Singapore Post
Price targets:
UOB Kay Hian ‘buy’ 72 cents
Maybank Securities ‘buy’ 77 cents
CGS International ‘add’ 74 cents
OCBC Investment Research ‘hold’ 58 cents
Asset sale Down Under
UOB Kay Hian (UOBKH), Maybank Securities and CGS International analysts have maintained “buy” and “add” calls on Singapore Post S08 (SingPost) with higher target prices of 72 cents, 77 cents and 74 cents, respectively, after the company announced its plans to sell its Australian business.
On Dec 2, SingPost said it had entered into an agreement with Pacific Equity Partners to sell all of its assets, including Freight Management Holdings (FMH), CouriersPlease and recently acquired Border Express, at an enterprise value of A$1.02 billion ($890 million).
SingPost would receive A$776 million in cash and post an expected one-off gain on disposal of around $312 million upon completion.
UOBKH analyst Llelleythan Tan Yi Rong says the transaction is expected to be completed by the end of March next year and is unlikely to be rejected by the Australian authorities. “In our view, this transaction was a surprise given that we expected a strategic minority stake sale versus a complete sale of the Australian business, given that this segment was the group’s only significant growth driver,” he adds.
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Maybank’s Jarick Seet notes that the Australian business has been SingPost’s main growth driver in the past few years.
Seet points out that with the acquisition of Borders Express just completed earlier this year, management could have continued to grow the business and realise its synergistic values.
“However, with the 100% sale, we don’t think it would be rational to reinvest the proceeds in a new business unless it is an extremely attractive opportunity. We believe that excess cash will be returned to shareholders, and we expect more asset sales going forward like FMH, SingPost centre and its post offices after discussions with local authorities,” he says.
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Tan concurs, adding that without the Australian business driving growth, there are limited earning drivers for SingPost. This is because both the postal and freight forwarding businesses face secular and macroeconomic headwinds, while the stable property segment has limited upside potential.
CGSI’s Ong Khang Chuen thinks investors will likely demand a significant risk premium for the stock if SingPost chooses to reinvest the proceeds from the sale of FMH.
Therefore, Ong believes a more likely outcome for SingPost would be to double down on its asset monetisation strategy and return cash to shareholders.
SingPost is considering a special dividend and will update the market in due course.
Assuming that all of the remaining $362 million cash proceeds are used for the special dividend, this would lead to a special dividend of around 16 cents per share and a dividend yield of 27%, Tan notes.
That said, he thinks the company will prioritise future growth opportunities and deleverage its balance before a large special dividend.
“Using $100 million of the remaining $362 million cash proceeds would result in a special dividend of around 4.4 cents per share and a dividend yield of 8%. As our base case, we assume that SingPost would minimally maintain its FY2025 dividend for FY2026–FY2027 via special dividends,” he adds.
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Following this, Maybank believes that the roadmap to return shareholder value is strengthened, and shareholders could get up to 86 cents per share if all its assets are monetised.
The analyst notes that the downside risk is now limited, highlighting that key shareholders are also monetising non-core assets to return to their own shareholders.
Meanwhile, Ada Lim of OCBC Investment Research has kept her “hold” call and 58 cents fair value.
In her Dec 2 note, Lim points out that SingPost’s 1HFY2025 earnings ended Sept 30 missed her projections due to higher-than-expected financing costs that surged 6.1% y-o-y.
“Meaningful deleveraging will enhance the group’s financial position and flexibility and bring about financial cost savings,” adds Lim.
SingPost may also give part of the proceeds to shareholders in the form of a special dividend. Nonetheless, given that this divestment is part of a wider strategic review, Lim prefers to maintain her “hold” call and fair value for now.
“Management was reticent about the strategic growth path for the company post-divestment, only sharing that it will look to review and reset its strategy after the transaction and to provide an update to the market in due course,” says Lim.
“We await further clarity on SingPost’s next engine of growth, backed by a stronger balance sheet and greater financial flexibility. Pending this and the necessary approvals for the divestment to proceed, we leave our forecasts intact and reiterate our fair value estimate of 58 cents,” she adds. — Khairani Afifi Noordin
LHN
Price target:
Maybank Securities ‘buy’ 55 cents
Strong FY2024 earnings
Eric Ong of Maybank Securities is keeping his “buy” call on co-living operator LHN with a higher target price of 55 cents from 43 cents previously. This comes after the group reported its FY2024 ended Sept 30 results, which saw promising growth.
