WCC - ZKH Group IPO Falls Flat As Investors Worry Over Slowing Growth | Benzinga
Key Takeaways:
- ZKH Group raised $62 million in one of the biggest IPOs by a Chinese company in New York this year, though its shares priced weakly and ended flat on their first trading day
- The company is valued ahead of many of its global peers, which could pressure its shares as its growth shows signs of slowing sharply
By Doug Young
If timing is everything, one of the largest IPOs by a Chinese company in New York this year hasn’t performed too well. After years of strong growth, ZKH Group Ltd. (NYSE: ZKH) recorded its first revenue contraction in the third quarter of this year, the last reporting period before its shares made their trading debut last Friday.
The company makes money by selling products for maintenance, repair, and operations (MRO) to manufacturers, including everything from personal protective equipment to fasteners, welding materials, chemicals and all kinds of tools. It sells such items both directly to its thousands of customers, and also operates an online marketplace where third-party suppliers can sell to their own customers.
As a key link in the manufacturing supply chain, the company’s fortunes are closely tied to China’s manufacturing sector that is showing signs of a sharp slowdown after years of breakneck growth. The nation’s official purchasing managers index (PMI), the broadest measure of the sector’s health, has been has been contracting nearly every month since April, after ticking up strongly at the start of the year with the end of strict Covid restrictions.
As the nation’s manufacturing machine began to sputter, so, too, did ZKH’s results. The company made its first public IPO filing in March, back when people were hoping for a sharp post-pandemic rebound as supply chains and manufacturing activity began returning to pre-pandemic levels.
But even after China’s economy started running out of steam, ZKH still forged ahead with the listing plan. It priced its American depositary shares (ADSs) at $15.50, representing the bottom of their range, and raised $62 million, according to its pricing announcement issued ...