Xinjiang Sailimu Modern Agriculture Co., Ltd. (Xin Sai Co., Ltd.) (600540)

Equity Research Report | Industry: Cotton Agriculture and Agricultural-Product Processing Supply Chain | Report Date: September 13, 2026 | As of the September 11, 2026 close; shareholder-structure data as of June 30, 2026, with announcement date of August 27, 2026

This report was automatically compiled by AI based on publicly available information and is for reference only. It does not constitute investment advice.

1. Executive Summary

Xin Sai Co., Ltd.’s operating performance improved significantly in the first half of 2026. The company recorded operating revenue of RMB 2.571 billion, up 77.15% year on year; net profit attributable to shareholders of the listed company was RMB 125.11 million, up 1819.68% year on year; non-recurring-adjusted net profit attributable to shareholders was RMB 146.65 million; and net cash flow from operating activities was RMB 2.420 billion. Revenue growth was mainly driven by increased sales of lint cotton and higher revenue from Xin Sai Bio-Protein Technology Co., Ltd. However, the exceptionally high year-on-year growth rate also reflects the low base in the same period last year, and the sustainability of full-year earnings remains to be seen.

The company’s core business remains the procurement, processing and trading of lint cotton. In 2025, lint-cotton revenue accounted for approximately 79.42% of revenue from principal operations, while sales volume increased 121.75% year on year. In the first half of 2026, lint-cotton sales volume increased by approximately 73,100 tonnes from the same period last year, with related revenue increasing by approximately RMB 1.177 billion. The company operates 14 ginning plants, with owned capacity equivalent to approximately 86,000 tonnes of lint cotton. However, lint-cotton sales reached 180,400 tonnes in 2025, with a substantial portion of the volume coming from trading and external cooperation arrangements. Business expansion is therefore sensitive to procurement costs, inventory management, working-capital turnover and purchase-sale spreads.

Earnings quality remains volatile. In 2025, revenue increased 93.74% year on year to RMB 3.012 billion, but net profit attributable to shareholders still showed a loss of RMB 142.36 million. Gross margin for principal operations was approximately 0.40%, while lint-cotton gross margin was -0.43%. At the end of 2025, inventories stood at RMB 2.460 billion and prepayments at RMB 515 million; net cash flow from operating activities for 2025 was negative RMB 1.317 billion. The improvement in first-half 2026 profit has not yet fully demonstrated that the lint-cotton business has established a stable and sustainable positive-gross-margin model.

The share price and trading sentiment have fluctuated significantly recently. As of the September 11, 2026 close, the share price was RMB 5.90, hitting the daily lower limit. It had declined continuously from the September 9 closing price of RMB 7.21. Previously, the share price rose rapidly by approximately 57% from August 27 to September 9, during which the turnover ratio exceeded 30% on multiple occasions. The company has warned of the risks of excessive short-term gains, overheated market sentiment and a rapid share-price decline. As of the relevant announcement disclosures, the China Securities Regulatory Commission’s investigation into the company for suspected violations of information disclosure rules was still ongoing.

2. Company Overview

2.1 Basic Information

2.2 Principal Businesses and Product Mix

• Lint-cotton business: Includes self-produced lint cotton and traded lint cotton. Self-produced lint cotton is generated through the procurement of seed cotton and ginning, producing lint cotton, cottonseed and other products. Traded lint cotton is procured through the National Cotton Trading Market or offline channels and sold to downstream customers such as textile companies. Revenue in 2025 was RMB 2.379 billion, accounting for approximately 79.42% of revenue from principal operations, while sales volume was 180,400 tonnes, up 121.75% year on year.
• Deep processing of cottonseed: Cottonseed generated during ginning is used to produce degossypolized cottonseed protein, cottonseed oil, cotton linters and cotton hulls. In 2025, cottonseed revenue was RMB 186 million, Grade-3 cottonseed oil revenue was RMB 96.94 million, and cotton-protein revenue was RMB 191 million. Cotton-protein sales volume was 71,500 tonnes, up 418.87% year on year, while cotton-oil sales volume was 14,700 tonnes, up 20.22%.
• Mineral processing: Mainly conducted by subsidiaries including Zhengda Calcium and Juxin Calcium. Products include calcium oxide, limestone and desulfurizing agents, primarily sold to steel, building-materials and chemical companies. Revenue from calcium oxide/limestone in 2025 was RMB 29.99 million, with sales volume of 116,100 tonnes, up 62.30% year on year.
• Trading, warehousing, logistics and other businesses: Includes lint-cotton and cottonseed trading, warehousing and logistics, and agricultural-product transportation. Traded lint-cotton revenue was RMB 1.236 billion in 2025, up 315.92% year on year. The company added cooperative operations with 21 external ginning plants, with cooperative lint-cotton sales volume reaching 93,500 tonnes.
• Capacity and resources: As of 2025, the company owned 14 ginning plants with annual capacity to process approximately 200,000 tonnes of seed cotton, equivalent to approximately 86,000 tonnes of lint cotton. The company’s own ginning plants were generally operating at full capacity; actual sales also included external cooperative capacity and lint-cotton trading supply chains.