Excluding fair value gains and other non-recurring items, FY2024 core patmi of $29 million beat Maybank’s and the market’s expectations at 116%/106% of full-year estimates, respectively.
The stellar performance was mainly driven by strong demand for its co-living segment, which achieved a high occupancy rate of 97.5%, coupled with stable rental rates.
LHN has declared a final dividend and special dividend of 1.0 cent each, bringing the total payout to 3.0 cents. This translates into an attractive yield of 7.0%.
Notably, its co-living business in Singapore remains the primary growth driver, with revenue jumping by 85.5% y-o-y to $52.4 million in FY2024.
This arose primarily from additional keys at 298 River Valley Road, 99 Rangoon Road and 404 Pasir Panjang Road, full contributions at 2 Mount Elizabeth Link and Lavender Collection, and services provided under Coliwoo’s management.
LHN targets to add about 800 new rooms every year via master lease or selective acquisition (including the ongoing conversion of floors in the GSM Building to residential spaces).
“We understand the property at 55 Tuas South received a Temporary Occupation Permit (TOP) in September 2024, and LHN is looking to sell its 49 strata units with contributions anticipated in FY2025,” says Ong in his Dec 2 report.
As part of its long-term strategy to move towards an asset-light model, LHN has put up three properties, located at 115 Geylang Road, 471 Balestier Road and 404 Pasir Panjang Road, for sale for a combined $120 million.
The properties can be acquired individually or collectively as a portfolio and come with flexible options, including with or without Coliwoo management or via the benefit of a master lease. “The successful sale of these properties will also enable the group to lower its current gearing of 59.6%,” notes Ong.
Moving forward, LHN will further expand its co-living portfolio with new developments such as the launch of 48 and 50 Arab Street, the GSM Building at 141 Middle Road and 260 Upper Bukit Timah Road. These properties will add over 250 keys to its current operations.
In line with its capital recycling initiative, the group’s 40% associated company sold the car park at Bukit Timah Shopping Centre for $22 million and reinvested in a 50% JV, which acquired Wilmar Place at 50 Armenian Street for $26.5 million and will operate under its Coliwoo brand.
Following its positive profit guidance announcement on Nov 15, shares in LHN have seen quite a jump in the past two weeks, soaring about 20% to trade at 44 cents on Dec 3. Since the start of the year, the stock has gained 34.9%. — Samantha Chiew
IHH Healthcare
Price target:
DBS Group Research ‘buy’ $2.58
Favourable growth trends
DBS Group Research has raised its target price for IHH Healthcare Q0F following its latest earnings, which suggest the multi-market provider of healthcare services is poised for further growth.
In 9MFY2024 ended Sept 30, IHH recorded patmi of RM1.7 billion ($511 million), up 21% y-o-y. “The growth in the group’s core hospital and healthcare segment was attributed to sustained demand for healthcare services, higher revenue intensity, and inflation-adjusted price adjustments,” say analysts Amanda Tan and Andy Sim in their Dec 2 note.
Besides the growth generated by its existing hospitals and clinics, IHH has recently acquired Island Hospital in Penang.
DBS says the addition of this 600- bed hospital for RM3.9 billion will help boost its market position in Malaysia and derive synergies of more than RM200 million over the next five years.
In Singapore, another key market, its flagship Mount Elizabeth Orchard Hospital, is on track to complete the bulk of an extensive renovation by 3QFY2025. By then, its ebitda margins should trend back to normalised levels of around 29%, suggests the DBS analysts.
Taking into account new contributions from Island Hospital, inflation in Turkey, where IHH operates a chain of hospitals and a lower tax rate, the DBS analysts have raised their FY2024 and FY2025 earnings estimates by 66% and 47%, respectively.
Their new target price for IHH’s KL-quoted shares is RM8.50, up from RM7.60; for the Singapore-quoted shares, $2.58, up from $2.18.
“While there might be some profit-taking after the strong run-up following the announcement of the Island Hospital acquisition, we believe that investors who take a longer-term view on the counter could accumulate on dips.
“IHH’s expansion plans amidst favourable industry trends, such as an ageing population, increased prevalence of lifestyle diseases, increasing affluence, and medical advancements, make it well positioned for growth,” add Tan and Sim. — Khairani Afifi Noordin
United Overseas Bank
Price target:
DBS Group Research ‘buy’ $37.90
Capital management and earnings visibility
As Singapore’s three banks enter the final month of FY2024, DBS Group Research analyst Lim Rui Wen thinks there is “higher earnings visibility” in FY2025, thanks to lower net interest income (NII) sensitivity to US Federal Reserve rate cuts and slower pace of cuts overall.
