ZK International Announces Corporate Update

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Jun 26, 2020, 08:30 ET

WENZHOU, China, June 26, 2020 /PRNewswire/ -- ZK International Group Co., Ltd. (ZKIN) ("ZK International" or the "Company"), a designer, engineer, manufacturer, and supplier of patented high-performance stainless steel and carbon steel pipe products primarily used for water and gas supplies, today announced the following corporate updates:

Manufacturing Goes Full Steam Ahead Post the Pandemic

As the COVID-19 swept across China starting from mid-January, dramatic measures were taken on a massive scale to force residents to remain indoors. These measures included government-mandated factory shutdowns until early March. As a result, we have experienced longer than usual shutdowns that spanned much of the month of February due to Chinese New Year holidays and subsequently COVID-19 induced government mandated lockdown order.

While the COVID-19 pandemic forced longer than usual factory shutdowns after the Chinese New Year holidays, which in turn caused increased backlog of orders, our factories resumed normal production in early March and has been running at full capacity since then.

As we look back today, with the easing of the backlog following more than 3 months of manufacturing running on full capacity, we were able to smooth out the disruption in production and product workflow caused by the COVID-19 pandemic.

To help local communities fight against the pandemic, we are proud to supply piping infrastructure for the field hospitals designated by the Wenzhou local authority to officially treat patients with pneumonia infected by the COVID-19. The hospitals were completed by the end of February with a full capacity of 800 beds.

The Dianshi Partnership Gives Us Quick Access to the Hunan Market

In April, we entered into a strategic partnership agreement with Hunan Dianshi Decoration Design and Engineering Co. Ltd. ("Dianshi"), one of the leading home improvement and interior design chains in Hunan Province with approximately 3,000 employees. This Dianshi Partnership gave us a unique leverage to quickly expand our sales network into the 65 design centers and studios in 30 cities in China that are currently owned by Dianshi. Leveraging Dianshi's strong design capability and ZK International's high-performance stainless steel water pipes and fittings supplies, the Dianshi Partnership allows two parties to team up in providing best-in-class home improvement and interior design solutions in 30 cities with the primary focus in the Hunan market. As a strategic partner and designated preferred vendor of water pipes and fittings for Dianshi, we view the Dianshi Partnership as potentially a springboard for ZK International to penetrate the growing residential real estate market across China, especially Hunan Province.

The Huaye Partnership to Bring Additional Manufacturing Capacity and Access to the North Eastern China Market

Earlier this month, we entered into an Exclusive Supplying and Distribution Framework Agreement with Shandong Huaye Group ("Huaye"), a leading structural and fencing piping products manufacturer and suppliers in China. The Huaye Agreement covers Huaye's ongoing production line and machine upgrades (the "Upgrades') as well as designating Huaye as the Company's strategic OEM manufacturer and distributor.

The Upgrades, with Huaye's plan to allocate a total budget of RMB350 million (approximately $49.7 million), are now underway at Huaye's existing 120,000 square meters facility in Mengyin County, Shandong Province. ZK International is dispatching experienced engineers in support of the ongoing Upgrades which are expected to be completed by September 2020. Upon completion of the Upgrades, Huaye will become a designated OEM manufacturer and distributor of the full suite of ZK International's patented high-performance stainless steel and carbon steel piping products.

Based on the current schedule for the Upgrades, we expect the Huaya Partnership to increase our total production output by up to RMB40 million (approximately $5.6 million) in calendar year 2020, significantly ease our production capacity bottleneck and reduce our product delivery time.

For over 18 years and with 500 distributors, Huaye has established itself as one of the leading manufacturers and suppliers of stainless steel structural and fencing piping products in the Northern and Eastern regions of China, particularly in Shandong Province. With complementary product portfolios and sales network, we have high hopes on the Huaye Partnership and expect it to bring us not only additional manufacturing capacity but also speedy access to the North Eastern China market where we have limited presence.

Due to its price advantage, PPR pipe currently has higher market share than stainless steel pipe in North Eastern region of China. However, PPR pipes has high maintenance cost as a result of its significantly shorter life span compared to stainless steel pipes. Additionally, enhanced consumer health awareness helps stainless steel pipe rapidly gain larger market share. Currently we generate small percentage of revenues from North Eastern China region; leveraging Huaye's extensive sales channel, we anticipate that this region will become the fastest growing market for the coming years.

New Corporate Video

The Company also released a corporate video (the "Video"), highlighting its manufacturing facilities, and its mission and values. The Video can be accessed through the Company's website at https://www.zkinternationalgroup.com/news-media/media/media/2787/zk-corporate-video.

Chairman's Comments

"For over 20 years and still counting, ZK has been always on a mission to enable clean water and safe gas for municipalities and communities with its high-quality, high-performance stainless steel and carbon steel pipe and fitting solutions. Looking ahead, we expect the macro headwinds caused by the COVID-19 pandemic to continue deep into the second half of 2020. However, we also see tremendous opportunities ahead of us. With strong order book, additional production capacity and expanded geographical outreach brought by the Huaye partnership, we are increasingly optimistic about our long-term prospects. Northern China market is our next strategic market as a corporate strategy for the second," commented Jiancong Huang, Chairman and Chief Executive Officer of ZK International.

About ZK International Group Co., Ltd.

ZK International Group Co., Ltd. is a China-based designer, engineer, manufacturer, and supplier of patented high-performance stainless steel and carbon steel pipe products that require sophisticated water or gas pipeline systems. The Company owns 33 patents, 21 trademarks, 2 Technical Achievement Awards, and 10 National and Industry Standard Awards. ZK International is Quality Management System Certified (ISO9001), Environmental Management System Certified (ISO1401), and a National Industrial Stainless Steel Production Licensee that is focused on supplying steel piping for the multi-billion dollar industries of Gas and Water sectors. ZK has supplied stainless steel pipelines for over 2,000 projects, including the Beijing National Airport, the "Water Cube", and "Bird's Nest", which were venues for the 2008 Beijing Olympics. Emphasizing superior properties and durability of its steel piping, ZK International is providing a solution for the delivery of high quality, highly sustainable, environmentally sound drinkable water not only to the China market but also to international markets such as Europe, East Asia, and Southeast Asia.

For more information please visit www.ZKInternationalGroup.com. Additionally, please follow the Company on Twitter, Facebook, YouTube, and Weibo. For further information on the Company's SEC filings please visit www.sec.gov.

Safe Harbor Statement

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate" or "continue" or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are not guarantee of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict and many of which are beyond the control of ZK International. Actual results may differ from those projected in the forward-looking statements due to risks and uncertainties, as well as other risk factors that are included in the Company's filings with the U.S. Securities and Exchange Commission. Although ZK International believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in forward-looking statements will be realized. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by ZK International or any other person that their objectives or plans will be achieved. ZK International does not undertake any obligation to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Investor Contact:

Tony Tian, CFA
Weitian Group LLC
Phone: +1 (732) 910-9692
Email: [email protected]

SOURCE ZK International Group Co., Ltd.