JD.com plans to list shipping unit in HK

HONG KONG • JD.com plans to list its shipping business in Hong Kong, raising potentially billions of dollars to capitalise on China's post-Covid-19 e-commerce boom.

JD Logistics' initial public offering could raise roughly US$5 billion (S$6.7 billion) and value the unit at about US$40 billion, sources said.

Details of the proposed spin-off have not been finalised, the company said in an IPO prospectus filed with the stock exchange.

JD.com's shares gained more than 6 per cent to a record in Hong Kong yesterday.

The Chinese e-commerce operator joins an IPO rush fuelled by flush liquidity in markets worldwide, with Hong Kong emerging as a hot venue for tech coming-out parties.

Kuaishou Technology last month completed the biggest Internet debut since that of Uber Technologies, marking the best start to a year for Asian stock listings on record.

New Horizon Health this week became the second-most popular Hong Kong IPO with retail investors in the city's history.

JD Logistics should similarly draw interest. Shopping sites from Alibaba Group Holding to Pinduoduo have benefited as Covid-19 lockdowns have driven consumers online.

Chinese e-commerce revenue should surpass 50 per cent of the country's total retail sales this year - a first anywhere in the world, according to researcher eMarketer.

BofA Securities, Goldman Sachs Group and Haitong International Capital are the joint sponsors of the proposed IPO, the prospectus says.

JD Logistics' IPO would be a milestone for its parent, which spent billions of dollars building one of China's largest courier services to ensure on-time delivery and retain control over its shipping network.

That in-house operation, which spanned more than 800 warehouses across the country as at Sept 30 last year, has been credited for speeding JD.com's recovery from early Covid-19 disruptions.

"The spin-off and separate listing will help JD.com crystallise the value of its logistics arm, which it had invested in heavily for more than a decade," Bloomberg Intelligence analyst Vey-Sern Ling said.

"The funds raised can aid JD Logistics' expansion without burdening JD.com. Going forward, investors and management can focus on two distinct businesses, e-commerce and logistics, which have different growth and profitability profiles."

Chinese e-commerce sales have increased by several times during the pandemic, making companies that handle shipping and deliveries attractive, Ms Elysia Tse, head of Asia-Pacific research and strategy at LaSalle Investment Management, said earlier this month.

JD Logistics' net loss narrowed to 11.7 million yuan (S$2.4 million) in the nine months ended September last year, from more than 80 times that a year before.

The IPO will "lead to a re-rating for a pretty substantial part of JD's business, which, in turn, should be good for JD's shares", said Mr Robin Zhu, a senior analyst at Bernstein Research in Hong Kong.

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