Investors have been anxious for the Trump Administration’s unveiling of a nationwide plan to inject billions into cleaning up the country’s bridges and roads and while the infrastructure sector took a spill in February, Financials Trend began covering the sector in early September.
Now that time has marched on, we’re revisiting infrastructure stocks once again pegging ZK International Group Ltd (NASDAQ: ZKIN) as one of the stocks we like. Ortoli Rosenstadt Ltd represented ZKIN in its initial IPO, raising $5.3 million. That offering was done at $5.00 per share and ZKIN began trading on Sept 1. 2017, flaring to a hi of $10.50 before settling back to trade in a range of $8.00 to $8.50 ever since.
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While ZKIN is a Chinese company focused on that market, Financials Trend saw its potential to grow against a higher-than-U.S. infrastructure market in China and we reiterate that outlook. On Sept 25, 2017 ZKIN released news clarifying its Mission Statement behind ZK International Group’s plans. ZKIN CEO, Jiancong Huang, noted in that release that the Company would be “expanding into more markets,” following the capitalization infused from its NASDAQ IPO. Financials Trend feels, if investors are patient they will see good upside to ZKIN.
Amongst other infrastructure stocks, we like Vulcan Materials Co. (NYSE: VMC), which concentrates on aggregates, an area that is waiting for a massive road improvement project to become effective when the Trump administration acts on its commitments. VMC is currently down 6.2% year-to-date.
Chicago Bridge & Iron Co. (NYSE: CBI) focus is engineering, procurement and construction. So far, CBI is down 5.7%, year-to-date.
Fluor Corporation (NYSE: FLR), another engineering, procurement and construction company, has also drifted lower, trading down 3.5%. FLR faired better than its peers, however potential gains in market price are more-likely lower than CBI and VMC.
Amongst our four favorite infrastructure stocks, we peg ZKIN as the more-likely top gainer, given its drawback from its $10.50 hi, even though its shares are trading more-than 50% above its IPO price due to the fact that its China market is more likely to show stronger growth when stacked up against its U.S. peers.
ZK International Group Co., Ltd. (Nasdaq: ZKIN) is a China-based manufacturer of stainless steel pipe for water and gas that has becoming one of the key suppliers in China and while that may not seem as appealing to investors as biotech or gold, you can’t overlook growth and earnings that match those sectors’ performance. ZKIN has the fundamentals to growth.
Ok, you ask.. why is ZKIN a play? Two words; Growth and Revenue. ZK International Group Co., Ltd. reported $36.8 million in revenue in 2016 on head-turning net income of $5.3 million. Those results were generated mostly from China’s booming urban growth in a market where most of the water pipe is plastic, which also raises health concerns along with the corrosive copper pipes.
Currently, stainless steel only makes up about 3% of water pipeline in China, reflecting a high growth rate potential for ZKIN. That equates to $32 billion in water pipeline in residential housing nationwide in 2013, with stainless steel showing a 25% annualized growth rate. By 2016 the water pipeline market in China topped $58 billion.
So where do those figures come from? Only 3% of the 1.4 Billion Chinese citizens have access to drinking water in their homes. China accounts for ~20% of the world’s population, yet has access to only 7% of the world’s renewable
Add that to China’s booming urbanization and you can see why ZKIN has good potential for growth.
But water isn’t China’s only problem within urban markets; natural gas pipeline usage grew 200% in five years from 2010 through 2015 and now stands at 600,000 km. That’s more-than a 19% annual growth rate with gas consumption rising at a 17% annual rate. China’s gas pipeline market reached $2 billion in 2016.
See what we mean by Appealing Fundamentals of potential growth and revenue?
The combined water and gas pipeline market in China grew to $60 billion by the end of 2016 with ZKIN barely taking a 1% market share. Hardly an industry leader, right? Wrong!! ZK International Group Co., Ltd. (Nasdaq: ZKIN) holds 28 patents with awards for its innovative pipe couplings in stainless steel. That gives ZK International Group Co., Ltd. (Nasdaq: ZKIN) a competitive edge that should reflect in capturing higher market share over time. The Company has also become an approved “qualified supplier” to six of China’s water and gas transmission companies with more resources expected to add to ZK International Group Co., Ltd. next year.
ZKIN is well-positioned for increased growth as it continues to deploy pipe and fitting systems in China’s construction boom. Their project teams work closely with urban planners and real estate developers designing and implementing sophisticated pipe and fitting solutions as well as providing engineering expertise. As more developers better understand the use of stainless steel in their projects, ZKIN will continue to have a growing opportunity.
ZK International Group Co., Ltd. (Nasdaq: ZKIN) helps bring communities reliable and durable gas and water transmission systems.
A High Growth Industry In Developing Countries
According to China Statistics, national residential real estate investment in 2013 was $943.2B and 2.5% or $32B of the investment was for water supply pipeline. This market is increasing 25% annually supported by a growing construction market. In addition, gas consumption in China is growing at 17% annually driven by the growth of urbanization. From 2010 to 2015, urban gas pipeline length increased from 250,000 to 600,000 km at an annual growth rate of 19.14%.
ZK International Group Ltd. (Nasdaq: ZKIN) is as appealing as those biotech and gold stocks we’ve covered in the past and we think our readers will agree! Look for ZKIN on the NASDAQ.
Keep Your Eye on ZKIN and Watch For New Developments