2.3 Position in the Upstream and Downstream Value Chain and Cost-Profit Structure

Xin Sai Co., Ltd. is positioned in the upper-middle portion of the cotton value chain, primarily in ginning and lint-cotton circulation, while extending downstream into the deep processing of by-products such as cottonseed protein and cottonseed oil. The company benefits from its location in Xinjiang and the Xinjiang Production and Construction Corps cotton-producing regions, its ginning-plant network, state-owned background and supply-chain integration capabilities. However, lint cotton is a standardized bulk commodity, limiting the company’s overall pricing power. Its business is characterized by scale-driven growth, cost sensitivity and low margins.

• Seed cotton is the core input for the cotton business. It is mainly supplied by cotton growers, cooperatives and external ginning companies and is generally purchased in concentrated volumes from September to November each year. Procurement prices largely fluctuate with market conditions, and the company does not possess significant pricing power. Xinjiang has a large number of ginning companies, resulting in issues including competition for supply, price increases and excess capacity.
• Cottonseed is both a by-product of ginning and the primary raw material for businesses such as cottonseed protein. Procurement methods include tender procurement, inquiry-based procurement and long-term cooperation. Cottonseed prices are affected by cotton output and the prices of cottonseed oil, cottonseed meal and soybean meal; the company is generally a price taker.
• The principal raw material for calcium oxide is limestone, while energy, electricity, transportation and environmental-protection inputs are also required. The company reduces costs through multi-party price inquiries, centralized tenders and efforts to obtain preferential electricity prices, but it has not disclosed the concentration of its principal suppliers.
• In 2025, raw materials accounted for 93.54% of agricultural-business costs and 82.41% of industrial-business costs, demonstrating the sensitivity of the cost base to raw-material prices and procurement efficiency.
• The company’s ginning operations are distributed across multiple major cotton-producing areas in southern and northern Xinjiang, providing a certain procurement radius and regional coordination advantages. However, the company has not disclosed verifiable cotton-cultivation acreage or the procurement share attributable to its five largest suppliers. Accordingly, no clear conclusion can be drawn regarding resource reserves or supplier bargaining power.
• Lint cotton is mainly sold to textile companies engaged in spinning, home textiles and apparel manufacturing. Customers generally reference futures prices, spot prices and basis pricing. The company has limited pricing power over individual customers, and profitability depends on procurement costs, processing efficiency, quality grade, logistics and warehousing, hedging and purchase-sale spreads.
• Cotton protein is mainly sold to feed producers in Xinjiang, while cottonseed oil and other products are sold to oil-processing, feed and related agricultural-product processing companies. This segment is affected by prices of substitute proteins such as soybean meal and rapeseed meal, as well as downstream livestock and aquaculture conditions. In 2025, raw-material supply in the degossypolized cottonseed protein industry was ample, but processing margins remained relatively narrow.
• Calcium oxide is mainly sold to steel, building-materials and chemical companies. Customers are price-sensitive, and procurement is generally based on spot and regional market prices. Demand from steel, real estate and building materials was weak in 2025, while the industry faced dispersed regional capacity, homogeneous competition and price pressure.
• Customer concentration: The 2025 annual report did not disclose the sales share of the five largest customers, nor did it separately disclose the five largest customers contributing more than 10% of revenue from trading activities. Therefore, customer concentration cannot be accurately assessed solely from the publicly available annual report. The description that customers are “generally leading domestic spinning, home-textile and apparel-manufacturing companies” is a business description and does not constitute a list of the five largest customers or customer-concentration data.
• Structurally, products such as lint cotton and calcium oxide are highly standardized, and companies are closer to price takers for bulk commodities. Cottonseed protein also faces competition from substitutes such as soybean meal and rapeseed meal, and the company has not yet established a stable high-margin barrier.
• As of December 31, 2025, accounts receivable were RMB 20.43 million, equivalent to approximately 0.68% of 2025 revenue; inventories were RMB 2.460 billion, equivalent to approximately 81.66% of revenue; prepayments were RMB 515 million, equivalent to approximately 17.11% of revenue; accounts payable were RMB 172 million, equivalent to approximately 5.71% of revenue; and contract liabilities were RMB 302 million, equivalent to approximately 10.01% of revenue. The low level of accounts receivable is mainly related to payment-before-delivery, trading-market supervision and spot-settlement practices. However, inventories and prepayments represent significant capital occupation. Net cash flow from operating activities in 2025 was negative RMB 1.317 billion, mainly due to business-volume growth and increased cash payments for goods purchased. The company’s core working-capital risks arise primarily from cotton-price fluctuations, inventory impairment, financing costs and capital turnover, rather than from accounts receivable generated by traditional credit sales.
• The company has not disclosed the sales share of its five largest customers or the procurement share of its five largest suppliers. Because these concentration data are unavailable, customer or supplier concentration risks cannot be assessed accurately. References to “leading domestic spinning, home-textile and apparel-manufacturing companies” originate from the company’s business description and do not constitute verifiable customer-concentration data. The latest annual report shall prevail.

