Zixin Group Holdings Announces Strategic Expansion in Hainan Free Trade Port

Key Developments and Implications for Shareholders

Overview

SGX Catalist-listed Zixin Group Holdings Limited (紫心集团控股), a leading biotech-focused sweet potato integrated value chain operator, has announced the incorporation of a new wholly-owned subsidiary, Hainan Zixin Sweet Potato Industry Technology Co., Ltd. (海南紫心薯业科技有限公司), in Hainan Province, China. This move is executed through Zixin’s wholly-owned subsidiary, Zixin International Pte. Ltd.

The newly incorporated entity has a registered capital of S\$5 million and a paid-up capital of S\$3 million, funded by net proceeds from the company’s share option agreement entered into on 18 September 2025 and subsequent exercises of share options.

Expansion Strategy and Operational Focus

Hainan Zixin’s principal activities will span:

• Processing and production of food
• Food sales
• Urban distribution and delivery services (excluding dangerous goods)
• Tourism business
• Accommodation services
• Catering services

The company aims to replicate its Liancheng circular economy industrial value chain in Lingao County, Hainan, which is expected to significantly expand the regional market and enhance brand recognition for Zixin in Hainan.

The initial phase will focus on trading and selling both fresh and processed sweet potatoes, as well as raw materials such as maltose for snack food manufacturing. This initiative will leverage favorable tax measures under the Hainan Free Trade Port (FTP), allowing Zixin to aggregate sales and purchases of sweet potatoes and semi-processed products across regions and overseas.

Tax Advantages and Free Trade Port Incentives

Starting 18 December 2025, the Hainan FTP will implement a zero-tariff and “customs closure” system, offering investors and operators significant tax incentives:

• “First line”: Exemption from import duties for goods processed in Hainan that contain imported materials and have at least 30% value added when exported to the Chinese mainland.
• “Second line”: Eligible entities can import certain goods from overseas into Hainan FTP without incurring import tariffs, VAT, or consumption tax.

These measures create a highly efficient, open, and digitally managed trade environment and are expected to make Hainan a globally competitive free trade hub.

Zixin Group intends to fully utilize these incentives, particularly through the newly established Hainan Zixin, to expand its earnings base and streamline its trading operations between China and overseas markets.

Financial Performance and Revenue Breakdown

In the first half of FY26, fresh and processed sweet potatoes accounted for approximately 97% of the Group’s revenue. This underscores the strategic importance of the sweet potato supply chain and the potential impact of expanded trading operations via Hainan Zixin.

Management Statement:
Mr. Liang Chengwang, Executive Chairman and CEO, has commented that the establishment in Hainan is a “strategic and timely move,” and the gradual deployment of essential business segments will replicate successful models from other regions, strengthen supply chain capabilities, and foster sustainable development for stakeholders, including farmers and workers in food processing factories.

However, the Board has indicated that contributions from Hainan Zixin are not expected to have any material impact on the company’s financial performance for the year ending 31 March 2026 (FY26). Shareholders will be updated on any material developments as they arise.

Business Model and Industry Leadership

Zixin Group operates a vertically integrated value chain, harnessing biotechnology for:

• Research and development of sweet potato varieties
• Advanced cultivation techniques
• Seedling nursery bases
• Fresh sweet potato supply
• Innovation in snack and functional foods
• Brand building and marketing via traditional and e-commerce channels
• Recovery and recycling of agricultural waste into animal feed ingredients using proprietary probiotic fermentation technology

The company aims to lead the sector with smart ecological agriculture and a circular economy business model, leveraging complementary industries like smart warehousing and agricultural waste fermentation to enhance effectiveness and economies of scale.

Key Points for Investors and Shareholders

• Strategic Expansion: Establishment of a wholly-owned subsidiary in Hainan positions Zixin to leverage significant tax and trade incentives, potentially boosting future earnings and global competitiveness.
• Operational Focus: Expansion into trading, processing, and distribution of sweet potato products, including overseas markets, aligns with the group’s core revenue drivers.
• Tax Benefits: Zero-tariff and customs closure measures in Hainan FTP could materially reduce costs and increase margins for Zixin, especially as the business scales.
• Replication of Proven Model: The company is replicating its successful Liancheng circular economy model in Hainan, which may enhance brand recognition and market share.
• No Immediate Financial Impact: The board does not expect material financial impact in FY26, but future developments could be significant if the trade advantages are fully realized.
• Price Sensitive Information: The establishment of Hainan Zixin and the ability to leverage new tax incentives could be price sensitive, especially if future updates indicate material financial impact or accelerated growth in overseas markets.

Cautionary Note and Disclaimer

This article is for informational purposes only and does not constitute investment advice. Shareholders and potential investors are advised to exercise caution when dealing with the shares of Zixin Group Holdings Limited. Persons in doubt should consult their stockbrokers, bank managers, solicitors, accountants, or other professional advisers before trading or making any investment decisions regarding the company’s shares. The information herein is based on the latest disclosures from Zixin Group Holdings Limited and may be subject to change. The Singapore Exchange Securities Trading Limited (SGX-ST) assumes no responsibility for the contents of this article, including the accuracy or completeness of the information provided.

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