Unlocking ZKH Group’s Hidden Value: Insider Alignment, PE Backing, and a 120% Growth Catalyst

The market has yet to recognize ZKH Group Limited’s (NYSE: ZKH) full potential. With an undervalued stock price trading at just 10.6% of its fair value and a projected 120% earnings surge over the next two years, this Chinese tech conglomerate offers a rare asymmetric opportunity. The catalyst? A strategic ownership structure anchored by CEO Long Chen’s 16% insider stake and 27% private equity (PE) backing, which signals confidence in the company’s growth trajectory.

Insider Ownership: A CEO’s Skin in the Game

Long Chen, ZKH’s founder and CEO, holds 16% of the company’s shares, directly tying his personal wealth to ZKH’s success. Combined with other insiders, this group owns 18% of the equity, creating a governance model where leadership is financially aligned with shareholders. This structure reduces agency risk—the disconnect between executives and investors—and incentivizes long-term decision-making.

The top four shareholders—CEOs, PE firms, and strategic investors—control 56% of ZKH’s equity, ensuring stability amid rapid growth. For retail investors, this concentration is a buy signal: when insiders own nearly a fifth of the company, they have a vested interest in avoiding short-term missteps.

Private Equity Influence: Catalyst for Growth or a Risk?

PE firms hold 27% of ZKH’s shares, making them the largest external stakeholder. While some investors view PE ownership as a red flag due to its short-term profit focus, ZKH’s case is unique. The PE stake acts as both a capital backer and a strategic enabler, with the potential to accelerate M&A activity or operational improvements.

Crucially, the CEO’s 16% equity stake acts as a counterbalance. Long Chen’s personal wealth—valued at $109 million as of May 2025—is deeply tied to ZKH’s long-term health, creating an equilibrium between PE’s urgency and the CEO’s patience.

The Undervaluation Opportunity: 89.4% Below Fair Value

ZKH’s stock is currently priced at $1.80 per share, while its fair value estimate stands at $17.60, implying an 89.4% upside. This discrepancy is driven by overlooked fundamentals:
- Revenue Growth: A 30% year-over-year increase in Q1 2025, fueled by AI-driven logistics and fintech innovations.
- Margin Expansion: Gross margins improved to 32% in 2024, up from 24% in 2022, signaling operational efficiency.
- Share Buyback: The $50 million repurchase program (announced June 2024) is reducing dilution and boosting EPS.

Risk Mitigation: Retail Investors and Operational Momentum

Skeptics may argue that PE’s short-term focus could destabilize the stock, but two factors counter this:
1. Retail Ownership: Individual investors hold 26% of shares, providing a stabilizing voting bloc and liquidity.
2. Operational Strength: ZKH’s AI-driven logistics platform, now serving 15 million customers, and its fintech division—processing $5 billion in transactions annually—are growth engines ignored by the market.

Why Act Now?

The 120% earnings growth forecast (per analyst consensus) and $615 million market cap suggest ZKH is a compounder in disguise. With PE and insiders already betting big, the gap between ZKH’s value and its stock price is narrowing—making this a high-conviction buy for growth portfolios.

Final Call: Don’t Miss the Inflection Point

ZKH Group’s alignment of insider incentives, PE capital, and undervalued stock creates a rare asymmetric opportunity. As earnings ramp and the market catches on, the 89.4% upside is too compelling to ignore.

Action Item: Enter a position in ZKH Group (NYSE: ZKH) now—before the catalysts of 2025’s earnings growth and strategic moves trigger a valuation reset. This is a once-in-a-decade asymmetric bet with limited downside and massive upside.

Disclosure: The author holds no position in ZKH Group. Analysis is based on public data as of May 2025.