IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

Arun has over 15 years’ experience covering the Technology sector. During this time, he has worked with technology start-ups and as an equity analyst in investment banks and independent research firms. He was formerly a Technology Analyst for Canaccord Genuity, Altium Securities, Espirito Santo Investment Bank, Noble Group and Clear Capital. He has a dual Master’s degree in Financial Engineering and Industrial and Operations Engineering from the University of Michigan. He obtained his Bachelor’s degree in Mechanical Engineering from the Indian Institute of Technology, Bombay. He is also a CFA charterholder.

IPOs and Catalysts/Events

JD Logistics IPO: Valuation Scenario Analysis

JD.com: Will Logistics Spin-Off Expose an Already Mature Stub Business?

JD Logistics IPO: Valuation and Forecast Update

JD Logistics IPO: Prioritizing Market Share Gains over Margins

JD Logistics IPO Initiation: The Flow of Things

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Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/jd-logistics" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (2618 HK)</a> is the largest player in China’s integrated supply chain logistics services market, with a 2.2% revenue market share in 2019, according to CIC. JD Logistics was founded with the formation of <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a>’s in-house logistics department in 2007.</p></div><div><p>At the proposed IPO price range of HK$39.36-43.36 per share, JD Logistics will have a market cap of HK$239,766-264,132 million ($30.9-34.0 billion). At the mid-point of the IPO price range, the net proceeds are HK$24,713 million ($3.2 billion). Seven cornerstone investors will purchase $1.5 billion worth of the offer shares (47.16% of the offer shares at the mid-point of the IPO price range). The cornerstone investors are <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a>, Temasek, Tiger Global, China Structural Reform Fund, Blackstone,  Matthews Funds and Oaktree. </p></div><div><p>In <a href="https://www.smartkarma.com/insights/jd-logistics-ipo-initiation-the-flow-of-things" target="_blank" data-smartkarma-citation="insights:48279" rel="noopener">JD Logistics IPO Initiation: The Flow of Things</a>, we stated that JD Logistics is an indirect play on the shift of some customer behaviour permanently to online shopping, particularly in fast-moving consumer goods. We concluded that JD Logistics fundamentals are attractive and it remains well-placed to address consumers demand faster and more flexible supply chain logistics services.</p></div><div><p>In <a href="https://www.smartkarma.com/insights/jd-logistics-ipo-prioritizing-market-share-gains-over-margins" target="_blank" data-smartkarma-citation="insights:50976" rel="noopener">JD Logistics IPO: Prioritizing Market Share Gains over Margins</a>,  we noted that the PHIP which discloses the 2020 results and recent developments underscore the positives which are strong growth, rising margin and cash generation. However, the outlook is mixed as JD Logistics cautions that it will pursue market share gains at the cost of profitability over the medium term. We opined that JD Logistics has the right ingredients to ride out the industry’s current price-competitive dynamics and deliver good shareholder returns over the medium term. </p></div><div><div><div class="content-highlight"><p>Overall, based on valuation analysis, we think that the IPO price range is attractive, particularly in the context of JD Logistics' positioning and higher than peers forecasted growth. </p></div></div></div>

JD Logistics (2618 HK) is the largest player in China’s integrated supply chain logistics services market, with a 2.2% revenue market share in 2019, according to CIC. JD Logistics was founded with the formation of JD.com Inc (ADR) (JD US)’s in-house logistics department in 2007.At the proposed IPO price range of HK$39.36-43.36 per share, JD Logistics will have a market cap of HK$239,766-264,132 million ($30.9-34.0 billion). At the mid-point of the IPO price range, the net proceeds are HK$24,713 million ($3.2 billion). Seven cornerstone investors will purchase $1.5 billion worth of the offer shares (47.16% of the offer shares at the mid-point of the IPO price range). The cornerstone investors are Softbank Group (9984 JP), Temasek, Tiger Global, China Structural Reform Fund, Blackstone,  Matthews Funds and Oaktree. In JD Logistics IPO Initiation: The Flow of Things, we stated that JD Logistics is an indirect play on the shift of some customer behaviour permanently to online shopping, particularly in fast-moving consumer goods. We concluded that JD Logistics fundamentals are attractive and it remains well-placed to address consumers demand faster and more flexible supply chain logistics services.In JD Logistics IPO: Prioritizing Market Share Gains over Margins,  we noted that the PHIP which discloses the 2020 results and recent developments underscore the positives which are strong growth, rising margin and cash generation. However, the outlook is mixed as JD Logistics cautions that it will pursue market share gains at the cost of profitability over the medium term. We opined that JD Logistics has the right ingredients to ride out the industry’s current price-competitive dynamics and deliver good shareholder returns over the medium term. Overall, based on valuation analysis, we think that the IPO price range is attractive, particularly in the context of JD Logistics' positioning and higher than peers forecasted growth. 

JD Logistics

JD Logistics IPO: Valuation Insights