JD.Com Files After NetEase to Issue Shares in Hong Kong

LU HANZHI|ZHANG YUSHUO

(Yicai Global) June 5 — JD.Com has passed the Hong Kong Stock Exchange’s hearing for its secondary listing hot on the heels of another Nasdaq-listed Chinese firm, NetEase.

JD.Com will use the proceeds toward technology innovation to improve smart pricing, inventory management, logistics, and talent acquisition, the Beijing-based e-commerce giant said in its prospectus published today, without disclosing its fundraising target or scale of issuance.

JD.Com’s share issuance should take place on June 18, according to a Chinese media report published on May 19. However, the online marketplace has declined to comment on the timing, per Yicai Global’s inquiry.

As the US is looking to tighten its regulation to subject US-listed Chinese companies to similar accounting standards, many firms have started eyeing Hong Kong for secondary listings. Guangzhou-based internet firm NetEase is expected to start trading in the special administrative region on June 11.

But some of the motivation can be based on e-commerce rivalry. JD.Com’s US listing has been unsatisfactory because its market value is several times smaller than that Alibaba Group Holding, and even Nasdaq-listed newcomer Pinduoduo has surpassed JD.Com, which is awkward, Fang Jie, general manager of Phoenix Tree Capital, told Yicai Global. Alibaba issued shares in Hong Kong last November in the largest listing of the year by then.

Hong Kong is also closer to the two-decades-old firm’s clients. JD.Com should be able to hike its market value by the offering because Hong Kong is close to many investors who have deep knowledge of its business, Fang said, adding that China’s investment market is increasingly mature with boosted liquidity.

The company will continue to invest in supply chain platforms to provide integrated solutions to merchants inside and outside of JD.Com’s ecosystem, according to the prospectus. But if the logistics infrastructure expansion fails, its performance could be harmed, it added.

Founder Richard Liu is influential in the company’s decision-making, according to the risk section of the filing. The chairman was accused of sexual assault in the US in 2018.

Liu holds a 15.1 percent stake in the company with more than 78 percent of the voting rights. A unit of Tencent Holdings has a 17.8 percent stake with less than 5 percent of the voting rights. Walmart has bought nearly 10 percent of the US-listed equity.

In the first quarter, JD.Com posted CNY146.2 billion (USD20.6 billion) in revenue, up 21 percent from a year earlier. Its net profit, counted by Generally Accepted Accounting Principles, was down 85 percent to CNY1.1 billion (USD155.3 million).

JD.Com’s stock price [NASDAQ: JD] slid 0.37 percent to USD56.52 yesterday, with a market cap of USD70.3 billion. Its stock price has risen by over 60 percent this year.

Set up in 1998, JD.Com went public in the US in May 2004, reaching USD26 billion in market value.

Editor: Emmi Laine