Shares in the supply chain and delivery unit of Chinese ecommerce group JD.com rose 14 per cent in their debut after the company amassed $ 3.1bn in one of Hong Kong’s largest stock markets this year.
JD Logistics is a spin-off similar to US tech group logistics arm Amazon. The company delivers 90 percent of packages on the same or the next day for parent JD.com, the largest customer, but it is more focused on providing service and delivering services to third-party customers.
The first public offer such as the Chinese government step analysis in the tech sector of the country. Market capitalization of Beijing -based JD Logistics reached about $ 36bn after trading in Hong Kong began on Friday.
While the unit benefited from a strong online buyout during the Covid-19 pandemic, the IPO was unexpected compared to the company’s earlier submission of its material lists.
“Capital markets are hot at the moment,” JD Logistics chief executive Yu Yui told FT. “For JD Logistics, our IPO is just a point in time, it’s not the end point… If the [price] is in reasonable range, I think it’s OK. ”
Analysts said the fall was due to falling prices on the part of rival SF Holdings and growing losses at JD Logistics as more invested in infrastructure.
The group has added about 200 warehouses in the past six months. Its operating loss widened to Rmb1.5bn ($ 235.3m) in the first quarter as revenue rose 64 per cent year -on -year to Rmb22.4bn.
“In the final prospectus, they said they would lose a bunch of money in 2021, so the estimate is down,” said a Hong Kong analyst.
The IPO is also the second major spin-off for JD.com, whose healthcare unit raised $ 3.5bn in a Hong Kong IPO in December. The fintech arm of JD.com pulled off a proposed IPO in the Shanghai Star market last month amid regulatory scrutiny.
Last year, JD Logistics earned nearly half of its revenue from ferrying packages for parent JD.com. But the share of business seeking external customers grew rapidly, recording a triple digit growth rate in the first quarter.
JD Logistics serving external customers “was our thesis when we decided to invest in 2018”, said Colin Guo, a partner at Sequoia Capital China. “If they just did JD’s own logistics, their growth rate would be linked to JD – so investors and management have a goal that they’ll bring in a lot of outside customers.”
The company had 190,000 outside company customers as of December.
“JD Logistics is a leading third -party logistics vendor. They are efficient and cost right – in China there are many options for logistics,” said Anderson Peng, vice president of supply chain for the brand. shoes Skechers China.
Yu said another way to grow for JD Logistics is called livestreaming ecommerce with video apps like ByteDance’s Douyin, the Chinese version of TikTok, and Kuaishou, as well as merchants selling products on the WeChat platform. at Tencent. “We can provide services to all of them,” he said.
JD Logistics’s 190,000 couriers have also started delivering parcels for individuals. Shipping a 1kg sack of apples from Beijing to Shanghai cost about Rmb16, said a 28-year-old deliveryman Yang. “More and more people are learning about our courier services and are starting to use ours,” he added.
While analysts at Bernstein’s research group estimated JD Logistics ’courier service for individuals contributing 14 percent of revenue last year, they noted that China’s logistics industry is fiercely competitive in prices. fell about 10 percent annually over the past ten years.
They added that low prices and sales spending at JD Logistics could push up revenue soon.