Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Nearly 30 years of experience in the Korean/Asian equity research. Major sectors coverage include the following:
- Technology 
- Consumer 
- Special Situations/Deep Value Plays
- Tender Offers/M&As
- Holdcos/Stubs
- Asian Unicorns/Private Companies

Korea/Asia, Events, IPOs

JD Logistics: An Attractive IPO With a 40% Upside

JD Logistics: Gray Market Value & The Very Long-Term View Driven by Technological Innovations

Impact of Market Caps & Share Based Compensation Schemes on Chinese IPOs in 2021

JD Logistics IPO: Prioritizing Market Share Gains over Margins

Carbon Footprint of Freight Transportation and Logistics and Other ESG Issues

Equity Capital Markets

<p>Last week, <a href="https://www.smartkarma.com/entities/jd-logistics" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (JDL HK)</a> received the regulatory approval for an IPO on the Hong Kong stock exchange that could raise up to $4 billion. According to <a href="https://asia.nikkei.com/Business/Markets/IPO/JD.com-logistics-unit-on-track-to-deliver-4bn-Hong-Kong-IPO" target="_blank" rel="noopener">Nikkei Asia</a>, JD Logistics is seeking a valuation of about $40 billion. This valuation level is the same as the level the company was seeking in<a href="https://www.bloomberg.com/news/articles/2020-11-24/jd-s-logistics-unit-said-to-mull-ipo-at-40-billion-valuation" target="_blank" rel="noopener"> late 2020. </a></p><p>Although the valuation level that JD Logistics is seeking through this IPO has not changed, what has changed so much in the past 10 weeks is the valuation of <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a> in this period. SF Holding is one of the key comparable companies for JD Logistics in China. SF Holdings' share price has crashed by 45% from 18 February to 2 May 2021. </p><div class="content-highlight"><p><strong>Our base case valuation of JD Logistics is EV of 289 billion RMB and implied market cap of 314 billion RMB (US$48.6 billion). At an implied market cap of $48.6 billion, this represents a 21% higher level than the recent valuation of $40 billion that the company is seeking.</strong> Despite this solid upside, this base case valuation is 15% lower than our previous base case valuation. This is mainly due to the much lower price of its comp SF Holding and the greater competitive pressures in the local logistics and parcel delivery services in China. </p></div>

Last week, JD Logistics (JDL HK) received the regulatory approval for an IPO on the Hong Kong stock exchange that could raise up to $4 billion. According to Nikkei Asia, JD Logistics is seeking a valuation of about $40 billion. This valuation level is the same as the level the company was seeking in late 2020. Although the valuation level that JD Logistics is seeking through this IPO has not changed, what has changed so much in the past 10 weeks is the valuation of S.F. Holding (002352 CH) in this period. SF Holding is one of the key comparable companies for JD Logistics in China. SF Holdings' share price has crashed by 45% from 18 February to 2 May 2021. Our base case valuation of JD Logistics is EV of 289 billion RMB and implied market cap of 314 billion RMB (US$48.6 billion). At an implied market cap of $48.6 billion, this represents a 21% higher level than the recent valuation of $40 billion that the company is seeking. Despite this solid upside, this base case valuation is 15% lower than our previous base case valuation. This is mainly due to the much lower price of its comp SF Holding and the greater competitive pressures in the local logistics and parcel delivery services in China. 

JD Logistics IPO - Looking to Raise $4 Billion but Valuation Pulled Down by SF Holding