The company operates in the upper-middle portion of the cotton value chain, in ginning and lint-cotton circulation, with additional deep processing of cottonseed by-products. Overall, it occupies a low-margin position in midstream processing and trading, rather than a high-margin segment supported by brand premiums or high technological barriers. Further profit improvement will depend mainly on improving seed-cotton procurement and lint-cotton sales spreads, increasing ginning-equipment utilization and processing efficiency, raising the comprehensive utilization rate of cottonseed protein, cottonseed oil and other by-products, and improving inventory turnover, financing costs and futures-hedging management. Merely expanding the scale of lint-cotton trading will not necessarily increase margins.

3. Financial Data and Valuation Analysis

3.1 Recent Operating Performance

The 2026 interim report was disclosed on August 27, 2026. Financial data are as of June 30, 2026, and the report was unaudited. Non-recurring-adjusted net profit attributable to shareholders in the first half of 2026 was RMB 146.65 million, compared with a loss of RMB 34.0003 million in the same period last year. Basic EPS was RMB 0.2152, compared with RMB 0.0112 in the same period last year. Basic EPS for 2025 was negative RMB 0.24.

Revenue and profit both improved significantly in the first half of 2026. Revenue growth was mainly driven by the expansion of the lint-cotton business and higher sales at Xin Sai Bio-Protein Technology Co., Ltd. Lint-cotton sales volume increased by approximately 73,100 tonnes from the same period last year, with related revenue increasing by approximately RMB 1.177 billion year on year. Xin Sai Bio-Protein Technology Co., Ltd. recorded revenue of approximately RMB 238 million. Net cash flow from operating activities during the same period was RMB 2.420 billion, up 32.48% year on year. However, cash flow was substantially higher than net profit, and sustainability still needs to be assessed in conjunction with the lint-cotton business’s working-capital turnover and changes in inventory, receivables and payables. Although revenue increased sharply in 2025, the company remained loss-making. Gross margin for principal operations, expense ratios, and fluctuations in inventory and commodity prices remain the core variables affecting profitability. The sharp year-on-year increase in first-half 2026 net profit attributable to shareholders was partly due to the low base in the same period last year.

3.2 Earnings Forecast

As of the latest search, no publicly available consensus forecasts from mainstream brokerages for Xin Sai Co., Ltd.’s 2026–2028 revenue, net profit attributable to shareholders or EPS could be cross-verified. The earnings-forecast page of Tonghuashun indicates that no institution has issued an earnings forecast for the current year. Forecast net profit and forecast EPS for 2026 and 2027 are blank, and no institutional forecast data for 2028 were identified. Target prices or forecast figures appearing on individual automated-analysis websites could not be confirmed as originating from formal brokerage research reports and are not included as institutional earnings forecasts.

3.3 Valuation and Institutional Ratings

As of the September 11, 2026 close, the share price was RMB 5.90. Total and freely tradable shares were approximately 581 million, while total and free-float market capitalization were both approximately RMB 3.430 billion. The Securities Times quotation page showed a dynamic P/E of approximately 13.71x and a dynamic P/B of approximately 7.33x. Based on simple annualization of first-half 2026 basic EPS of RMB 0.2152, annualized EPS was approximately RMB 0.4304, implying a P/E of approximately 13.7x at a share price of RMB 5.90. However, this calculation annualizes first-half profit and is not a static P/E based on audited full-year earnings. The 2026 interim report disclosed net assets attributable to shareholders of the listed company of RMB 468.1 million, up 36.48% year on year. Based on approximately 581 million shares, net assets per share were approximately RMB 0.81, implying a P/B of approximately 7.3x. Lixinger data showed a P/B of approximately 8.147x as of September 10, 2026, placing the company at approximately the 98.21st percentile of its own historical P/B range, above its historical median of approximately 4.199x and 80th-percentile level of approximately 6.211x. Differences in P/B across platforms may reflect differences in valuation dates, net-asset definitions, treatment of goodwill, adjustment methods and data-update timing. Because the company remained loss-making in 2025, traditional static P/E has limited reference value. Current valuation depends primarily on annualized first-half 2026 profit rather than formal institutional forecasts for the full year and the following three years. If second-half profit cannot be sustained, valuation may again appear as high P/B with weak earnings support. If full-year profit reaches the level implied by simple annualization of first-half earnings, the dynamic P/E would have some explanatory value.

4. Recent News and Announcements

4.1 Shareholder Holding More Than 5% Reduced Stake to 5%

On September 1, 2026, Zhongxin Jian Huyang Private Equity Fund Management Co., Ltd., on behalf of Xinjiang Zhongxin Jian Huyang Industrial Investment Fund Partnership (Limited Partnership), sold 4,863,200 shares of Xin Sai Co., Ltd. through centralized bidding, equivalent to 0.8365% of the company’s total share capital. Before the sale, it held 33,932,051 shares, representing 5.8365%; after the sale, it held 29,068,851 shares, reducing its stake to 5.00%. The change in shareholding reached the 5% threshold but did not trigger a mandatory tender-offer obligation, nor did it result in a change in the company’s controlling shareholder or actual controller. The sale was conducted for fund-operation purposes, and the announcement did not disclose the average transaction price. The announcement was disclosed on September 2, 2026.