The banks are not due to report their results for FY2024 ended Dec 31 until February 2025, but Lim is looking forward to “more active capital plans to be announced”. “Higher dividend yields, more share buybacks are likely to support further sector rerating.”
Singapore banks are increasing their fixedrate assets and extending their loan book duration, according to results for 3QFY2024.
Lim, in a Nov 29 note, says NII sensitivity to rate cuts has continued to decline for Oversea-Chinese Banking Corporation (OCBC) and United Overseas Bank U11 (UOB).
According to Lim’s estimates, each rate cut of 25 basis points (bps) is estimated to reduce Singapore banks’ FY2025 earnings by 1% to 2%, with banks guiding for an NII impact of $2.8 million to $5 million per basis point.
During 3QFY2024, DBS’s net interest margin (NIM) declined 3 bps q-o-q, while OCBC’s declined 2 bps q-o-q while UOB recorded stable NIM q-o-q.
OCBC and UOB’s NIM sensitivity has decreased by some 40% compared to the previous cycle, while DBS’s NIM sensitivity is now reduced to $4 million per bp of rate cuts, from $18 million to $20 million during 2021.
DBS Group Research economists see another 25 bps cut in December, followed by 100 bps through 2025. “An average [loan] duration of two [to] three years supports earnings stability through the rate cut cycle. As risks skew to [a] lesser and slower pace of rate cuts, this may provide upside in FY2025,” she adds.
With US President-elect Donald Trump’s victory, the rates space has to contend with potential additional tariffs, corporate tax cuts and fiscal worries, says Lim. “These would likely keep long-end US yields buoyant, which will continue to support banks’ share prices.”
Loan growth
Rate cuts may spur loan growth in FY2025, says Lim. “Based on our channel checks, interest in new loans has picked up. With a soft landing expected for the US economy and renewed optimism in China’s supportive macroeconomic policies, we believe that modest cuts are likely to spur loan growth in FY2025, notwithstanding a recession scenario. This will buffer any decline in NII.”
As of September, system loan growth in Singapore is up 1.4% year-to-date, while loan growth is up 0.8% y-o-y, driven by 1.9% y-o-y growth in consumer loans, while business loans were up 0.4% y-o-y.
DBS, OCBC and UOB loans grew 0.5%, 2.9% and 4.0% yearto-date to September respectively. “DBS has continued to see corporate repayments while OCBC and UOB benefitted from loan growth in Malaysia and Asean, respectively,” notes Lim.
Alongside the expansion of two Singapore integrated resorts, with Marina Bay Sands reportedly seeking a loan deal size of $12 billion, Singapore banks continue to indicate there is a good regional loan pipeline for FY2025 spanning various sectors, including data centres, semiconductors and property.
DBS and UOB are guiding for mid-single-digit loan growth and high single-digit loan growth for FY2025, respectively.
Lim forecasts Singapore banks’ loan growth to be 6%–7% in FY2025. Asset quality continues to remain benign through FY2024 thus far, with the exception of UOB Thailand that is having some asset quality issues in Thailand with respect to the integration of Citi Thailand.
UOB also had another 20% of specific allowances attributed to collateral revaluations in Hong Kong commercial real estate in 3QFY2024. “Overall, we believe the trend of benign asset quality will continue into FY2025. We expect credit costs to fall within the respective FY2025 management guidances with no surprises assuming a calibrated soft landing in [the] global economy,” says Lim.
DBS has guided for higher specific credit costs of 17 bps to 20 bps and expects more potential recoveries for its oil and gas portfolio going forward.
In contrast, UOB has guided for total credit costs at the lower end of 25 bps to 30 bps.
UOB preferred over OCBC Lim prefers UOB over OCBC, with a “buy” call and a $37.90 target price. “We believe a higher return on equity (ROE) trajectory alongside active capital management plans to return capital to shareholders are positives for the stock. [UOB’s] share price remains well-supported by its strong provisions buffer of 99% and a forward dividend yield of 6% with potential upside for higher dividends.”
Lim anticipates that UOB will announce a $2 billion share buyback programme during its FY2024 results briefing, “which will continue to bolster UOB’s shareholder returns.”
