Company Initiation: Zixin Group Holdings Ltd. (ZXGH SP/42W.SI)
Company Update: 09 May 2025
Strong supply chain position presents growth potential
- Further expansion into Hainan. Zixin Group is expanding its sweet potato value chain from Liancheng County, Fujian, to Lingao County, Hainan, through a Revitalisation Project covering 8,961.33 hectares across 12 villages. This new land in Hainan is significantly larger than their original area in Fujian, offering substantial replication potential. Although currently in the initial stages, the group anticipates realizing profits from this expansion starting in FY2027. This strategic move marks Zixin’s first replication of its model outside Fujian, demonstrating its growth ambitions in the agricultural sector.
Breakthrough in New Snack Products
Zixin Group recently announced that it has achieved a breakthrough in the production of sweet potato chips and fries snack products. The company has begun to deliver the substantial orders received in February 2025 for these new products from its network of distributors. These products have also received significant demand, and Zixin has ramped up its production capacity at its existing snack manufacturing facility.
1H25 Financial Results
Zixin Group Holdings reported total revenue of RMB156.7mn in 1H25, representing a 33.1% YoY increase, compared with a revenue of RMB117.8mn in 1H24. The company continues to make strong progress on its integrated circular economy industrial value chain across business operations, driving significant and organic growth in financial performance. Net profit after tax increased to RMB7.73mn in 1H25, compared to a net loss after tax of RMB3.40mn in 1H24. The group’s basic EPS was 0.54 RMB cents in 1H25, compared to a loss per share of 0.25 RMB cents in 1H24.
Valuation & Action
We initiate with an OUTPERFORM recommendation and a TP of S$0.060, based on a financial analysis using Discounted Cash Flow (DCF), with a terminal growth rate of 2.0% and a WACC of 10%. Zixin Group’s strong cash position and business model also position the company well to capture economies of scale as well as the benefits of the entire supply chain, further driving growth for the company. The company’s improving margins also highlight the company’s growth trajectory. Our TP of S$0.060 implies a 105.9% upside.
Risks
Environmental risks present a key operational challenge for Zixin Group. The direct impact of variable weather patterns on sweet potato cultivation, coupled with the increased exposure from the extensive farmland, introduces significant yield uncertainty. The risk of widespread disease outbreaks across its agricultural holdings further highlights the urgent need for comprehensive risk assessment and mitigation strategies to safeguard the company’s output and profitability.
