ZIXIN’s Sweet Success: Fundamentals, Profits Shine, And Growth Story Entices

THE CONTEXT

• It may surprise some that a Chinese micro-cap company, Zixin Group, has attracted investor attention.

The stock is covered by Phillips Securities and KGI Research. Investor Thomas Clive Khoo has aggressively accumulated shares, now holding 13.5% of the company.

• Zixin Group listed on SGX in 2015 via a reverse takeover.

• Despite its unglamorous sweet potato focus, Zixin has progressively delivered improved financials.

• The latest set of FY results (+220% profit) was ultra-sweet.

In FY2025 (ended March 2025), it earned a net profit of RMB 42.7 million, driven by higher sales of fresh sweet potatoes, processed products, and seedling.

• Read what Phillip Securities now says ....

Excerpts from Phillip Securities report

Analyst: Liu Miaomiao

Record PATMI

• PATMI surged by 219.9% to RMB42.7mn in FY25, outperforming our expectations and accounting for 122% of our FY25e forecast.

A 33% increase in revenue, a 2ppts improvement in gross profit margin, and a decline in other losses drove the strong growth. Sales of fresh sweet potatoes soared by 72% YoY to RMB99mn.

• We expect PATMI to remain on an upward trajectory, improving by 31.6% YoY in FY26e, supported by a 60% expansion in processed sweet potato capacity (by 1H26) and a c.25% increase in cold storage capacity for fresh sweet potato (by 2H26).

Gross margin is anticipated to remain flat YoY in FY26e, as higher-margin products will only be introduced from 2H26 onwards.

Zixin is also increasing marketing expenses to capture a greater market share and trading off margin for higher sales volume.

Zixin KGI 5.25

Outlook
Zixin is spending c.RMB60mn in CAPEX to expand its current capacity for fresh and processed sweet potato products, aiming to increase its market share and achieve economies of scale.

LiangChengwang2017 CEO Liang ChengwangWe expect all cash outlay to be completed in FY26e, with production ramping up from FY27e onwards.

Additionally, cash flow from the Hainan project will start flowing in from FY27e, and Zixin plans to replicate the entire value chain from Liancheng to Hainan.

The quality and yield of Hainan sweet potatoes are generally superior to Liancheng’s, enabling Zixin to achieve higher volume and better margins.

We expect PATMI to at least double upon completion of the project.

Maintain BUY with a higher TP of S$0.060 (prev: S$0.056)
We maintain our BUY call with a higher DCF-TP of S$0.060 (prev: S$0.056) and raise our FY26e PATMI forecast by 16% to RMB56.2mn.

Ernest Lim2023 Liu Miamiao, analystZixin’s revenue diversification strategy continues to gain traction, with animal feed contributing an additional RMB446k in revenue in 4Q25 at a margin of approximately 20%.

With production capacity expected to double from 2H26 onwards, we forecast FY26e PATMI from animal feed to rise to RMB500k.

Meanwhile, the Hainan Rejuvenation Project, a key long-term growth driver, remains on track to start contributing to revenue from FY27e.

Zixin is also in a strong financial position, holding net cash of RMB183mn (S$32mn), equivalent to 52% of its current market cap.

Full report here

ZIXIN’s Sweet Success: Fundamentals, Profits Shine, And Growth Story Entices

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