ZK International Sees Shares Soar 26% on Strong Financials; Says Demand Grows
The stock of the Chinese producer of steel pipes soared 26 percent by midday Monday to $2.04 per share.
The stock of ZK International Group Co. Ltd. (Nasdaq: ZKIN) soared 26 percent midday Monday to $2.04 per American depositary share after the company reported its revenue and income both increased in the year ended Sept. 30.
The Wenzhou-based company, which makes patented steel pipe products, said in a statement today that its revenue reached $54.9 million in its fiscal 2018 compared with $45 million in the preceding year.
Its net income, ZK said, was $7 million, or 51 cents per share, compared with $5.9 million in the fiscal 2017.
"Our financial results in 2018 were largely driven by new supplier agreements with leaders in our industry including Changsha Water Group, Towngas China Company, and Shenzhen Water Group," the chairman of ZK, Jiancong Huang, said.
He also said Beijing's recent focus on improving the infrastructure and implementing new standards has attributed to the company's growth.
"Recently the Ministry of Housing and Urban-Rural Development implemented a standard to upgrade existing water piping to stainless steel and incorporate stainless steel into new infrastructure," Huang said. "As the government continues to increase legislation to impose mandatory standards for water and gas infrastructure, we will continue to see new opportunities to enhance our leadership position and drive financial growth."
The company noted that it has landed a number of significant contracts in 2018, specifically, with China Railway First Bureau Group Construction and Installation Engineering Co. Ltd. and Zhuhai Water Environment Holding Group Co. Ltd.
ZK said the costs of revenue was $36.6 million for the 12 months through September, up 15 percent year-over-year. Operating expenses were $8.7 million for the full year, up 74 percent.
Huang added that the company will continue to invest in sales and marketing, as well as in research and development, to keep up with the growing demand.