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JD Logistics readies to deliver $4 billion Hong Kong IPO

(ATF) The delivery arm of Chinese e-commerce giant JD.com has received a green light from the Hong Kong stock exchange for an initial public offering (IPO), according to a company filing with the bourse on Thursday. The IPO is expected to raise close to US$4 billion.

JD Logistics’ IPO will likely become the second-biggest deal on the Hong Kong bourse this year, after Tencent-backed short-video platform Kuaishou Tech raised $6.2 billion in January in the biggest IPO globally year-to-date. Chinese internet and artificial intelligence giant Baidu raised about $3.1 billion via a secondary listing in the city in March.

The IPO could value JD Logistics at about $35 billion, and the listing is scheduled for May 28, Tencent News reported, citing people familiar with the matter. Subscription for the IPO will start on Monday May 17, the report said.

At $35 billion, JD Logistics would become China’s second-most valuable delivery company after Shenzhen-listed SF Express. SF Express has a current market cap of 288.4 billion yuan ($44.7 billion).

Alibaba-backed ZTO Express completed its Hong Kong secondary listing last September, which valued it at HK$180.7 billion ($23.3 billion). The Shanghai-based firm is already listed on the New York Stock Exchange.

The JD Logistics IPO follows a blistering four months to begin the year, with investors betting serious money on IPOs. As of May 4, 35 IPOs raised about $20.3 billion on the Hong Kong bourse, the equivalent of two-fifths of last year’s total amount raised and a record high.

The company plans to use the proceeds to expand its warehouse, logistics and delivery networks; and to upgrade its technologies, such as its data analytics and algorithm capabilities.

BofA Securities, Goldman Sachs and Haitong International are acting as joint sponsors on the transaction, while UBS is serving as a financial adviser.

JD Logistics was originally set up in 2007 as JD Group’s in-house logistics department. In 2017, it became a separate business unit under JD.com and opened up its services to external customers.


Despite help from its parent company, which is China’s second largest e-commerce platform, JD Logistics has been bleeding money for more than a decade. In a letter to his “delivery brothers” in April 2019, when Liu was forced to cut benefits and cancel base salaries for JD delivery crews, Liu wrote that financing could only support JD Logistics’ operation for two years if the company kept losing money.

Despite a 47% increase in revenues last year thanks to the e-commerce boom amid the Covid-19 pandemic, the Beijing-based firm reported a bigger net loss of 4 billion yuan, after racking up losses of 2.8 billion yuan in 2018 and 2.2 billion yuan in 2019.

The company expects its net loss to “increase significantly” because of several factors such as a reduction in gross profit margin due to Covid-related government relief programs, as well as an increase in expenses.

In its prospectus, JD Logistics said it is now serving 190,000 clients, with revenue from external clients accounting for 43.4% of total revenue in the first nine months of 2020, up from 38.4% in 2019 and 29.9% in 2018.

However, analysts from Chaos Research Institute do not find JD Logistics’ external-facing services to be competitive.

“JD Group contributed 30.7 billion ($4.7 billion) to JD Logistics’ revenues in 2019, but third-party e-commerce platforms only contributed 3 billion ($463.8 million). The proportion does not match that of the gross merchandise volumes, which was about six to four according to 2016 data. The usage of JD Logistics’ delivery services on third-party platform is a bit low,” Chaos Research Institute said.

Apart from third-party e-commerce platforms, the average revenue from each customer of JD Logistics’ integrated supply chain service were modest – 241,622 yuan ($37,355) in the first nine months of 2020.

“Thanks to JD Group’s strong relationship with brands, JD Logistics can quickly acquire outsourcing customers. But it seems that most customers only outsource part of their supply chain to JD Logistics, not the entire function,” Chaos Research Institute said.

While SF Express is adept at expanding its business capabilities through acquisitions and recruiting industry veterans, JD Logistics’ management team is made of old timers, and the company has made very few acquisitions, the research firm said. 


JD Logistics employs more than 260,000 people and operates more than 900 warehouses across the country. In comparison, FedEx  which has a market capitalisation of $68 billion  employs a total of 245,000 people across various services worldwide.

The spin-off of JD Logistics is the fourth listing by a company under the umbrella of JD Group in less than a year.

JD.com completed a $3.8 billion secondary listing in Hong Kong in June 2020, followed by JD Health’s $3.5 billion listing in the city in December. Dada Nexus, JD Group’s 46.5%-owned delivery platform, listed on Nasdaq in June of last year.

Combined, these companies raised $10.9 billion from investors, data from Refintiv shows.


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Iris Hong

Iris Hong is a senior reporter for the China desk, and has special interests in fintech, e-commerce, AI, and electric vehicles. She began her career in 2006 and worked for Interfax News Agency and for PayPal before joining Asia Financial in July 2020. You can reach out to Iris on Twitter at @Iris23360981


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