Business Context and Reporting Period
ZJK Industrial Co., Ltd. (ZJK) is a Cayman Islands exempted company incorporated in May 2022, operating primarily through subsidiaries in the People's Republic of China (PRC) and Vietnam. The company specializes in manufacturing precision fasteners, structural parts, and metal components for new energy vehicles, consumer electronics, and AI infrastructure. This Form 20-F covers the fiscal year ended December 31, 2025.
Key corporate developments during the period include:
- Share Capital Reorganization: Effective March 6, 2026, the company implemented a dual-class share structure. Class B shares (held by controlling shareholders) carry 30 votes per share, while Class A shares carry 1 vote per share.
- Expansion: The company announced a strategic partnership in November 2025 to establish a U.S. Gigafactory with an expected investment of up to $200 million.
- Listing: Class A ordinary shares trade on the Nasdaq Capital Market under the symbol "ZJK."
Key Financial Metrics (Year Ended Dec 31, 2025)
| Metric | 2025 (US$) | 2024 (US$) | Variance |
|---|---|---|---|
| Total Revenues | 56,103,853 | 37,809,465 | +48.4% |
| Gross Profit | 24,501,421 | 13,565,238 | +80.6% |
| Gross Margin | 43.67% | 35.88% | +7.79 pts |
| Net Income (Attributable to Shareholders) | 10,185,035 | 3,682,723 | +176.6% |
| Operating Cash Flow | 6,559,811 | 5,342,539 | +22.8% |
| Total Assets | 79,528,262 | 55,373,565 | +43.6% |
| Total Liabilities | 35,934,034 | 25,306,690 | +42.0% |
| Cash & Equivalents | 14,350,959 | 12,255,213 | +17.1% |
| Short-Term Debt | 0 | 1,223,405 | Repaid |
Material Changes vs. Prior Period
- Revenue Growth: Driven by a 28.5% increase in sales volume and higher average unit prices. Key growth came from screws (driven by mass production transition), turned parts (AI-related demand), and stamping parts (complex new projects).
- Margin Expansion: Gross margin improved to 43.67% due to a shift toward high-precision, value-added products and economies of scale.
- Expense Management: General and administrative (G&A) expenses remained relatively flat (+0.66%) despite a $1.11 million impairment charge on equipment prepayments, offset by a decrease in professional service fees post-IPO. Selling and marketing expenses rose 52.2% due to expansion into North America and increased commissions.
- Balance Sheet: Accounts receivable increased significantly ($15.97M vs $10.28M) due to sales growth. Inventory increased to $12.14M to support expanded sales scale. The company fully repaid all short-term bank borrowings by year-end.
Guidance, Outlook, Risks, and Contingencies
Outlook and Strategy
Management plans to fund growth through existing cash, operating cash flows, and potential external financing. Strategic focus includes the U.S. Gigafactory project, expanding the sales network in North America/Singapore/Taiwan, and increasing R&D for AI server and liquid cooling components.
Material Risks
- Customer Concentration: The top four customers accounted for 75% of 2025 revenue. PSM-ZJK (a related party) alone accounted for 36% of revenue. Loss of these customers would materially impact operations.
- Regulatory & Geopolitical: Risks related to PRC regulations on overseas listings (CSRC filing requirements), data security, and the Holding Foreign Companies Accountable Act (HFCAA). While the current auditor (HTL International, LLC) is subject to PCAOB inspection, future access uncertainties remain.
- Environmental Compliance: Subsidiaries Zhongke Components and Zhongjinke Shenzhen have faced non-compliance issues regarding pollutant discharge permits and environmental protection facility inspections. While no fines have been issued to date, potential penalties or operational restrictions exist.
- Internal Controls: Management identified material weaknesses in internal control over financial reporting as of December 31, 2025, citing a lack of in-house accounting personnel with sufficient U.S. GAAP experience. Remediation plans are underway.
Investor Verification Checklist
- Related Party Transactions: Verify the commercial terms and pricing of sales to PSM-ZJK (36% of revenue) and the collectability of the $11.2M receivable due from this related party.
- Environmental Remediation: Confirm the status of pollutant discharge permits for Zhongke Components and the resolution of environmental inspection non-compliance for Zhongjinke Shenzhen.
- Internal Control Remediation: Monitor the hiring of qualified accounting personnel and the implementation of the financial control framework to address identified material weaknesses.
- U.S. Gigafactory Funding: Assess the company's ability to secure the necessary $200 million financing for the U.S. manufacturing project without diluting shareholders excessively.
- Customer Diversification: Evaluate progress in reducing reliance on the top four customers, particularly PSM-ZJK and BULTEN Wuxi.