery (RMB2.58 million) was assessed for impairment but found to be recoverable at current values.

Related-Party Transactions and Fund Flows

• Sales to immediate holding company SDIC Zhonglu Fruit Juice Co., Ltd (“SDICZL”) and its group: RMB94.2 million (almost all revenue).
• Interest income from SDICZL: RMB3.1 million.
• Interest paid to SDICZL: RMB955,000.
• Trade receivables and notes receivables are largely due from SDICZL, highlighting significant related-party concentration.
• Trade financing and short-term loans are secured against promissory notes from SDICZL.

Corporate Actions and Business Events

• No dividend declared or recommended, as the Company lacks retained profits and wishes to conserve capital.
• No share buybacks, dilution, placements, or fundraising during the period.
• Ongoing amalgamation of subsidiaries Yuncheng Zhongxin and Xuzhou Zhongxin, with consolidation of assets and the establishment of a branch.
• No material subsequent events or changes in group composition.

Macroeconomic and Industry Trends

• Global demand for fruit juices remains unpredictable, with trade policy changes (notably US tariffs) impacting exports and profitability.
• Cost pressures from logistics and raw materials remain elevated.
• The Group plans to optimise costs, improve operational efficiency, and diversify products and markets, leveraging its parent company’s network.

Chairman’s Statement

“The Group recorded lower revenue and earnings in HY2026, reflecting a more moderate customer demand following a period of strong sales in the previous financial year. While this has resulted in softer reported performance for the period, the Group remained profitable during the financial period. The Group continues to operate in an uncertain environment, with factors such as trade policies and tariffs, logistics costs, market demand fluctuations, competitive pressures, and climate-related impacts on agricultural output potentially affecting operations and raw material pricing. Exports to the United States remain subject to trade policy changes, with higher tariffs since early 2025 increasing cost pressures, while the duration and impact of any relief measures remain uncertain. The Group will continue to focus on cost management and optimisation as well as operational efficiency, while gradually advancing its market and product diversification efforts. Leveraging the resources and network of its parent company, SDICZL, the Group aims to strengthen its competitive position in the concentrated fruit juice industry.”

Chairman’s tone: Neutral to cautious—recognising current challenges but reaffirming ongoing profitability and improvement initiatives.

Conclusion & Investor Recommendations

Overall Assessment: The Group’s financial performance for HY2026 is neutral to weak, with clear pressure from reduced demand and lower sales, though profitability and asset value have been maintained. Management’s focus on cost efficiency and diversification is prudent given prevailing industry risks, but high concentration of revenue and receivables with its parent company and exposure to external trade policy uncertainties remain material risks.

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