Meanwhile, Lim has a “hold” call on OCBC with a target price of $16.10. “We prefer UOB to OCBC as we await more clarity on OCBC’s capital management plans, alongside uncertainty from the current voluntary unconditional general offer for Great Eastern, which may weigh on its capital plans.” — Jovi Ho
CSE Global
Price targets:
RHB Bank Singapore ‘buy’ 58 cents
KGI Securities ‘buy’ 60 cents
Two “buy” coverage initiations
RHB Bank Singapore has initiated coverage on CSE Global 544 with a “buy” call and target price of 58 cents, given its exposure to global growth and green energy across diversified segments.
KGI Securities analyst Tang Kai Jie has also initiated coverage with an “outperform” recommendation and a target price of 60 cents, citing growing energy demand and order book.
RHB’s Alfie Yeo forecasts a CAGR of 16% for the group’s earnings between FY2023 and FY2026, driven by its current strong order book, especially the electrification segment and acquisitions in the communications segment.
CSE has seen an increase in topline revenue over the years, with a 30% y-o-y growth in revenue in FY2023 to $725.1 million. In 1H2024 ended June, CSE reported revenue of $428.9 million, increasing 22.8% y-o-y and making up 59.2% of its FY2023 revenue.
Tang expects the company’s FY2024 revenue to “blow past” its FY2023 figures as the world sees higher energy demand and an increase in the uptake of renewable energy as a source of energy in 2024.
Yeo notes that CSE is a systems integrator that provides electrification, communications and automation solutions. It offers exposure to green energy, such as renewable energy (RE) and electric vehicle (EV) infrastructure, critical communications, and infrastructure development across the US, UK, Singapore, Australia and New Zealand.
According to Precedence Research, the US electrification market is forecast at US$30.28 billion ($40.56 billion) this year and is projected to be US$72.94 billion in 2034, growing at a 9.2% CAGR during the forecast period.
This is driven by green energy adoption, which leads to the development of electrical infrastructure for electrification systems, of which CSE is a beneficiary.
“We see growth driven by the electrification and communications segments, with the automaton segment’s outlook remaining stable,” Yeo says, noting that the electrification segment is driven by infrastructure and RE development.
This is due to the increasing demand for electricity due to digitisation, information technology (IT), automation, more data centres (DC), adoption of EVs, and more efficient utility installation, which drives more power grid electrification.
According to KGI’s Tang, the significant advancement in artificial intelligence (AI) has been driving energy demand from DC, translating to a higher demand for electrification projects globally. Acquisitions in the US, where it is looking to increase its contributions, will support the growth in the communications segment.
CSE’s critical communications business is present in the UK, the US, Australia, New Zealand and Singapore.
The group recently announced the US$11.5 million acquisition of RFC Wireless Inc, an advanced communications solutions provider.
Additionally, Yeo notes that CSE has a “robust” order book of $634 million as at September, while its order intake continued to be strong at $565 million. Tang concurs, adding that the continuation of a strong order book presents strong cash flow for the company moving forward, alongside an enhanced market position. — Cherlyn Yeoh
Centurion Corp
Price target:
UOB Kay Hian ‘buy’ $1.11
Recommended for ‘growth-minded investors’
UOB Kay Hian (UOBKH) analyst Adrian Loh has maintained his “buy” call on Centurion Corporation OU8 , with an upgraded price of $1.11, from 85 cents, following Centurion’s business update for the 3QFY2024 ended Sept 30, released on Nov 13.
In its release, Centurion reported stronger-than-expected 9MFY2024 revenue growth of 25% y-o-y to $186.5 million, driven by continued strong occupancies and positive rental reversions across its business segments.
This formed over 82% of UOBKH analyst Adrian Loh’s full-year revenue estimate. Its purpose-built workers’ accommodation (PBWA) and purpose-built student accommodation (PBSA) assets saw revenue growth of 27% and 20% y-o-y, respectively.
Centurion should see around 16% volume growth in both PBWA and PBSA segments from 2HFY2024 to 2HFY2026. Based on Loh’s estimates, around 66% of the growth will come from PBWAs in Singapore.
In addition, the company noted that it is currently exploring opportunities to develop around 7,000 beds in Iskandar, Johor, which Loh believes depends on the progress of the Special Economic Zone.
Centurion has also announced the establishment of a joint venture (JV) with Xiamen City Home Apartment to design, build or convert buildings into long-term, professionally managed rental assets.
Loh notes that the consistent purchase of shares by Centurion’s CEO and co-chairman is also a positive sign for the company’s near-to-medium-term outlook.
Between March and September, both men purchased 2.39 million shares at prices ranging from 40 cents to 74 cents apiece.