4.2 Company Issued Trading-Risk Warning After Consecutive Limit-Up Sessions

The company disclosed a stock-trading risk warning announcement on September 3, 2026. Its shares hit the daily upper limit for five consecutive trading days on August 27, August 28, August 31, September 1 and September 2, with a cumulative gain of 61.39% during the period. The company warned that the short-term share-price gain was substantial and materially exceeded the gains of the relevant industry and the Shanghai Composite Index over the same period, creating risks of overheated market sentiment, irrational speculation and a rapid share-price decline. The company stated that its principal business, production and operations, and operating environment had not undergone material changes compared with previously disclosed information, and that there had been no material change in fundamentals. It also reiterated the risk that it could be subject to regulatory action following the CSRC investigation into suspected violations of information disclosure rules; as of the announcement date, the investigation was ongoing.

4.3 Abnormal Stock-Movement Announcement: No Major Undisclosed Matters

The company disclosed an abnormal stock-trading fluctuation announcement on September 2, 2026. The cumulative deviation in the closing-price increase over August 31 and September 1 exceeded 20%, constituting an abnormal stock-trading fluctuation. Following a self-review and written inquiries to the controlling shareholder and actual controller, the company stated that, except for the disclosed 2026 interim report, neither the company nor its controlling shareholder or actual controller had any major matter affecting the abnormal stock movement, nor any material information that should have been disclosed but was not. The announcement stated that the matter did not involve major asset restructuring, share issuance, acquisition of the listed company, major transactions, debt restructuring, business restructuring, share repurchases, equity incentives, major business cooperation, introduction of strategic investors, asset disposals or asset injections. These conclusions reflected the company’s self-review and written inquiries at that time and did not indicate that the regulatory investigation had concluded.

4.4 CSRC Investigation Remains Ongoing

The company announced on June 23, 2026 that it had recently received a CSRC Notice of Case Filing, numbered “CSRC Case Filing No. 0362026002,” because the company was suspected of violating information disclosure rules. As of the disclosure of the risk-warning announcement on September 3, 2026, the investigation remained ongoing. The company stated that production and operations were currently normal and that directors and senior management were performing their duties normally. However, the final investigation result, whether administrative penalties would be imposed and the impact on the company’s financial condition and subsequent regulatory arrangements had not been determined.

4.5 Company Repaid RMB 10 Million Loan on Behalf of Controlling Subsidiary

On September 10, 2026, the company disclosed an announcement on the fulfillment of guarantee obligations. It had recently repaid RMB 10 million in principal on behalf of its controlling subsidiary, Shuanghe Xin Sai Juxin Calcium Co., Ltd., in respect of a loan from Agricultural Bank of China. Juxin Calcium is 51%-owned by Xin Sai Co., Ltd. and 49%-owned by Xinjiang Yixiang New Building Materials Manufacturing Co., Ltd. As of June 30, 2026, Juxin Calcium had unaudited total assets of RMB 40.2042 million, total liabilities of RMB 25.3731 million and net assets of RMB 14.8311 million. Its revenue in the first half of 2026 was RMB 215,400, and it recorded a net loss of RMB 1.1361 million. The company stated that it had obtained full legal recourse rights after making the repayment and planned, pursuant to the counter-guarantee agreement, to initiate the disposal of the 24.50% equity interest in Juxin Calcium pledged by Xinjiang Yixiang New Building Materials Manufacturing Co., Ltd., with priority given to repaying the principal, capital-occupation fees and rights-protection expenses. As of August 31, 2026, the total amount of guarantees proposed by the company and its controlling subsidiaries did not exceed RMB 3.5 billion, while actual outstanding guarantees amounted to RMB 538.72 million. Actual outstanding guarantees represented 157.07% of the company’s most recent audited net assets attributable to the parent company. The company stated that it had not provided guarantees to its controlling shareholder, actual controller or related parties, and had no overdue external guarantees. The amount and timing of recovery remain uncertain.

4.6 Court Ordered Judicial Auction of Assets Owned by Wholly Owned Subsidiary

The company disclosed on August 29, 2026 that land-use rights and buildings owned by its wholly owned subsidiary, Xinjiang Urumqi Xin Sai Oils Co., Ltd., had been ordered by a court to be sold through judicial auction. The matter arose from a construction-contract dispute. Wushi Oils and related parties were required to pay construction fees of RMB 25.9786 million and litigation costs of RMB 858,000; the mediation confirmed total construction fees and litigation costs of approximately RMB 26.0644 million. The Urumqi Reclamation Area People’s Court ordered the auction of land-use rights and buildings owned by Wushi Oils at Er Lian, Regiment 104, and No. 209 Sailimu Lake Road, Toutunhe District, Urumqi. The appraised value of the assets was RMB 48.1873 million. The process still requires online bidding, payment and transfer of ownership, and remains subject to uncertainties including a completed transaction, failed auction, suspension, withdrawal or price reduction. If the assets are ultimately disposed of judicially, Wushi Oils’ production and operations may be affected, and the company’s consolidated assets and profit or loss may be impacted. The final amount will depend on the actual disposal result and audited data.

