Late Investor Activity Lowers JD Logistics' Initial Stock Gains

On Friday, JD Logistics (HKG:2618), the logistics spinoff of Chinese e-commerce giant JD.com JD, made its Hong Kong Stock Exchange debut priced at $HK40.36. It hit its peak of $HK47.75 and eventually gave up those gains, closing at $HK41.70 for a 3.3% gain.

Much of this drop from the peak was due to late retail investor activity, with security filings showing that the retail portion of the IPO was oversubscribed 715 times, according to a Reuters report.

This listing is the third to raise more than $1 billion this year and the second-largest IPO in Hong Kong.

"We are going to use the funds raised from the IPO to further improve our networks, including in the lower-tier and suburban areas in China, and the infrastructure of the overseas markets," said Yu Rui, CEO of JD Logistics, in a Hong Kong briefing.

JD.Com Earnings

The logistics firm's parent company released its Q1 earnings, posting $31 billion in net revenues, a 39% increase over Q1 2020, which was set back due to COVID shutdowns in Asia.

The company boasted a 112 million active user gain over the last year, which led to an annual active user count of 500 million on April 1.

JD executives explained the importance of supporting brands and merchants with an online marketplace that they can leverage to scale their business and plans to have more than 230 brands achieving over $HK100 million in sales to celebrate the platform's 18th anniversary on June 18.

The company noted that in order to continue achieving this growth, it was important to continue building an advanced B2C e-commerce model supported by a resilient supply chain, led by JD Logistics.

"JD Retail is collaborating with the suppliers and partners to build an adaptive model that can efficiently serve various types of consumer demands in any scenarios, anywhere and anytime," said Lei Xu, chief executive officer of JD Retail, the retail segment of JD.com. "[We] provide our business partners with our strong supply chain middle platform capacities, omnichannel marketing and across-the-board user assets management solutions. In this process, we achieved the unification of products and people in the increasingly diversified retail industry, propelling further optimization of cost efficiency and user experience."

The earnings report noted that its recent partnership with Tencent, a Chinese technology conglomerate, and the launch of JD-Tencent Cloud Warehouse will continue to provide a logistics platform for its sellers with integrated solutions to support warehouse and supply chain capabilities, branding and marketing solutions and business lead management.

"Through the JD-Tencent mini program based on the Tencent cloud mall, merchants can quickly launch their shops on WeChat. The seamless connection between the two companies will enable convenient advertising and integrated supply chain services," said Liguang Zhou, head of JD Logistics' cloud warehouse ecosystem business at the JD Logistics Cloud Warehouse Partner Conference in Beijing.

At the end of Q1, JD Logistics was operating over 1,000 warehouses globally that cover 226 million square feet of space, managed by the JD Logistics Open Warehouse Platform.

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