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. (ZKH.US) 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.