4.7 Second Extraordinary General Meeting of Shareholders in 2026 Scheduled for September 15

The company plans to convene its second extraordinary general meeting of shareholders in 2026 on September 15, 2026. The physical meeting will be held in the conference room on the second floor of Xin Sai Co., Ltd. in the Shuanghe Economic Development Zone, Xinjiang, with online voting also available. The meeting will mainly review amendments to the Articles of Association, amendments to the Remuneration Management System for Directors and Senior Management, and related internal-governance adjustments. As of September 13, 2026, no public announcement had been identified confirming that the meeting had been held or disclosing voting results. Whether the relevant proposals will be approved remains subject to subsequent announcements.

4.8 No New Earnings Preview, Buyback or M&A Announcement Identified as of September 13, 2026

As of September 13, 2026, a search of September and recent announcements found no new earnings preview, earnings flash, share-repurchase plan, major asset restructuring, asset injection, share issuance for asset acquisition or strategic-investor introduction announcement disclosed by Xin Sai Co., Ltd. The company’s September 2 abnormal stock-trading fluctuation announcement also expressly stated that, as of the announcement date, neither the company nor its controlling shareholder or actual controller had any undisclosed major matter affecting the share price, including share repurchases, major asset restructuring, major business cooperation, asset disposals or asset injections. This conclusion reflects only the results of searching publicly disclosed information as of September 13, 2026 and does not mean that the company will not undertake relevant capital-market operations in the future.

4.9 Overall Assessment of Recent Announcements

As of September 13, 2026, the company’s recent new information primarily relates to trading risks, the regulatory investigation, shareholder selling, guarantee repayment and judicial auction. Following consecutive limit-up sessions, the company issued abnormal-trading and risk-warning announcements, cautioning about excessive short-term gains, overheated market sentiment and the risk of a rapid share-price decline. The Huyang Fund sold 4,863,200 shares on September 1, 2026, reducing its stake from 5.8365% to 5.00%. The CSRC investigation remained ongoing as of September 3, 2026. The company recently repaid a loan on behalf of a controlling subsidiary and became subject to the judicial auction of assets owned by a wholly owned subsidiary. The company stated that production and operations were normal and that the repayment had limited impact on daily operations and liquidity. However, the investigation result, recovery of guarantee-related claims and final outcome of the judicial auction remain uncertain.

5. Share-Price Performance and Technical Analysis

5.1 Price Overview

5.2 Technical Indicators

Xin Sai Co., Ltd. rose rapidly from August 27 to September 9, 2026, with the closing price increasing from RMB 4.59 to RMB 7.21, before falling sharply on September 10 and September 11 and closing at RMB 5.90 on September 11, hitting the daily lower limit. Trading value remained high during the high-level decline, while the turnover ratio exceeded 30% on multiple days in early September, indicating active short-term turnover and intensifying fund divergence. Technically, MA5 was approximately RMB 6.59, MA10 approximately RMB 5.84 and MA20 approximately RMB 4.94. The moving averages still retained signs of the prior bullish alignment, but the share price had rapidly fallen below MA5 and short-term momentum had weakened significantly. The estimated Bollinger Bands showed that the September 9 price touched the upper band before retreating into the channel. Complete verifiable MACD and standard RSI figures were unavailable, so the relevant assessments are qualitative or supplementary only.

5.3 Short-Term Outlook (Next Week; Scenario Analysis for Reference Only)

⚠️ Risk warning: The following content is a subjective scenario analysis based on closing data as of September 11, 2026. It does not constitute investment advice or a definitive forecast of future prices.

① Key Technical Levels

② Scenarios for the Coming Week (Subjective Weights, Not Statistical Probabilities)

