Liang, whose company has its fingers in the entire value chain centred on the humble vegetable root sweet potato, is confident that the trade war has a positive impact on his business instead.
He adds that due to all these external challenges, China has become much more conscious of the need to be self-reliant in more aspects of its economy, so much so that various policies implemented at varying levels are geared towards speeding up this overarching goal. The sure way to reduce the reliance on imports is to boost domestic production. With an increasingly prosperous population, this means Zixin is in a business at the right place at the right time. “We need to top up our own rice bowl,” says Liang in an interview with The Edge Singapore.
While international headlines have been dominated by how US is imposing curbs on high tech products such as semiconductors, forcing an acceleration in the development on its own chips, the Chinese government has been extending support so that it can be more self-reliant on agriculture produce as well — not merely for human consumption, but also as animal feed. Guangdong, the province next to Zixin’s Fujian, has, for example, specifically introduced policies meant to boost the cultivation and market opportunities related to tuber-based crops, says Liang.
Liang acknowledges that sweet potato, like most commodities, suffers from some inevitable cyclical factors. Nonetheless, he says that sweet potato, relative to other comparable agricultural products, enjoys certain advantages. For one, it is seen as a healthier ingredient — a trait that will gain more appreciation among increasingly prosperous and health-conscious consumers.
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For example, he sees sweet potato-based starch used as the base ingredient of the “bubbles” or “pearls” in bubble teas — a massive and growing market that has spawned not just thousands of outlets under numerous brands but also various listed companies. While this market segment is nascent, Zixin is ready to ramp up production according to changes in market demand. According to Liang, cultivating sweet potato yields better returns for the farmers as well, obviously giving them a bigger incentive to plant this cash crop.
He also sees a bigger market that can be created by spending the time and effort to develop a bigger range of sweet potato-based foodstuffs, such as sweet potato chips, which he claims are healthier than potato-based ones; cakes and even alcohol. In what can be described as a virtuous cycle, with more effort spent in R&D to create more products, fetching better margins, giving Zixin even more resources to make further investments and capture better returns.
While most of what Zixin produces is consumed within China, Liang aims to boost his export numbers. He is already laying the groundwork to sell to major markets such as Indonesia and the US. There are some distributors reselling his snacks here in Singapore and Malaysia, but the volume is limited for now as they are not quite enjoying economies of scale.
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Higher production in Hainan
Right now, Zixin’s main production base is in Liancheng County in Fujian, from which it grows the sweet potato, stores the harvested crops, and processes them into end-market products of various kinds. The company, in a joint venture with a subsidiary of CITIC, is putting in place a bold plan to replicate a similar set-up in Hainan Island, where the weather is warmer.
The total capex is to be determined, but work has already started, and the first harvest can be as early as next year. In a bid to better husband its resources, Zixin will tap existing infrastructure as much as possible instead of building everything new from the ground up. Harvest in Hainan can be as early as 2026, says Liang.
Relative to Fujian, Hainan has a key advantage: because of its tropical weather, sweet potato can be grown all year round, resulting in more harvesting cycles, which means potentially higher output.
To move its products, Zixin has adopted various marketing and distribution channels. It has jumped on the live streaming bandwagon, and is also selling via physical channels and more mainstream ecommerce platforms.
Zixin is open to working with all parties, be it as an ingredient supplier, a finished foodstuff producer, or even a contract manufacturer. Each different channel or product will come with its own opportunities and considerations. For example, selling under Zixin’s own brands will require a certain level of marketing and branding spend; as a contract manufacturer, there will be other requirements from the customers, while direct selling via e-commerce platforms means dealing with numerous more customers with varying order volumes. “All channels will have a reasonable profit margin,” says Liang.
Circular value chain
Liang is also keen to highlight how the company is creating a circular value chain in a bid to have healthier, more sustainable earnings growth, instead of big swings along the way.
On March 28, Zixin announced it had received an order worth RMB720,000 ($128,978) to supply 180 tonnes of feedstock over a year to a local duck farm that specialises in raising a local white duck breed. The specially formulated feed, which took a few years of R&D, is created using Zixin’s sweet potato peel plus tea and various herbs.
For Liang, monetising peel waste was the missing link to the circular business model that is now completed. Previously, Zixin had to pay for the disposal of the peel, amounting to a few hundred tonnes a year. It is now able to monetise this instead.
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The revenue from feedstock, relative to the company’s total, is small for now. In the most recent FY2025 ended March, Zixin reported revenue of RMB424.7 million, up 33.1% y-o-y, as the company managed to sell a bigger volume of produce. It enjoyed better sales from processed products too, led by new varieties such as an additive-free vacuum-packed steamed sweet potato, plus crisps and fries. A total revenue of RMB323 million was recorded for this segment, up 24.1% y-o-y. In FY2025, Zixin booked maiden revenue of RMB445,000 from the sale of feedstock under what it calls the “recovery recycling” segment. Along with higher sales, better operating efficiency, the company’s earnings improved in FY2025 — up 219.9% y-o-y to RMB42.7 million. Year to date, Zixin’s share price gained 13.3% to close at 3.4 cents as of June 10, valuing the company at around $56 million.
Unlike many other counters of this size, this stock is starting to attract some coverage from sell-side analysts. In their June 3 note, Liu Miaomiao and Paul Chew of PhillipCapital note that with feedstock sales beginning to contribute to the numbers, Zixin’s revenue diversification strategy is gaining traction. Now, with production capacity set to increase and with the facilities in Hainan ready, they project revenue to grow further from FY2027 onwards. Following the FY2025 results, they have kept their “buy” call and also raised their target price from 5.6 cents to 6 cents to factor FY2026 earnings estimate of RMB56.2 million.
KGI Securities analyst Tang Kai Jie, in his note on June 10, has the same target price. “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.”
When asked, Liang says that the company’s share price at current levels perhaps deserves better recognition. However, he is happy that, at the very least, there is growing interest as indicated by significant trading volumes — on certain days, Zixin was the most heavily traded counter.
Some of the buying likely came from Thomas Clive Khoo, a private investor who first bought into the company years ago and has met Liang several times since. The latter says Khoo has been a very supportive investor. He did not ask for a board seat, nor has he insisted on any changes in the way Zixin is run. In fact, Khoo, having invested in the company since September 2023, only asked to meet Liang after his stake crossed 5%. On June 13, 2024, Khoo paid 1.8 cents each for 4.6 million shares, which increased his stake in the company from 4.98% to 5.3%.
Over home-cooked fare such as braised duck, prawn rolls, stir-fried broccoli, Khoo asked Liang questions ranging from why the company was listed in Singapore, his goals and aspirations, and his business philosophy. Liang, of course, also indicated his near-term expansion targets.
At the various follow-up meetings, Khoo would then ask Liang if those targets had been met. Following each meeting, Khoo would then buy more Zixin shares. Since last June, Khoo has increased his stake steadily, and at ever higher prices. His most recent buying was on May 27 when he paid 3.3 cents for 8 million shares to bring his total stake to nearly 214.6 million shares, or 13.501%, making him the second biggest shareholder after Liang.
“I’m happy that we are gaining recognition, that investors are better aware of how we are tapping technology to create a value chain, an ecosystem. The recent results are a validation of our model,” says Liang. “With this momentum building, with the feedback from investors, we are now more confident in stepping up our growth pace,” he adds.
