JD Logistics participates in volatile IPO. Why this is another win for JD.com.
Chinese e-commerce giant
landed another successful listing on Friday, floating its logistics arm in an initial Hong Kong public offering that gives the company a market cap of around $ 33 billion.
Shares of JD Logistics climbed 18% in a volatile first day of trading, with the stock relinquishing its gains at the end of the day to close 3.3% higher.
The comeback story. JD Logistics is an integrated supply chain player in China, offering services from warehousing to distribution, from manufacturer to end customer. The group comes from
—One of China’s internet giants – in 2017 to provide services to external clients after a decade of internal operations.
As of the end of March, the company was operating more than 1,000 warehouses, its logistics network using high-tech tools such as autonomous vehicles and autonomous robots. Its 32 “smart mega warehouses” across China include a fully unmanned center in Shanghai.
Since its split in 2017, JD Logistics has grown rapidly, with revenue growth of 32% between 2018 and 2019 and 47% from 2019 to 2020. It recorded net losses of over 2 billion yuan (300 million) in 2018 and 2019., and a net loss of 4 billion yuan in 2020. The group expects its net loss for 2021 to “increase significantly” from 2020, in part due to the drop in profit margins due to a drop in government support linked to the Covid-19 pandemic.
Also read: Chinese giant JD.com is seeking $ 3.4 billion in an IPO in the logistics sector. Here is what you need to know.
What’s up. JD Logistics stock opened at HK $ 46.05 after the company valued the IPO at HK $ 40.36 – at the lower end of its HK $ 39.36 range at 43.36 $ HK. The stock climbed to HK $ 47.75 before closing at HK $ 41.70, giving the company a market cap of around $ 33 billion at the close of trading.
The group raised $ 3.2 billion in its IPO, the largest in Hong Kong since
– saved video sharing app
floated in February to raise $ 5.4 billion. Main investors included
Vision Fund, Tiger Global,
and Temasek Holdings – the Singapore state-backed investment firm – which had pledged to purchase around $ 1.5 billion in shares.
JD Logistics chief executive Yu Rui told a briefing in Beijing that the group will use the funds it has raised to improve its network, including in less developed areas of China, as well as to develop a international logistics company, according to Reuters.
More: China has cracked down on its internet giants. The rebound will be slow.
Look forward. While JD Logistics’ IPO was priced at the lower end of the group’s range, and the volatile trading day failed to capture those 18% gains, Friday still marks a victory for JD.com . This is the group’s third listing success in less than a year after the tech giant launched its pharmaceutical and healthcare business,
in Hong Kong in December 2020 to raise $ 3.5 billion. JD.com itself was listed in Hong Kong in June 2020 after years of trading its shares on the Nasdaq.
Additionally, this IPO took place amid a challenging regulatory environment and amid broader concerns about valuations in China’s logistics industry. Regulators last month warned 13 groups, including a subsidiary of JD.com, of antitrust concerns, and Chinese tech sector stock prices have been facing headwinds since February amid rising backdrop. interest rates and regulatory concerns in the United States and China. In addition, one of the competitors of JD Logistics,
saw its stock price plunge more than 44% from February highs after posting a surprise quarterly loss, prompting questions about valuations elevated beyond SF.
For investors, JD Logistics may still be a way to play a few familiar high-tech trends, including artificial intelligence and 5G breakthroughs in autonomous vehicles and robots. These technologies have serious implications for supply chains.