• Range-bound consolidation (relatively high subjective weight, approximately 50%–60%; this is a heuristic weight based on current technical conditions and capital flows, not a statistical probability): Price range of approximately RMB 5.75–6.35. Triggering conditions include support emerging around RMB 5.75–5.95, trading value falling materially from the early-September peak, no broad and consecutive sell-off across the agriculture sector, and the share price returning to around RMB 6.20 without decisively breaking RMB 6.55–6.60. The price may show wide fluctuations and repeated intraday rallies followed by declines rather than quickly resuming the previous one-way uptrend.
• Weak downward movement (medium subjective weight, approximately 30%; a heuristic judgment, not a statistical probability): Price range of approximately RMB 5.30–5.80. Triggering conditions include a decisive closing-price break below RMB 5.75–5.90, daily turnover remaining above RMB 700 million while rebounds weaken, continued weakness in the agricultural planting sector, further substantial net outflows from main funds, and continued liquidation by investors trapped at the highs formed on September 10 and September 11. If RMB 5.35 is broken, the price may technically retest the RMB 5.00–5.15 area. However, this is an inference based on the earlier high-volume trading zone, not a certain price target.
• Stronger rebound (low subjective weight, approximately 10%–20%; a heuristic judgment, not a statistical probability): Price range of approximately RMB 6.20–6.80. Triggering conditions include the price first stabilizing in the RMB 5.75–5.95 area, then recovering RMB 6.20 on higher volume, further breaking through MA5 at RMB 6.55–6.60 and the high-volume resistance zone, daily trading value returning above RMB 800 million, and the closing price being near the intraday high. A simultaneous rebound in the agriculture sector or new market-recognized catalyst from the company would also be supportive. Only if the price decisively holds above RMB 6.60 would a retest of RMB 6.80–7.20 become possible in the short term. The area around RMB 7.20 is close to the previous high and estimated upper Bollinger Band, so resistance remains substantial.

③ Capital and Liquidity Background

As of September 11, 2026, the turnover ratio was approximately 21.1%–21.4% and trading value was approximately RMB 740–750 million. Trading value from September 8 to September 11 was approximately RMB 1.471 billion, RMB 1.291 billion, RMB 1.293 billion and RMB 750 million, respectively, while turnover ratios were approximately 37.46%, 32.08%, 32.88% and 21.42%, respectively. Compared with turnover ratios of approximately 1%–8% on most trading days in mid-to-late August, turnover increased significantly in early September and exceeded 30% multiple times from September 2 to September 10, indicating active short-term ownership turnover and increasing trading congestion. For a small- to mid-cap stock with total market capitalization of approximately RMB 3.4 billion, daily trading value of RMB 700 million to RMB 1.5 billion makes the price highly sensitive to short-term capital flows and sentiment, potentially causing substantial intraday slippage and limit-up/limit-down volatility. In terms of ownership structure, as of June 30, 2026, the top 10 shareholders held approximately 45.19% in aggregate, and the largest shareholder held 29.16%. However, these data are one quarter old, and the Huyang Fund, a shareholder holding more than 5%, sold approximately 4.8632 million shares through centralized bidding on September 1, 2026, equivalent to approximately 0.8365% of total share capital. Therefore, the end-June structure cannot be treated as identical to the actual ownership structure on September 11. The top 10 shareholders include local state-owned/industrial investment platforms, private-equity funds, individuals and client funds of certain financial institutions and cannot simply be regarded as an institutional ownership structure dominated by public funds.

If daily trading value remains above RMB 800 million over the coming week while the closing price regains RMB 6.20 and further breaks through RMB 6.55–6.60, this could be observed as a signal that short-term funds are again providing effective support. If trading value increases but the share price continues to close lower, the move would be more consistent with high-level turnover and fund realization than with active buying.

④ Points to Monitor (Observation Framework Only, Not Trading Instructions)

• Observe whether declining volume and stabilization emerge in the RMB 5.75–5.95 support zone; this is an observation framework, not a trading instruction
• Observe whether the RMB 6.20 and RMB 6.55–6.60 resistance zones can be recovered on higher volume; this is an observation framework, not a trading instruction
• Observe whether the share price strengthens in tandem with higher trading value, and avoid mistaking higher volume alone for net capital inflows; this is an observation framework, not a trading instruction
• Monitor subsequent announcements and changes in shareholder structure following the sale by the shareholder holding more than 5%; this is an observation framework, not a trading instruction

The above scenario analysis is based on the September 11, 2026 closing data and calculations using historical prices and technical indicators. Short-term share-price movements will also be affected by news flow, capital flows, broader market conditions and other factors. Technical indicators themselves have lagging effects and limitations. This does not guarantee future actual performance and does not constitute a buy or sell recommendation. Investors should independently assess the latest market information and bear investment risks themselves.

6. Industry Structure and Competitor Analysis

6.1 Industry Overview

The Xinjiang cotton industry chain covers cultivation, seed-cotton procurement, ginning, lint-cotton circulation, spinning and weaving, and apparel and home-textile manufacturing. China’s cotton output was 6.641 million tonnes in 2025, with Xinjiang accounting for approximately 92.83% of national output. Xinjiang continues to occupy a dominant position in China’s cotton production.

