Last Updated: 14 Sep 2024
Executive Summary
ZKH Group Limited (ZKH) is a Chinese company that operates in the retail building materials, hardware, and garden supply industry. The company's financial performance has been weak in recent quarters, with negative EBITDA and EPS. However, the company's revenue has grown slightly year-over-year. The stock price has declined significantly over the past year, and it is currently trading at $2.88.
Company Overview
ZKH Group Limited is a leading provider of building materials, hardware, and garden supplies in China. The company operates a network of over 1,000 stores across the country. ZKH's products include a wide range of items, such as lumber, cement, paint, tools, and appliances.
The company was founded in 1994 and is headquartered in Shanghai, China. ZKH has a market capitalization of approximately $2.63 billion.
Fundamental Analysis
ZKH's financial performance has been weak in recent quarters. The company reported a net loss of $405.1 million in the fiscal year ended September 2022. This was primarily due to a decline in sales and an increase in costs.
The company's revenue declined by 2.2% year-over-year to $8.54 billion in the fiscal year ended September 2022. This was due to a slowdown in the Chinese economy and increased competition from online retailers.
ZKH's gross profit margin declined from 15.4% in the fiscal year ended September 2021 to 15.4% in the fiscal year ended September 2022. This was due to an increase in the cost of goods sold.
The company's operating margin declined from -3.1% in the fiscal year ended September 2021 to -3.9% in the fiscal year ended September 2022. This was due to an increase in operating expenses.
ZKH's net income margin declined from -4.3% in the fiscal year ended September 2021 to -4.8% in the fiscal year ended September 2022. This was due to a decline in gross profit margin and an increase in operating expenses.
Technical Analysis
ZKH's stock price has declined significantly over the past year. The stock is currently trading at $2.88, which is well below its 52-week high of $21.91.
The stock's technical indicators are bearish. The relative strength index (RSI) is below 30, which indicates that the stock is oversold. The moving average convergence divergence (MACD) is also below zero, which indicates that the stock is in a downtrend.
Short Term Outlook
The short-term outlook for ZKH is negative. The stock is oversold and the technical indicators are bearish. The company's financial performance has also been weak in recent quarters.
Long Term Outlook
The long-term outlook for ZKH is uncertain. The company's financial performance has been weak in recent quarters, but the company's revenue has grown slightly year-over-year. The stock price has declined significantly over the past year, but it is currently trading at a low valuation.
Analyst Recommendations
Two analysts have issued buy ratings on ZKH, while no analysts have issued strong buy, hold, sell, or strong sell ratings. The average analyst target price is $10.00.
