ZXGH.SP / 42W.SI
FY26 marks the first tangible proof-point of the circular sweet potato ecosystem
Agri-Technology
Revenue rose 43.0% YoY to RMB607.5m and net profit increased 43.8% YoY to RMB61.4m. The 1H26 note framed Zixin around policy support, Hainan visibility and sweet potato powder optionality. FY26 extends that narrative with stronger fresh tuber sales, the first meaningful feedstock contribution and a wider set of subsidiaries and JVs across Hainan, Quanzhou, Singapore and the US.
Zixin Life Inc gives the group a US route-to-market option; Quanzhou Zixin adds a Fujian-based product/distribution partner; Hainan Bankang and Hainan Wenlan Shuxiang deepen the Hainan operating footprint; Zixin Fresh and Velterra create Singapore and Southeast Asia channels. In aggregate, these entities are small in capital size but strategically relevant because they map onto upstream sourcing, downstream distribution, functional products and export channels.
We model revenue rising from RMB607.5m in FY26 to RMB1.20bn in FY31, supported by fresh sweet potatoes, processed products, fermented feedstock and a gradual functional-product ramp. We deliberately keep gross margin below the prior 1H26 model, assuming a lower-margin fresh tuber mix and up-front expansion costs, while operating leverage drives EBIT margin toward c.12% by FY29-FY31.
We reiterate OUTPERFORM and raise our 12-month target price to S$0.069 from S$0.048. The increase is a net effect of more aggressive FY27-FY31 revenue assumptions, a broader TAM-SAM-SOM opportunity set, and higher confidence that Zixin can replicate parts of its Liancheng model outside Fujian
Our TP is derived from a DCF valuation using a 15.0% WACC and 2.0% terminal growth, which produces equity value of RMB1,107.8m and fair value of RMB0.362 per diluted share. Applying CNY/SGD of 0.190 gives fair value of S$0.069 per share, implying 122.2% upside from the current price of S$0.031.
Key downside risks include: (i) slower-than-expected Hainan and Quanzhou execution; (ii) working-capital pressure from upfront supplier payments; (iii) lower realised gross margin as fresh tuber revenue expands; (iv) dilution from warrants and share options; (v) weather and agricultural yield volatility; and (vi) limited liquidity and higher cost of capital for a small-cap Catalist issuer.
