Major Bank Rating | Huatai Initiates ZhenKunHang with "Buy" Rating, Optimistic About Online MRO Dividend and Profit Release, Target Price $4.30

格隆汇 July 21｜Huatai Securities has released its first coverage report on Zhenkunxing (ZKH.US), assigning a "Buy" rating with a target price of $4.30. Huatai expects Zhenkunxing's operating revenue to reach 10.41 billion yuan, 11.83 billion yuan, and 13.58 billion yuan in 2026–2028, respectively; adjusted net profit is forecasted at 150 million yuan, 310 million yuan, and 490 million yuan, indicating the company is likely to turn profitable on an annual basis by 2026.Huatai believes China’s MRO procurement market is still in the early stages of online and platform integration. In 2024, the market size is around 3.7 trillion yuan, yet the penetration rate of digital and intelligent procurement is just 9.5%, meaning leading platforms still have significant potential for market share growth. Zhenkunxing has developed strong comprehensive capabilities in professional industrial-grade MRO product data, selection recommendations, and order fulfillment. By the end of Q1 2026, its SKU count has reached 27 million; by the end of 2025, the company owns 30 distribution centers, 107 transit warehouses, and more than 5,600 EVM smart vending machines.The report points out the company is improving gross margin by increasing direct procurement from manufacturers, optimizing customer structure, and raising the share of its own brand. At the same time, it is leveraging AI and automation tools to enhance operational efficiency. In 2025, the company's number of RPA digital employees will exceed 5,000, with AI intelligent workstations autonomously completing over 520,000 system operations, resulting in customer service and procurement productivity increasing by 45% and 50% year-on-year, respectively. As GMV resumes growth and early investments in warehousing, distribution, and digitalization are gradually amortized, Huatai believes Zhenkunxing is transitioning from the infrastructure investment stage to the profitability release stage.