JD Logistic set for cautious $3.2bn Hong Kong float

By Elles Houweling

JD Logistics, the delivery arm of the Chinese ecommerce giant JD.com, has priced its Hong Kong initial public offering (IPO) at HKD24.6bn ($3.2bn), which is near the bottom end of the range.

The warehousing and shipping company priced 609.2 million shares at HKD40.36 each, while earlier this week it announced on planning to price its shares between HKD39.36 and HKD43.36 apiece.

JD Logistics’ debut on the Hong Kong Stock Exchange (HKEX), scheduled on May 28, will be closely watched as a gauge of investor demand in Hong Kong’s IPO market, which has cooled because of concerns over rising inflation and weakness in global stock.

It is the second-largest IPO in the city this year after Kuaishou Technology’s debut in January, which according to GlobalData’s deals database raised HKD2bn.

The pricing close to the bottom suggests investors were cautious of the share price, even if JD Logistics stopped taking orders a day earlier than planned because of strong demand. At the bottom end of the range, the company will be valued at $31bn, well below the $40bn valuation it had hoped for at the start of its IPO process.

In 2020, JD Logistics raked in revenue of 73.4bn yuan ($11.4bn), a 47% year-over-year (YoY) rise. However, the company reported a 4bn yuan loss in 2020, more than the 2.2bn loss the year before.

In its prospectus, the Beijing-based firm said that it expects a bigger net loss for this year. “As we currently prioritise growth of our business and expansion of our market share over profitability, there can be significant fluctuations in our profitability profile in the near-to-medium term,” the company explained.

JD Logistics plans to use proceeds from the IPO to expand its warehouse, logistics and delivery networks, and upgrade its technologies including its data analytics and algorithm capabilities.

Set up in 2007 as a standalone unit under JD.com, JD Logistics operates as the supply chain and logistics services for the ecommerce platform. JD Logistics’ main selling point is its same- or next-day delivery supported by the many warehouses it operates across the country which keep products close to end consumers.