Guojin Securities: Optimistic about China's MRO intensive procurement proposals focus on leading high-quality enterprises with scale effects and operational efficiency

The Zhitong Finance App learned that Guojin Securities released a research report saying that MRO (maintenance, repair, operation) refers to essential industrial supplies that are not raw materials for production. SKU is scattered over long tails and accounts for a high proportion of unplanned purchases. The value of a single SKU is low but management & hidden costs are extremely high. Intensification is an industry trend, and online/digital intelligence accelerates the intensification process. The MRO market in China is vast and highly fragmented. The bank is optimistic about the long-term growth space of China's MRO intensive suppliers, and suggests focusing on leading high-quality enterprises with scale effects and operational efficiency.

Guojin Securities's main views are as follows:

Reviewing Guanjie, the leader in North America. MRO has weak cyclical attributes, and the value of intensive procurement is clear

North American leader Guanjie (founded in 1927, revenue of US$17.9 billion in 2025) has verified MRO's ability to cross the cycle. The average internal revenue growth rate from 2009 to 2025 was 5.7%, significantly outperforming the US GDP growth rate (2.1%) and manufacturing IP growth rate (-0.1%) during the same period; revenue fell by only 9.2% during the 2009 financial crisis, and achieved a jump share due to the 2021-2022 public health incident due to supply chain compliance capabilities during the 2021-2022 public health incident.

The three major values drive industry needs: (1) cost reduction and efficiency; e-commerce intensive procurement can save 15-20% of costs, 70% of time and 50% manpower; (2) compliance and transparency, digital intensive procurement can achieve full marks, fair prices, and traceable processes, especially to meet the Sunshine procurement needs of central and state-owned enterprises; (3) deepening service, and deeply embedded into customer procurement and operation systems through hierarchical services (high-touch+ online platform for small and medium-sized customers), forming high customer stickiness.

Differences in industrial structure determine the unique development path of MRO in China and have unique growth space

Scale and dispersion form a unique growth space: China's MRO procurement service market is 3.7 trillion yuan, and the digital intelligence channel penetration rate is only 9.8%; supply-side CR10 is less than 1.5%, while the US CR10 is 30%-45%; demand-side Chinese industrial enterprises exceed 6 million (SMEs account for 98%), and the US is about 800,000. Highly fragmented forms a unique long-term growth space for intensive suppliers; at the same time, the procurement demand of China's central enterprises is also a unique demand point for the industry.

The difference in profit levels determines the model difference: the profit margin on sales after tax in the US manufacturing industry is about 11.37%, the operating profit margin of Chinese industrial enterprises is about 5.3%, the profit margin of Chinese enterprises is thinner and more sensitive to purchase prices. The Chinese MRO platform model “low margins+high turnover+low expenses” vs. the US “high margins+high expenses”.

China's unique advantages are expected to accelerate the development of the industry: China has the world's leading e-commerce infrastructure and digital ecosystem (empowered by platforms such as JD), and the MRO industry is expected to accelerate intensification through e-commerce infrastructure under the core drive of cost reduction.

Competitive landscape: horizontal platforms look at scale efficiency, vertical and vertical look at service depth

Horizontal platform type (JD Industrial, Zhenkun, Colipu, Qixin Group): emphasizes the breadth of categories, turnover efficiency and scale effects, with relatively low gross profit+high turnover. The representative company JD Industrial has a gross profit margin of 17.6%, inventory 23.5 days/receivables 2.9 days/payables in 105.4 days, showing strong operating efficiency.

Vertical (Xianheng International, etc.): Deeply cultivate specific industries (power grids, oil and gas, rail transit, etc.), obtain high gross profit (gross margin is usually 30% +) through professional model selection and in-depth services, and follow the “high margin+low turnover” route, with deep customer binding and high switching costs.

Disassembled from an ROE perspective, JD Industrial deducts 19.30% of non-ROE, thanks to high turnover efficiency; Yiheda's ROE 12.09% is a high net interest rate (17.37%); Xianheng International ROE is between the two; overseas Guanjie ROE 48.10% is a mature model of high profit+high turnover+moderate leverage.

Core targets

JD Industries (HK shares): China's largest MRO procurement service provider, revenue of 23.952 billion yuan (+17.4%), adjusted net profit of 1,131 billion yuan; Zhenkun (US stocks): clear loss reduction trend, revenue of 8.988 billion yuan, net loss narrows; Xianheng International (A shares): focused on power grid MRO, industry expansion became the second growth curve, with revenue of 4.561 billion yuan (+26.5%); Colipu (Hong Kong Stock Exchange): Chenguang Holdings, revenue of 15.048 billion yuan (+8.8% YoY)), MRO category revenue of 4.269 billion yuan (+19.4% compared to the same period), the migration from office supplies collection to MRO is being accelerated. Qixin Group (A share): The leading office collector, with revenue of 11.965 billion yuan (+5.0% YoY). MRO industrial products have become the core extended category. Note: These are all 25-year revenue and year-over-year data.

Risk Alerts

Macroeconomic downside risks; industry competition exacerbates risks; policy and regulatory risks; risk of industry development falling short of expectations.