Loh notes that there is potential for a higher dividend payout. During the 1HFY2024 results, Centurion declared a dividend of 1.5 cents, implying a 26% dividend payout based on earnings per share (EPS) of 5.77 cents from its core business operations.
Loh maintains a current forecast dividend of 3 cents for the full year, but he believes that, given the better-than-expected earnings, an upside to 3.5 cents is highly likely.
Based on the closing share price on Nov 26, this implies a 2024 yield of 3.6%. Loh has upgraded his 2024 to 2026 EPS by 2% to 11% to account for slightly higher rental reversions and volume growth in PBSA for Australia.
Loh’s new target price is based on a P/E multiple of 8.7 times, up from 7 times before.
He says the new P/E multiple is “undemanding”, given Centurion’s earnings growth over the next two years.
“We believe that the company’s current metrics are inexpensive, trading at FY2025 P/E of 8.1 times and 0.8 times P/B,” he adds. “Year to date, Centurion’s 135% share price increase easily outperformed the STI’s total return, and we expect continued outperformance in the next 12 months.” — Cherlyn Yeoh
Sembcorp Industries
Price target:
CGS International ‘add’ $7.32
Stepping up renewable push
Sembcorp Industries (SCI) has expanded its renewable energy portfolio in India to 5.4 gigawatts (GW) with the win of a 300 megawatt (MW) hybrid wind-solar project from NTPC, announced on Nov 26.
The win boosts SCI’s overall renewable energy gross capacity to 16GW, or 64% of its 2028 target of 25GW. This includes a 49MW acquisition pending completion in Vietnam, note CGS International Research analysts Lim Siew Khee and Meghana Kande in a Nov 26 note.
In view of SCI’s “strong” renewable energy portfolio and expanded market share in Singapore, Lim and Kande are maintaining an “add” on Sembcorp with an unchanged target price of $7.32.
SCI announced on Nov 26 that its wholly-owned subsidiary Sembcorp Green Infra was awarded a 300MW inter-state transmission system (ISTS) connected wind-solar hybrid power project from stateowned power producer NTPC, formerly known as National Thermal Power Corporation.
The award is part of a 1.2GW bid issued by NTPC. Other winners include Adani Renewable Energy (600MW), Green Prairie Energy (200MW), Adyant Enersol (70MW) and ReNew Solar Power (30MW).
Upon completion of the project, power output will be sold to NTPC under a 25-year-long power purchase agreement. Lim and Kande expect the project to become operational by 2027F.
Based on industry newsflow, SCI’s 300MW was awarded at a tariff of INR3.29 (0.52 cents) per kilowatt-hour (kWh) by NTPC.
This compares to INR3.26/kWh for Solar Energy Corporation of India’s (SECI) October project and INR3.48 for the public sector project SJVN in March.
“We believe the lower tariffs compared to projects announced at the beginning of 2024 could be due to lower solar panel and module prices,” say Lim and Kande. “In general, we note that India’s wholesale price index (WPI) for solar power system solar panel and attachable equipment has retraced by 10% y-o-y.”
According to SCI’s management, the equity internal rate of return (IRR) for projects in India remains in the teens.
SCI also has a sizeable renewable energy portfolio in China. According to Chinese statistics of national new energy grid connection and consumption, average implied curtailment for solar and wind power nationwide improved to 2.3% and 2.9%, respectively, in 3Q2024.
This is lower than 3.2% for solar and 3.9% for wind power in 1H2024. In the energy sector, “curtailment” refers to reducing power production when there is too much electricity in the grid.
“We understand curtailment for SCI’s solar and wind assets have also improved to 7% and 6%, respectively, in 3Q2024,” say Lim and Kande, compared to 11% and 8%, respectively, in 1H2024.
Looking ahead, key catalysts for SCI are stronger-than-expected earnings growth from expanded renewable and non-renewable energy capacity expansion, and asset recycling for mature renewable energy and non-core assets, say Lim and Kande.
SCI could also accelerate its pace of acquisitions and secure more renewable energy contracts to reach its 2028 target, they add.
On the other hand, any prolonged unplanned plant shutdown would affect SCI’s profit, say the analysts. — Jovi Ho
Nanofilm Technologies International
Price target:
OCBC Investment Research ‘hold’ 76 cents
Potential recovery
Ada Lim of OCBC Investment Research has initiated coverage on Nanofilm Technologies International MZH .
In her Nov 26 note, Lim observes that the company, which provides coating services for electronics manufacturers and other companies, is seemingly reversing a downtrend suffered in the past three years.
Lim acknowledges that the company, which operates largely out of China, faces near-term uncertainties.
