Key Takeaways:
Jingdong Industrials has received the regulatory nod from China's securities regulator for its Hong Kong IPO, paving the way for the listing to proceed
The company could raise more than $1 billion, based on a likely valuation between $4 billion to $7 billion
After three years of waiting, the latest offspring from e-commerce giant JD.com (JD.US; 9618.HK) may finally be close to making its market debut. That's our latest assessment, after a stalled Hong Kong IPO by Jingdong Industrials Inc., JD.com's B2B marketplace, was formally registered this week on the China Securities Regulatory Commission's (CSRC) website. Such registration is a key regulatory step all Chinese companies must clear before they can list in offshore markets, mostly in the U.S. and Hong Kong.
According to the CSRC announcement, Jingdong Industrials plans to sell 253 million ordinary shares in the listing. The company first filed to list in Hong Kong in 2023, and filed a second application last year. It tried again with a new filing this March, though that will expire at the end of this month. That means we're likely to see it file again before the end of the year.
Jingdong Industrials will offer a relatively new option for e-commerce investors with its focus on B2B products and services, unlike the vast majority of Chinese operators that focus on selling to consumers. B2B typically offers bigger volumes per transaction than B2C, since business buyers tend to make bigger purchases than individual consumers. But such bulk comes at a cost, since bigger volumes often carry much lower margins.
Jingdong Industrials is a case in point. Its gross margin for 2024 stood at a relatively low 16.2%, far less than the 41% for Alibaba (BABA.US; 9988.HK) and 58% for Pinduoduo (PDD.US) in the 12 months through June. That discrepancy also helps to explain why Alibaba ultimately delisted its own ...
