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On 18 Sep 2025, Zixin, whose core business is focused on sweet potato products in China, announced its pivotal “Entry into share option scheme agreement”. |
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 Financial Controller Jee Meng Kwang have committed up to S$13m (almost 50% of the deal), directly aligning their interests with shareholders.
CEO Liang Chengwang If Mr Liang fully exercises his options, his stake would rise significant from 15.27% to 21.89%.
- The fresh funds are mostly earmarked for expansions beyond Liancheng County, both within China and internationally, enabling Zixin to accelerate its growth. With net cash of RMB108.3m remaining in China and not easily transferable, this arrangement ensures that Zixin has capital for pursuing international 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, 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 feared that the Zixin stock uptrend is not sustainable, as the buying was not broad-based. With this share option agreement, it is reassuring to see that there are nine other investors investing 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!
(For more on the technicals, see Ernest's blog post)
C) Substantial shareholder Khoo Thomas Clive continues his purchase
Post the share option agreement, some investors observed 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.
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?
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.
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 4th 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.
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Conclusion Zixin’s recent share option agreement at S$0.030/share meaningfully aligns management’s interests with those of shareholders; |
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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. Please refer to the disclaimer HERE.
 → Read about another S-chip: Long-Awaited Re-Rating Is Happening, +69% year to date |
