JD Logistics $3bn IPO falls short of expectations

JD Logistics long anticipated initial public offering (IPO) in Hong Kong has fallen short of expectations amid Beijing’s ongoing tech crackdown.

The IPO started off strongly as shares rose up to 18 per cent, however this figure fell to 3.3 per cent after afternoon trading.

The disappointing performance in the second half of the day culminated in a market capitalisation of around $33 billion for the company.

JD Logistics is the supply chain arm of Chinese ecommerce giant JD.com and promises to deliver 90 per cent of orders in 24 hours or less.

While the company delivers mainly orders from its parent company, it has also recently started focussing on orders from third-party brands.

READ MORE: JD.com latest Chinese tech giant to face anti-trust fine

Analysts believe that the decline of the share price of its rival SF Holdings as well as JD Logistics heavy investment in its infrastructure contributed to the disappointing share price.

“The capital markets were hot at the time, For JD Logistics, our IPO is just a point in time, it’s not the end point . . . if the (price) is in a reasonable range, I think it’s OK.” JD Logistics chief executive Yu Rui told the Financial Times.

Yu maintained a positive outlook on the company’s future, saying that the company could venture down the avenue of live-streaming ecommerce on popular apps such as ByteDance’s Douyin, which is the Chinese version of TikTok.

He also said merchants could sell goods on Tencent’s WeChat platform, claiming “We can provide services to all of them”.

The IPO came as JD.com became the latest Chinese tech giant to be fined for violating antitrust laws as it was slapped with a 300,000 yuan ($46,663) fine by Chinese market regulators last month.

The Chinese government has gone down hard on Chinese ecommerce brands over the last 12 months, predominantly for breaches in antitrust regulations.

JD’s main rival Alibaba was subjected to a record $2.8 billion fine after the company’s chief executive Jack Ma made a damning speech on Chinese regulatory systems back in October.

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CompaniesDelivery / Supply ChainEcommerceNews

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