Zixin Group Holdings Ltd. (ZXGH SP/ 42W.SI)
Company Update: 20 November 2023
Cultivating Sweet Success
Company background. Zixin Group Holdings Limited is a holding company. The Company, through its subsidiaries, operates sweet potato biotech-focused value chain that focuses on cultivation and supply, product innovation and snacks production, brand building, and distribution, as well as recovery and recycling
Company site visit. We were recently invited to visit Zixin Group’s business operations in Liancheng County, China during the start of the company’s harvest. This experience allows us to further understand the different stages of the sweet potato supply chain, from upstream to downstream, which was entirely managed by the company through its subsidiaries.
1H2024 Financial results.
The company released its 1HFY2024 results. Revenue increased slightly by 2.1% to RMB117.2mn in 1HFY24, compared to RMB114.8mn in 1HFY23, despite facing challenges from a loss of harvest due to the sudden shift of zero-COVID policy in December 2022 and early 2023, which also resulted in a spillover effect in 1QFY24.
Returning to profit after COVID-19 lockdown.
The COVID-19 lockdown in late 2022 brought a dire impact on the company’s financial performance, resulting in a net loss in FY23. However, after China’s reopening, the company resumed its business activities, and now it is on track to profitability in FY24.
Supply chain dominance
Zixin Group owns a whole supply chain from the upstream of sweet potato plantations to the downstream of end sales to consumers. This allows Zixin Group to maintain the quality of its products and identify bottlenecks within the supply chain easily.
Creating multiple revenue streams.
Aside from producing different kinds of sweet potato snacks, Zixin Group, through a strategic 3rd party ferment company, also plans to ferment their sweet potato wastes, which would then be sold to external parties as an ingredient for animal feed. Furthermore, the company has spent a lot of R&D and effort into diversifying its product lines. They have managed to process sweet potatoes into other products such as tea, and beauty products. This will provide the company with multiple revenue streams when these products go on sale.
