Group 1 - Deutsche Bank maintains a "Buy" rating on Zhenkunhang (ZKH.US) with a 12-month target price of $4, citing ongoing digital transformation opportunities in China's MRO procurement service market as a driver for long-term growth potential [1] - Zhenkunhang's Q3 performance met expectations, with revenue increasing by 2% year-on-year to reach 2.328 billion yuan, and the company achieved monthly breakeven in September [1] - The bank expects an improvement in Q4 GMV growth and quarterly profitability, while keeping revenue forecasts for FY2025/2026 largely unchanged, but raising adjusted net profit margins by 20 basis points due to improved profit outlook [1] Group 2 - In the self-owned brand segment, the total GMV for self-owned brand products grew by 16.7% year-on-year, accounting for 8.2% of total GMV, with over 600 new self-owned brand SKUs launched in Q3 [2] - The company reaffirms its long-term goal of achieving a self-owned brand penetration rate of 30% [2] Group 3 - The company leverages artificial intelligence across various business scenarios, enhancing product recommendation accuracy and generating over 100 million yuan in new sales revenue since the launch of its recommendation engine in Q4 2024 [1] - The overseas strategy prioritizes supporting Chinese enterprises in international expansion, providing comprehensive services including procurement, delivery, product certification, and customs clearance in countries like Thailand, Malaysia, Indonesia, and Mexico, with management expecting overseas operations to break even by 2026 [1]

Group 1 - JD Industrial has passed the hearing for its listing on the Hong Kong Stock Exchange, with joint sponsors including Bank of America Merrill Lynch, Goldman Sachs, Haitong International, and UBS [1] - If successfully listed, JD Industrial will become the sixth publicly listed company under JD Group, which already includes JD Group, JD Health, JD Logistics, Deppon Logistics, and Dada Group [1] - JD Industrial's path to listing has faced challenges, having submitted its prospectus three times in 2023 and 2024, which expired without approval [3] Group 2 - JD Industrial has shown significant growth in revenue and profit, with revenues of 14.135 billion, 17.336 billion, and 20.4 billion yuan for the years 2022, 2023, and 2024 respectively [3] - As of August 2025, JD Industrial's total revenue reached 14.1 billion yuan, an 18.9% increase compared to the same period in 2024 [5] - The company turned a net loss of 1.3 billion yuan in 2022 into a net profit of 4.8 million yuan in 2023, with net profit soaring to 760 million yuan in 2024, marking a staggering increase of 1586% [5] Group 3 - JD Industrial, spun off from JD's enterprise business in 2017, focuses on MRO procurement services and has become a leading player in the domestic MRO procurement market [7] - The market size of JD Industrial is approximately three times that of its nearest competitor, serving 60% of China's Fortune 500 companies [7] - The actual controller of JD Industrial is Liu Qiangdong, who holds 3.68% directly through MaxI&PLimited, with a total control of about 83% of voting rights when combined with JD Group's holdings [7]

Core Insights - Zhenkunhang (NYSE: ZKH) reported a significant reduction in adjusted net loss for Q3 2025, narrowing to approximately 14 million RMB, a 78% decrease from about 66 million RMB in the same period last year, exceeding market expectations of 30 to 40 million RMB loss [1] - The company achieved a monthly breakeven point in September and is confident in achieving quarterly profitability in Q4 2025, marking a transition into a "profitability growth phase" [1][7] Business Performance - The average daily order volume increased from approximately 37 million RMB in July to about 52 million RMB in November, representing a growth of over 40% [2] - The number of customers surpassed 70,000, setting a new quarterly record, which lays a solid foundation for future growth [2] - Total expenses decreased by 14.4% year-on-year to approximately 420 million RMB, showcasing effective cost control and operational optimization [2] Product and AI Development - Zhenkunhang expanded its product matrix by adding over 2.3 million SKUs in Q3, bringing the total to over 19 million SKUs, with a goal to increase the share of its proprietary brand business from 8% to 30% [3] - The company launched its self-developed "Xingjialinglong" AI model, which automates 45 process scenarios, leading to a 42% increase in customer service efficiency and a 52% increase in procurement efficiency [4] - The AI-driven "AI Recommendation Brain" has generated over 100 million RMB in incremental sales since its launch, demonstrating the effectiveness of AI in enhancing sales performance [4] Future Outlook - Management plans to focus on strengthening its competitive edge in core industrial products, including spare parts and chemicals, to solidify its leadership position in the "hardcore" industrial goods sector [6] - Strategic partnerships with leading equipment manufacturers and core component suppliers are being established to enhance product offerings and customer service [7] - The company has successfully completed a phase of adjustment, indicating a stable recovery in overall operations and a transition to a new stage of high-quality growth [7]

