Company Update: Zixin Group Holdings Ltd. (ZXGH SP/42W.SI)
Company Update: 10 June 2025
More growth tailwinds ahead
- Replicating value chain into Hainan. Expansion into Hainan is underway. Zixin Group is actively extending its sweet potato value chain beyond Liancheng County, Fujian, into Lingao County, Hainan, through a revitalisation project spanning 8,961.33 hectares across 12 villages. The Hainan site is significantly larger than the Group’s original operations in Fujian, offering considerable potential for replication and scale. While the project remains in its early stages, Zixin anticipates majority of profit contributions beginning in late FY26 or early FY27. This marks the company’s first attempt to replicate its agricultural model outside Fujian, signalling its broader growth ambitions in the sector.
Diversifying revenue streams
Zixin continues to strengthen its presence across the sweet potato industrial value chain, resulting in a growing number of revenue streams. Recent expansion efforts have driven top-line growth, including the launch of its feedstock business with two initial orders. In addition, the development of new sweet potato-based snacks has introduced another source of income. Looking ahead, the company plans to produce and sell sweet potato flour, further expanding its processed food portfolio. The Hainan project is also expected to contribute positively to revenue over time.
FY25 Financial Results
Zixin Group Holdings reported total revenue of RMB424.7mn in FY25, representing a 33.1% YoY increase, compared to a revenue of RMB319.0mn in FY24. 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 rose by 220.0% to RMB42.7mn in FY25, compared to RMB13.4mn in FY24. The group’s basic EPS was 2.75 RMB cents in FY25, compared to 0.97 RMB cents in FY24.
Valuation & Action
We maintain our OUTPERFORM recommendation and keep our TP at S$0.060, based on a Discounted Cash Flow (DCF) model, incorporating a terminal growth rate of 2.0% and a weighted average cost of capital (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 improving margins also underscore its positive growth trajectory. Our TP of S$0.060 implies a 76.2% 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.