Yet, throughout the downturn, the company has continued to invest in alternative locations, beefing up capacity and capabilities, including in a new business unit focusing on capturing growth in the emerging hydrogen economy.
“Differentiated solutions, a large total market potential, and favourable secular trends support Nanofilm’s long-term growth outlook,” suggests Lim.
Citing management, Lim says that the company expects both revenue and earnings for the current FY2024, which would mark the first year of growth since FY2021.
Lim points out that Nanofilm has turned in what might be an inflexion point for its financial performance, suggesting that the worst is over. Nonetheless, we would prefer to see further sequential, sustainable improvement to build confidence around the name.
“All things considered, we initiate coverage on Nanofilm with a ‘hold’ rating and a fair value estimate of 76 cents,” says Lim. — The Edge Singapore
Zixin Group Holdings
Price target:
PhillipCapital ‘buy’ 5.6 cents
Stronger 2HFY2025 expected
PhillipCapital analysts Liu Miaomiao and Paul Chew have maintained their “buy” call on Zixin Group Holdings 42W while upgrading the company’s target price estimate from 5 cents to 5.6 cents.
The report, dated Nov 27, follows the analysts’ visit to Zixin’s factory and plantations in Liancheng County, China, from Nov 19 to 22.
In 1HFY2025 ended Sept 30, the analysts note that government investments into food security infrastructure and Zixin’s research and development (R&D) have increased the volume and shelf life of sweet potatoes by 160% and 328%, respectively.
Liu and Chew expect a stronger performance in the 2HFY2025, driven by higher average selling prices and demand during the harvesting season in Liancheng County, which runs from late September to early January.
Furthermore, festive sales and increased winter sweet potato consumption are expected to boost volume growth further.
Liu and Chew project full-year revenue to benefit from a 112% y-o-y surge in fresh sweet potato sales and a 40% y-o-y increase in processed product sales during 2HFY2025.
Liu and Chew expect near-term catalysts to arise from an increased capacity of around 20% in FY2025, with improved margins from higher-margin processed products and increased usage of cold storage facilities.
Additionally, Zixin has invested RMB100 million to construct a warehouse with research capabilities, aiming to expand production capacity to meet growing demand.
Liu and Chew state that the installation of equipment and machinery is complete and trial production is expected to start by the end of 2024 and double production capacity by 2026.
This facility is projected to increase Zixin’s processed food production capacity by approximately 20% in 4QFY2025 and an additional 60% increase in 1HFY2026.
Longer term catalyst
According to Liu and Chew, Zixin is broadening its revenue streams by transforming agricultural byproducts into raw materials for animal feeds.
Zixin is collaborating with third-party companies to enhance waste collection efforts, leveraging the county’s annual generation of 30,000 tonnes of sweet potato waste.
Zixin expects this to double its collection and production capacity by the end of 2025.
Furthermore, Zixin has integrated its probiotic formula into its feed additive that helps eliminate residual hormones and antibiotics in livestock, improving the health and survival rate and enhancing meat quality.
Given a higher gross margin of 50% for converting agricultural waste into animal feed additives, Liu and Chew estimate Zixin will generate around RMB1.2 million in revenue from this sector in 4QFY2025, increasing to RMB10 million in FY2026.
Additionally, Zixin has invested RMB3.6 million, representing a 3% stake in an urban revitalisation project in Hainan province. This project is expected to be completed within three years.
Following the completion of the primary land development project, part of the arable land will be allocated for sweet potato cultivation.
Zixin plans to replicate its entire value chain from Liancheng County in Lingao County, Hainan. Given Hainan’s favourable climate conditions, the region can support two yearly harvests compared to a single harvest in Liancheng County.
“As a result, we expect harvest yields to double upon the completion of the project,” Liu and Chew note.
Liu and Chew add that Zixin has consistently invested in seedling R&D, supplying high-quality seedlings to farmers and offering technical support to ensure stable and consistent yields.
In 1HFY2025, seedling sales rose 42% y-o-y, and Liu and Chew project an additional 7% y-o-y growth in 2HFY2025.
In FY2026, Liu and Chew anticipate further growth in seedling sales, driven by Zixin’s planned expansion of greenhouse capacity from 100 Mu in FY2024 to 200 mu next year.
In addition to their higher target price, Liu and Chew have increased their FY2025 and profits after tax and minority interests (patmi) forecasts by 6% and 12%, respectively. This is driven by rising capacity in processed products and improved margins. — Cherlyn Yeoh
