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May 28, 2021

JD Logistics repeats listing success after underwhelming IPO

By MarketLine

JD Logistics overcame an underwhelming IPO share price by rising 14% in debut. After being priced at the lower end of the indicated range, such a significant jump has positioned it among the top three listings in Hong Kong stock market so far this year.

Although the recent turmoil in the Chinese tech sector casted doubts on the current appetite of investors, the uplifting debut of JD Logistics does not come across as a true surprise. Indeed, the logistics arm may be the X factor for the ecommerce to prevail in a highly competitive sector.

In fact, the Beijing-based ecommerce, which prides itself on delivering 90% of its packages on the same day of the order, aims to compete against the almighty Alibaba on the grounds of efficient warehousing and agile delivery.

Moreover, JD Logistics chief Yu Rui has pledged to devote the funds raised in the public market to double down on its pioneering bet in automation and cloud-based logistics. Also, the further expansion of its network of state-of-the-art warehouses into lower-tier suburban areas in China, ranks among the top priorities for the ecommerce giant.

JD.com intends to use the interest raised by its logistics division to finally kickstart its automated delivery service, which the Chinese giant considers to be the pinnacle of its business model.

JD Logistics repeats listing success after healthcare unit listing in December last year

Even though the promising listing of the logistics spin-off may have a larger impact on the performance of JD.com core business, it comes second after the listing of its healthcare unit was the biggest IPO of the Hong Kong stock market last year.

These recent prolific listings by two of its arms, as well as the IPO less than a year ago of JD.com itself both in Hong Kong and the United States, shows the potential of JD to compete with giants like Alibaba across the tech retail spectrum.

Trading success of spin-off shows confidence of investors

JD Logistics IPO has been widely regarded by stakeholders as a significant test for any prospective upcoming listings of Chinese tech companies, since this is the first IPO after the expansive anti-trust probe carried out by the government in China.

However, JD.com was among the first companies to pledge compliance with the Communist Party laws and regulations. In fact, since it looks like the anti-trust probe was intended to take back power from Alibaba, JD and its subsequent units may benefit from the future measures put in place by the Chinese government to keep Alibaba in check.