Deutsche Bank: Maintains a "Buy" rating on ZKH Group Limited Sponsored ADR (ZKH.US), expects Q4 performance to meet expectations, revenue growth is expected to reverse in 2025, and seizing the AI opportunity.

On February 25th, Deutsche Bank Aktiengesellschaft released a forward-looking report on the fourth quarter performance of ZKH Group Limited Sponsored ADR (ZKH.US) in 2024, and maintained a "buy" rating on it. The research report pointed out that it is expected that the fourth quarter performance of ZKH Group Limited Sponsored ADR will meet market expectations, benefiting from optimized procurement costs and an increase in contributions from proprietary brands, with the gross profit margin expected to improve year-on-year. Additionally, due to improvements in the cash conversion cycle, operational cash flow is expected to remain positive. In particular, as the gradual fading of the business adjustment impact, it is expected that the company will experience a rebound in revenue growth in 2025, with the expansion of proprietary brands and economies of scale expected to continue to drive up gross profit margin and adjusted net profit margin. ZKH Group Limited Sponsored ADR is actively seizing opportunities brought by AI, and recently integrated "AI material management home" into DeepSeek, significantly improving the performance of the tool. For example, the accuracy of material recognition and analysis has increased significantly from 60% to over 90%. The company plans to develop and apply more AI tools in the future to further optimize supply chain management, improve service performance, and accelerate business expansion. The potential for development of proprietary brands is huge, and is expected to continue to be a strategic focus for the company in 2025, promoting the long-term increase in gross profit margin. At the same time, ZKH Group Limited Sponsored ADR officially launched its US independent site in December 2024, and its recent strategic focus is expected to be on establishing global supply chain capabilities, diversifying product categories, and adhering to a prudent and steady investment pace and strategy in overseas expansion. The company is expected to release its performance report for the fourth quarter of the 2024 fiscal year in mid-March.