6.2 Competitive Landscape

• Xinjiang’s cotton industry has a high degree of regional concentration. Target-price subsidies, quality subsidies and policies integrating the cotton markets of the Xinjiang Production and Construction Corps and Xinjiang provide a relatively stable institutional environment for regional production and processing.
• The ginning segment has many companies and relatively dispersed scale, with excess capacity and homogeneous competition. According to Xinjiang Development and Reform Commission data cited in the annual report, the number of processing companies publicly listed under Xinjiang’s cotton target-price reform as of 2025 was 1,069.
• Competition is shifting from simply securing seed-cotton resources toward seed-cotton procurement costs, equipment utilization, processing efficiency, lint-cotton quality and grade, warehousing and logistics, textile-customer channels, futures hedging and inventory management.
• Degossypolized cottonseed protein is positioned in the middle of the cotton value chain and is affected by substitute-product prices, including soybean meal and rapeseed meal, as well as downstream livestock and aquaculture conditions. Overall, it is a low-margin processing segment driven by costs and characterized by significant price competition. Xin Sai Co., Ltd.’s cotton-protein gross margin was 2.80% in 2025.
• Xin Sai Co., Ltd.’s owned ginning capacity in 2025 was equivalent to approximately 86,000 tonnes of lint cotton, while lint-cotton sales volume was 180,400 tonnes. The difference mainly came from trading and external cooperative operations. When analyzing scale, owned processing capacity should be distinguished from sales generated through trading and cooperative operations.

6.3 Major Competitors

Compared with Guannong and Xinjiang Nongken Development, Xin Sai Co., Ltd.’s revenue and operating focus are more concentrated in lint-cotton processing and trading, with more pronounced expansion in cotton-supply-chain scale but less diversification and less distinctive cotton-seed R&D. Compared with Morning Glory Bio-Tech and Xinjiang Morning Glory Bio-Tech, Xin Sai Co., Ltd. still focuses on lint cotton and cotton trading, with a lower share of deep cottonseed processing and limited earnings stability. Compared with Xinjiang Tianye, Xin Sai Co., Ltd. lacks the advantages of chemical-industry integration and energy support. Its core competitiveness mainly derives from cotton resources in Xinjiang and the Xinjiang Production and Construction Corps, its ginning network and its ability to integrate agricultural-product supply chains. Overall, the company operates in a resource-driven midstream processing and circulation segment for bulk agricultural products. Profit improvement will require better cost, quality, channel, inventory and by-product utilization efficiency rather than simple scale expansion.

7. Risk Factors

• Persistently low or negative lint-cotton margins: Lint-cotton gross margin was -0.43% in 2025. The company has limited pricing power over seed-cotton procurement and lint-cotton sales prices. If procurement costs, cotton prices or purchase-sale spreads move adversely, growth in lint-cotton sales volume may not translate into profit growth.
• High inventory and prepayment requirements and risks from cotton-price fluctuations and working-capital turnover: As of December 31, 2025, inventories were RMB 2.460 billion and prepayments were RMB 515 million, while net cash flow from operating activities in 2025 was negative RMB 1.317 billion. A decline in lint-cotton prices, slower inventory turnover or higher financing costs could result in inventory impairment and liquidity pressure.
• Significant dependence on trading and external cooperative capacity: The company’s owned ginning capacity is equivalent to approximately 86,000 tonnes of lint cotton, compared with lint-cotton sales volume of 180,400 tonnes in 2025. It added cooperation with 21 external ginning plants, with cooperative lint-cotton sales volume reaching 93,500 tonnes. Changes in partners’ supply, quality, fulfillment and procurement prices could affect sales scale and profitability.
• Unstable profitability in deep cottonseed processing: Cottonseed gross margin was -3.54% in 2025 and cotton-protein gross margin was 2.80%. These products are affected by cottonseed prices, prices of substitute proteins such as soybean meal and rapeseed meal, and downstream livestock and aquaculture conditions. Improvement in by-products has not yet created a stable high-margin barrier.
• Uncertainty regarding the regulatory investigation: The company received a CSRC Notice of Case Filing in June 2026 for suspected violations of information disclosure rules. As of September 3, 2026, the investigation remained ongoing. Whether administrative penalties will ultimately be imposed and the impact on financial results and subsequent regulatory arrangements remain uncertain.
• Financial risks from guarantee repayment and external guarantees: The company recently repaid RMB 10 million in loan principal on behalf of its controlling subsidiary, Shuanghe Xin Sai Juxin Calcium Co., Ltd. Juxin Calcium had revenue of only RMB 215,400 and a net loss of RMB 1.1361 million in the first half of 2026. As of August 31, 2026, actual outstanding guarantees provided by the company and its controlling subsidiaries were RMB 538.72 million, representing 157.07% of the most recent audited net assets attributable to shareholders. The amount and timing of subsequent recovery remain uncertain.
• Judicial auction of wholly owned subsidiary assets may affect operations and profit or loss: Land-use rights and buildings owned by Xinjiang Urumqi Xin Sai Oils Co., Ltd. were ordered to be sold through judicial auction. Construction fees and litigation costs totaled approximately RMB 26.0644 million, while the appraised value of the assets was RMB 48.1873 million. The auction could fail, occur at a reduced price or produce an outcome below expectations, potentially affecting Wushi Oils’ production and operations and the company’s consolidated financial statements.
• High short-term share-price volatility and valuation drawdown risk: The share price rose rapidly by approximately 57% from August 27 to September 9, 2026, before falling approximately 18.2% over the next two trading days and closing at RMB 5.90 on September 11, hitting the daily lower limit. Current dynamic valuation depends mainly on annualization of first-half profit. If second-half earnings cannot be sustained, the high P/B and short-term trading congestion could amplify downside pressure.
• Shareholder selling may intensify ownership volatility: Zhongxin Jian Huyang Private Equity Fund sold 4.8632 million shares on September 1, 2026, equivalent to 0.8365% of total share capital, reducing its stake from 5.8365% to 5.00%. Against the backdrop of high recent turnover, subsequent changes in shareholder structure may further affect the stability of the trading float.

