Dear all

On 18 Sep 2025, Zixin announced its “Entry into share option scheme agreement”. On 19 Sep 2025, I posted on my LinkedIn that I viewed this share option agreement as a positive step forward (click HERE). Zixin closed -S$0.001 to S$0.031 on 19 Sep 2025.

Zixin subsequently closed at S$0.034 on 26 Sep 2025 with a market cap of S$54.0m.

With this agreement, and as we approach the announcement of its 1HFY26F results around mid-November, Zixin may be interesting to take a look.  

Interesting points

A) The share option agreement aligns management interests with shareholders and allays market concerns

This share option agreement has several positives:

• Management is backing the company with real money. Both CEO Liang Chengwang and Group FC Jee Meng Kwang have committed up to S$13m (almost 50% of the deal), directly aligning their interests with shareholders. If fully exercised, Mr Liang’s stake could rise from 15.27% → 21.89%.

• Fresh funds are mostly earmarked for expansions beyond Liancheng County, both within China and internationally, enabling Zixin to accelerate its growth in these areas. With net cash of RMB108.3m remaining in China and not easily transferable, this arrangement ensures that Zixin has accessible capital for pursuing international growth opportunities.

• Instead of raising all at once, the option framework allows staggered drawdowns, ensuring capital is tapped only when needed.

• This reduces immediate dilution and signals financial discipline, while securing ~S$26.6m at a fixed price (S$0.030/share).

• It allays two chief market concerns on Zixin. Firstly, one of the market concerns is that, notwithstanding Zixin’s potential growth prospects, Mr Liang has too little stake in the company. If the above share option is fully exercised at $0.030 per share, Mr Liang’s stake could increase from 15.27% to 21.89%. To some extent, the increase should allay some market concerns. Secondly, some market watchers point out that the rise in Zixin’s share price since late May 2024 may be due to the aggressive share purchases by Mr Khoo Thomas Clive. He raised his stake from 5.3% on 13 Jun 2024 to 13.5% on 27 May 2025. In other words, some market watchers fear that the buying in Zixin is not sustainable, as it is not broad-based. With this share option agreement, it is reassuring to see that there are nine other investors who are willing to put in S$13.6m in Zixin too at S$0.030/share.

While risks are part of every investment, and earnings per share dilution is a consideration, I believe this agreement strengthens Zixin’s growth path and improves shareholder alignment.

B) Chart looks bullish after breaching its almost 8-year downtrend line!

Based on Chart 1 below, it is encouraging to see that Zixin has breached its downtrend line established since Nov 2017 with sharp volume expansion. On 23 Sep, Zixin breached this downtrend line with 149.4m shares changing hands, 10.7x above its 30D average volume. This also clocks the highest volume transacted since 27 Jan 2021. In tandem with the recent market consolidation, Zixin has also pulled back from its intraday high of S$0.037 on 23 – 25 Sep to close S$0.034.

Based on chart, Zixin should see strong support at S$0.034 which sits at the confluence of its Fibonacci level and the downtrend-resistance-turned-support region. Near term resistance is around S$0.037 / 0.039 – 0.040 / 0.045.

Chart 1: Strong support at S$0.034 on pullbacks

C) Substantial shareholder Khoo Thomas Clive continues his purchase

Post the share option agreement, some investors observe and worry that Mr Khoo Thomas Clive (a substantial shareholder) did not participate in the share option agreement.

On 22 Sep, Mr Khoo added 7.3m shares at $0.03152 to raise his stake to 14.02%. He has 222.824m shares in Zixin. This comes straight after insiders (CEO Liang and Group FC Jee) have undertaken to subscribe up to SGD13m worth of Zixin shares in the share option agreement priced at $0.030/share.

Given all the above actions, could it be possible that the “insiders”, substantial shareholders and other investors who participated in the share option saw potential in Zixin that the market has yet to recognise?

D) Will 1HFY26F results surprise on the upside?

Based on Bloomberg, the average analyst target price is $0.060, reflecting an 8x FY26F P/E. According to Shareinvestor, Zixin’s NAV/share is around S$0.067. Consensus estimates suggest that Zixin may report earnings of around RMB53m in FY(Mar)26. To provide some context, Zixin’s adjusted FY25 net profit (after accounting for one-off expenses of approximately RMB7.7m) was around RMB50m. Hence, projecting FY26F earnings to reach RMB53m appears conservative, especially in light of Zixin’s developments announced thus far.

Notwithstanding the points mentioned above, this is just my guess. The results for 1HFY26F should be released by mid-Nov, which should give us some inkling on how FY26F will be. It is noteworthy that Zixin has announced positive profit alerts for the last three half-yearly results. Will the forthcoming 1HFY26F mark the 4^th consecutive positive profit alert?

Potential risks

There are always risks involved in buying stocks. Examples of risks are execution risks; product demand uncertainties; agriculture risk (weather, disease, or environmental changes could affect sweet potato yield and quality); regulatory and policy risks etc.

To better appreciate the risks, readers can refer to the analyst reports HERE and my write-up HERE.

Conclusion

It is noteworthy that there are risks involved, such as the aforementioned risks (e.g., various business, execution risks; product demand uncertainties etc.). Nevertheless, Zixin’s recent share option agreement at S$0.030/share aligns management’s interests with those of shareholders; the additional purchase by Mr Khoo Thomas Clive at $0.03152/share after the announcement of the share option agreement, and the rally in Zixin’s share price and significant volume expansion, may indicate that savvy investors are beginning to take note of Zixin. Therefore, one could argue that Zixin is worth a closer look.

Readers have to assess their own % invested, risk profile, investment horizon and make your own informed decisions. Everybody is different hence you need to understand and assess yourself. The above is for general information only. For specific advice catering to your specific situation, do consult your financial advisor or banker for more information

Readers who wish to be notified of my write-ups and / or informative emails, you can consider signing up at http://ernest15percent.com. However, this reader’s mailing list has a one or two-day lag time as I will (naturally) send information (more information, more emails with more details) to my clients first. For readers who wish to enquire on being my client, I can be reached at ernestlim15@gmail.com.

P.S: Please read the above in conjunction with my earlier article HERE. For context, I have previously informed clients that I have taken profit post its FY25 results in late May. Last 1-2 weeks, I have started informing clients to consider re-looking into Zixin. I am vested.

Disclaimer

Please refer to the disclaimer HERE