Xinhua Finance and Economics Shanghai, December 16th (Reporter Wang He) - China Industrial Supplies (MRO) procurement service platform Zhenkunxing was listed on the New York Stock Exchange on the evening of the 15th Beijing time, with the stock code "ZKH", becoming the first stock of China's MRO to go to the United States.
China's MRO to the United States as the top stock market with a value of approximately $2.5 billion
It is reported that Zhenkunxing will issue 4 million American Depositary Shares (ADS) in this IPO at a price of $15.5 per share. Based on this issuance price, Zhenkunxing raised $62 million ("Green Shoes Front") through this IPO, and the underwriters have an additional 600000 shares of ADS overallocation rights. Deutsche Bank, Huaxing Capital, and CICC are the joint underwriters for this event.
Based on the issuance price, the market value of Zhenkunxing is approximately 2.5 billion US dollars, making it the largest Chinese concept stock in terms of IPO market value in the past two and a half years in the United States.
Zhenkunxing's existing shareholders Tencent and Canada Pension Plan Investment Board are both participating in this subscription issuance. Among them, the Canadian pension fund subscribes to ADSs worth $10 million, and Tencent subscribes to ADSs worth $5 million.
Zhenkunxing stated in its prospectus that about 30% of the net proceeds from the IPO will be used to further expand its business, especially to continue developing the selected product line of experts; About 30% is used to strengthen supply chain capabilities and further improve performance efficiency; Approximately 30% for potential strategic investments and acquisitions; The remaining portion is used for general corporate purposes, including working capital needs, investment in research and development to continue building infrastructure and improving digital services, as well as expanding overseas markets.
According to reports, the US Independence Station of Zhenkunxing will soon be launched early next year.
Significant growth in customer numbers, GMV, and gross profit margin in the past three years
According to the prospectus, Zhenkunxing Industrial Supermarket was established in 2014 and headquartered in Shanghai. It is known as the industrial goods "Amazon" by establishing industry infrastructure, providing customers with one-stop industrial goods (MRO) procurement and management services, and providing digital and fulfillment solutions for upstream and downstream enterprises in the industry. Through the digital supply chain construction of the MRO industry, we serve China's manufacturing and real economy, helping customers reduce costs, improve efficiency, and achieve digital transformation of the supply chain.
Zhenkunxing's trading services cover a massive number of SKUs, mainly including five categories: spare parts, general consumables, administrative materials, processing and manufacturing, chemicals, and a total of 32 product lines.
The number of customers of Zhenkunxing has increased from over 30000 in 2020 to over 58000 in 2022, and as of September 30, 2023, it has grown to 64000. Its customer base is diversified. From the perspective of the industry to which the customers belong, the GMV (total transaction volume) industry contribution values of the top 500 customers in 2022 are: 24% in the mechanical and electronic industry, 22% in the energy industry, 21% in the resource industry (including steel and non-ferrous metals, chemical industry, building materials and mining), 5% in the construction industry (including construction and infrastructure), 12% in the automotive industry, and 16% in other industries.
According to the prospectus, from 2020 to 2022, the GMV of Zhenkunxing was approximately 5 billion yuan, 8.6 billion yuan, and 9.4 billion yuan respectively, with a compound annual growth rate of 37.3%; In the first three quarters of this year, the GMV of Zhenkunxing was approximately 7.9 billion yuan, an increase of 17.5% compared to the same period in 2022. From 2020 to 2022, the net income of Zhenkunxing was 4.686 billion yuan, 7.655 billion yuan, and 8.315 billion yuan, respectively. In the first three quarters of this year, Zhenkunxing's net income was 6.277 billion yuan, which was significantly higher than the same period in 2022.
The economies of scale in the development of Zhenkunxing have gradually emerged. From 2020 to 2022, the company's gross profit margin was 14.5%, 13.6%, and 15.8%, respectively. In the first three quarters of this year, the gross profit margin was 16.5%, and the overall level of gross profit margin has increased.
Thanks to the increase in gross profit margin, the decrease in management expense ratio and performance expense ratio, the company's adjusted net loss has significantly narrowed. In 2020, 2021, 2022, and the first three quarters of this year, the company's adjusted net losses were 397.1 million yuan, 1.0941 billion yuan, 7311 million yuan, and 325.1 million yuan, respectively. The losses in the first three quarters of 2023 narrowed by 42% year-on-year, and the overall trend is improving.
China's industrial output value and digital transformation are giving rise to a 4 trillion yuan MRO market. The CIC report shows that the market size of MRO procurement services in China was 3 trillion yuan in 2022, and it is expected to reach 3.98 trillion yuan in 2027. The compound growth rate from 2022 to 2027 is 5.8%. With the rapid development of technologies such as the Internet, SaaS, intelligent logistics, and IT infrastructure, MRO procurement is gradually becoming digitized, with enormous potential. Among them, the market size of China's online MRO procurement services reached 235.4 billion yuan in 2022, and is expected to reach 847 billion yuan in 2027, with a compound growth rate of 29.2%. The online penetration rate in 2022 is 7.8%, and it is expected to reach 21.3% in 2027. (End)