However, earnings was up by just 3.9% y-o-y as the company incurred higher income tax and R&D costs. At this halfway mark, the bottom line was just 29% of what she expected for FY2026.
She remains upbeat about the company's prospects, given the visible growth plans and as indicated in her Nov 28 note, kept her "buy" call.
On the other hand, with Zixin's share base expanding because of the issuance of share options, Lim has cut her target price from 6 cents to 5.5 cents.
In 1HFY2026, Zixin's processed products segment saw sales volume increase by 40.7% y-o-y, driven by expanded capacity. This helped lift earnings for processed products by 68.6% y-o-y.
See also: SAC Capital initiates coverage on Reclaims Global with ‘buy’ call and target price of 49.7 cents
Earnings from its fresh sweet potato segment declined 39% y-o-y, despite higher production, as Zixin paid farmers more for sweet potatoes grown by them. Prices went higher because of typhoon-related disruptions.
Margins were further compressed from higher overheads, specifically, new machinery.
Nonetheless, from 30.2% in 1HFY2026, Lim expects Zixin's gross margin to improve slightly to 31.5% for the full year, supported by higher fresh sweet potato output during the harvest season and by increasing production volume of high-margin processed products from the new facility.
See also: JP Morgan increases DBS’s TP to $70; upgrades OCBC and SGX to ‘overweight’ and UOB to ‘neutral’
Lim sees a few long-term catalysts. For one, Zixin, backed by higher R&D spending, is producing a bigger proportion of so-called premium seedlings so as to better capture growing demand.
In addition, Zixin expects to ramp up its output over at its Hainan operations, where the planting area is five times that of its existing main location at Liancheng in Fujian province.
"This positions Hainan as a primary multi-year growth driver as capacity scales and downstream processing infrastructure are progressively deployed," says Lim.
Zixin Group shares closed at 3.3 cents on Nov 28, down 2.94% for the day but up 10% year to date.