8. Conclusion and Outlook

The company’s growth drivers mainly comprise expansion of the cotton supply chain, cooperative operations with external ginning plants, increased lint-cotton trading volumes and improved deep-processing capabilities for by-products such as cotton protein and cottonseed oil. In the first half of 2026, Xin Sai Bio-Protein Technology Co., Ltd. generated revenue of approximately RMB 238 million. Improved cotton-protein yield and an optimized product mix for cottonseed oil and other by-products helped improve overall profitability. However, the company operates in the midstream processing and circulation segment for standardized bulk agricultural products, where pricing power and profit barriers are limited. Simply expanding lint-cotton trading volume will not necessarily increase margins.

The sustainability of future earnings improvement will depend on the spread between seed-cotton procurement and lint-cotton sales prices, ginning-equipment utilization, comprehensive utilization of cottonseed protein and cottonseed oil, inventory turnover and financing-cost control, as well as whether cash flow from the lint-cotton business can remain stable. The sharp increase in first-half 2026 net profit was partly attributable to the low base. No cross-verifiable institutional earnings forecasts for 2026–2028 are currently available, and simple annualization of six-month profit cannot substitute for full-year earnings verification.

Valuation and market performance must also be assessed in conjunction with earnings stability. As of September 11, 2026, the share price was RMB 5.90, total market capitalization was approximately RMB 3.430 billion, the dynamic P/E was approximately 13.71x and the dynamic P/B was approximately 7.33x. However, the P/E is mainly based on annualization of first-half 2026 profit, while the company remained loss-making in 2025. Following consecutive limit-up sessions, the share price recently retraced rapidly. Short-term fund divergence, shareholder selling and the regulatory investigation could continue to amplify price volatility.

Data Sources

• Xin Sai Co., Ltd. (600540)_Company Announcements_Xin Sai Co., Ltd.: 2025 Annual Report_Sina Finance_Sina.com
• Xin Sai Co., Ltd. (600540)_Company Announcements_Xin Sai Co., Ltd.: Announcement on Response to the Shanghai Stock Exchange’s Regulatory Inquiry Letter Regarding Information Disclosure in the 2025 Annual Report_Sina Finance_Sina.com
• Xin Sai Co., Ltd. (600540)_Company Announcements_Xin Sai Co., Ltd.: 2023 Annual Report_Sina Finance_Sina.com
• Xin Sai Co., Ltd. (600540)_Company Announcements_Xin Sai Co., Ltd.: 2024 Annual Report_Sina Finance_Sina.com
• Guannong Co., Ltd. (600251)_Company Announcements_Guannong Co., Ltd.: 2025 Annual Report_Sina Finance_Sina.com
• Xinjiang Nongken Development (600359)_Company Announcements_Xinjiang Nongken Development: Summary of 2025 Annual Report_Sina Finance_Sina.com
• Morning Glory Bio-Tech (300138)_Company Announcements_Morning Glory Bio-Tech: 2025 Annual Report_Sina Finance_Sina.com
• Xinjiang Tianye (600075)_Company Announcements_Xinjiang Tianye: 2025 Annual Report_Sina Finance_Sina.com
• Xinjiang Morning Glory: 2025 Annual Report–Néeq–Eastmoney.com
• Regarding ×× Co., Ltd.
• Xin Sai Co., Ltd. (600540)_Company Announcements_Xin Sai Co., Ltd.: Summary of 2026 Interim Report_Sina Finance_Sina.com
• Xin Sai Co., Ltd. (600540) Financial Overview_F10_Tonghuashun Financial Services
• Xin Sai Co., Ltd. (600540)_Company Announcements_Xin Sai Co., Ltd.: Summary of 2025 Annual Report_Sina Finance_Sina.com
• Xin Sai Co., Ltd. (600540) Earnings Forecast_F10_Tonghuashun Financial Services
• Xin Sai Co., Ltd. (sh600540) Price Trend
• Xin Sai Co., Ltd. (600540) Price-to-Book Ratio | Valuation | Fundamentals – Lixinger

This report was automatically searched, compiled and generated by AI based on publicly available information. Information is current as of the September 11, 2026 close; shareholder-structure data are as of June 30, 2026, and the announcement date is August 27, 2026. Timing differences may exist. Specific data should be based on the company’s official announcements and authoritative data terminals. This report is for information compilation and research reference only and does not constitute investment advice. Investors should make independent judgments and bear investment risks themselves.