The highly anticipated debut of JD Logistics (HKEX: 2618) didn't disappoint, with its shares on Friday rising as much as 18% on its first day of trading.
The logistics arm of JD.com (Nasdaq: JD; HKEX: 9618) priced its shares near the bottom end of its range. Through the sale of 609.2 million shares priced at HK$40.36 each, JD Logistics raised HK$24.6 billion ($3.2 billion). The IPO was the second-largest in Hong Kong this year, only trailing the $6.2 billion flotation of short video app Kuaishou Technology (HKEX: 01024) in February.
Now that the first day of trading is complete, JD Logistics, which operated more than 1,000 warehouses in China as of March, plans on using the proceeds from the share sale to improve its logistics network and invest in technology.
JD Logistics is yet unprofitable. While the company experienced 47% revenue growth in 2020 compared with the previous year, its net loss nearly doubled to 4.1 billion yuan. And that won't get much better in 2021, with the company warning in a filing with the Stock Exchange of Hong Kong that it expects to "record a significant adjusted loss" this year.
Jacob Cooke, the chief executive officer at e-commerce and technology consultancy WPIC notes that spinning off from JD.com will allow the logistics company to broaden its customer base and better adhere to Beijing's anti-monopoly rules.
"JD Logistics fits in very well with the regulatory plans of the Chinese government in breaking up these monopolies and really allowing them to go get a new customer base operating independently, like they are now," Cooke told Bloomberg Television in an interview.
"Now that they're independent -- and there's so much that goes on with data sharing in China too -- but that's really going to make other platforms and other brands feel more comfortable using JD Logistic's products to help with their fulfillment."
The stock in JD Logistics ended its first day of trading up 3% at HK41.70 per share.
Goldman Sachs Group Inc., BofA Securities Inc., and Haitong International Securities Group Ltd. are the joint sponsors on the IPO.