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On Friday, shares of JD Logistics surged as much as 18.3% on their first day of trading on the Hong Kong Stock Exchange, valuing the distribution arm of Chinese online retailer JD.com at $34 billion.
The IPO that raised $3.2 billion was Hong Kong’s second-largest listing of the year and bright spot for the city’s bourse after several first-day flops.
And for the sprawling JD.com empire—referred to as ‘China’s Amazon’—the IPO was the third blockbuster public listing in less than 12 months.
Like its U.S. peer, JD.com has amassed e-commerce power by building its own in-house, country-wide delivery infrastructure; the logistics business was spun off into a separate entity in 2017.
The public debut, while falling short of analyst estimates, is a milestone for for JD Logistics as it shoots for a bigger slice of China’s $2.3 trillion logistics market and eyes overseas expansion.
The IPO “helps [JD.com] crystallize the value of its logistics arm, which it had invested in heavily for more than a decade,” says Vey-Sern Ling, an analyst at Bloomberg Intelligence.
JD.com has differentiated itself in China’s fiercely competitive e-commerce space by creating an in-house distribution network that extends across the country. Owning more links in the delivery supply chain has given the online retailer an advantage over rivals—one that proved especially handy during the COVID-19 online shopping boom, when heightened demand overwhelmed other delivery networks.
“We have built a nationwide ‘fulfilment infrastructure’ that we believe is the largest among all e-commerce companies in China,” said JD.com its 2018 annual report. The e-commerce giant delivers to all counties and districts in China and claims that 90% of all retail orders that go through its own distribution network are delivered on the same day or next day.