Core Viewpoint - JD Industrial is advancing its IPO process, planning to launch a pre-roadshow in Hong Kong this month and aiming for a formal listing in December, with expected fundraising of $500 to $600 million, marking the sixth listed company under Liu Qiangdong's business empire [1][2]. Group 1: IPO Details - JD Industrial has received approval from the China Securities Regulatory Commission for overseas listing, planning to issue up to 253 million ordinary shares, with UBS, Bank of America, Goldman Sachs, and Haitong International serving as joint sponsors [2]. - This marks JD Industrial's fourth attempt at an IPO, having previously submitted applications in March 2023, September 2024, and March 2025, all of which lapsed due to the expiration of the prospectus [3]. Group 2: Market Position and Financial Performance - JD Industrial has established itself as a leader in the domestic MRO procurement service market, with a market size approximately three times that of its nearest competitor, serving 60% of China's Fortune 500 companies [2]. - The company has achieved a turnaround in profitability, reporting a net profit of 762 million yuan in 2023, with further growth to 451 million yuan in the first half of 2024, maintaining a gross margin between 16% and 18.6% [2]. Group 3: Market Environment and Future Prospects - The current market environment is favorable for the IPO, with Hong Kong IPO financing reaching 150 billion HKD in the first nine months of 2025, making it the largest globally, and mainland companies being the main contributors [3]. - Analysts believe that JD Industrial's strong market position, clear profit model, and the positive atmosphere in the Hong Kong market increase the likelihood of a successful IPO, which would enhance its technological development and market expansion [3].

Core Insights - Zhenkunhang (ZKH.US), a leading MRO procurement service platform in China, reported a robust financial performance for Q2 2025, achieving revenue of 2.42 billion RMB, with core business showing steady growth after excluding the impact of optimized related business bases [1] - The overall gross margin under GMV criteria increased from 13.9% in Q2 last year to 14.8% in Q2 this year, marking six consecutive quarters of year-on-year growth [1] - The net loss significantly narrowed from 66 million RMB in Q2 last year to 53 million RMB in Q2 this year, representing a year-on-year reduction of approximately 20%, and notably, the company achieved monthly breakeven again in June following March [1]

Core Viewpoint - Deutsche Bank maintains an optimistic outlook for Zhenkunhang (ZKH.US) in the second half of the year, keeping a "Buy" rating with a target price of $4.5, citing the company's long-term growth potential driven by the digital transformation of China's MRO procurement services [1][2] Group 1: Financial Performance - The company's Q1 2025 performance met expectations, with GMV growth expected to accelerate quarter by quarter [1] - Revenue from the U.S. business doubled month-on-month in Q1, with further acceleration anticipated in the second half [2] Group 2: AI and Technology Integration - AI technology has significantly enhanced customer service efficiency, with a 60.4% increase in the average order handling capacity per customer service team member in Q1 [1] - The AI product recommendation engine has provided purchasing demand analysis and product pool management services to over 200 clients since its launch in September 2024, generating additional revenue exceeding RMB 34 million [1] - The company plans to expand the coverage of the AI product recommendation engine to 14,000 clients by 2025 to further unlock its value [1] Group 3: Product and Market Expansion - As of the end of March, Zhenkunhang's U.S. independent site has launched over 500 SKUs across various categories, including PPE, hand tools, power tools, packaging materials, and HVAC systems [1] - The company aims to launch a mobile application in the second half of the year and increase the SKU count to 1,500 to enhance product coverage and user experience [1] - Zhenkunhang is strengthening its global supply chain by expanding its quality supplier network in Southeast Asia to address potential geopolitical uncertainties [1] Group 4: Private Label Strategy - In Q1 2025, the transaction volume of private label products grew approximately 40% year-on-year, accounting for 8.7% of the company's total GMV [2] - Deutsche Bank views the development of private label products as a core strategy for the company this year, with significant growth potential as the current share is still far from the long-term target of 30% [2]