By WANG Yong
China's Zhenkunhang Industrial Supermarket, an industrial procurement service, debuted on the New York Stock Exchange (NYSE) on December 15, despite facing persistent losses in recent years.
Zhenkunhang's IPO involved the issuance of 4 million American Depository Shares (ADS), each representing 35 shares of the company's Class A common stock, at an offering price of US$15.5 per share. The total funds raised amounted to US$62 million (440 million yuan), with underwriters having an additional option for 600,000 ADS.
The closing price of US$15.5 per share reflected a market value of US$2.5 billion, making it the largest Chinese stock in the US IPO market in the past two and a half years.
Zhenkunhang, founded in 1998, initially focused on distributing overseas brands of adhesives and lubricants and transitioned into broad spare parts and general consumables service. Despite challenges, Zhenkunhang's IPO reflects a shift to online procurement in China.
Zhenkunhang's financial journey has been characterized by increasing revenue without corresponding profitability, reporting losses from 2020 until now. The prospectus acknowledged uncertainties about future profitability and negative operating cash flows.
MRO (Maintenance, Repair and Operating) procurement in China is worth over 30 trillion yuan and is expected to reach 40 trillion by 2027. Digitalization remains low, presenting opportunities for companies like Zhenkunhang.
