JD Logistics goes public with USD35bn valuation

JD Logistics, the JD.com delivery spin-off, completed its listing on the HKEX on 28 May 2021, raising about HKD24.1 billion (USD3.1 billion) with the final pricing, giving it a total market capitalisation of USD35 billion and making it China’s second-largest logistics company to SF Express by value to date.

Shihui Partners and Maples Group acted as PRC and Cayman Island counsel, respectively, to the issuer, and Skadden acted as Hong Kong and US counsel. For the sponsors and underwriters, Cleary Gottlieb advised on Hong Kong and US law, and Han Kun Law Offices advised on PRC law.

As the fourth listed company under JD.com, the valuation of the delivery arm exceeds that of the parent company during its own US listing in 2014. With revenue highly dependent on its parent, the company has generated discussion about its valuation and profitability. The prospectus shows that 56.6% of JD Logistics’ total revenue in the first three quarters of 2020 still comes from JD.com.

JD Logistics’ listing could gradually change how investment banks value logistics companies, from the traditional P/E (price to earnings) ratio route to valuation by P/S (price to sales) ratio, putting an emphasis on future expectancy.

The development strategy of internet platform companies – scaling in the early stage, and optimising cost and profiting gradually in the later stage – has been increasingly recognised by the market. Coming from such a background, as some analysts point out, JD Logistics will reach a trillion-level market space with its current market-leading revenue growth rate.