Melody Chen
JD Industrials has relaunched a bid to list in Hong Kong, aiming to raise funds to enhance its supply chain capabilities and expand its business.
The industrial technology and service provider was launched in 2017 as an independent unit of its parent JD.com (9618) and was featured on the e-commerce giant homepage as a main category by 2018.
As a business-to-business platform for industrial products, the company was the largest player in China's maintenance, repair, and operations procurement services market, measured by gross merchandise value last year, with a size twice that of the next largest competitor, according to China Insights Consultancy.
Its GMV soared from around 17.4 billion yuan (HK$18.5 billion) in 2021 to 26.1 billion yuan in 2023, showing a compound annual growth rate of 22.5 percent.
JD Industrials recorded an interim net profit of 291.2 million yuan this year from a net loss of 187.2 million yuan during the same period last year.
Most of its revenue came from product sales, with the rest derived from marketplace, advertising, technology and other services.
Product revenue rose to 8.1 billion yuan in the first half of the year, from 6.6 billion yuan during the same period last year, accounting for over 95 percent of total revenue.
Service revenue was 550 million yuan, down from 608.5 million yuan in 2023.
JD Industrials offers around 65 product categories across approximately 41.7 million stock-keeping units, topping CIC's list for the broadest variety of industrial products.
Leveraging its digital supply chain advantages, the company built the broadest customer coverage and became the largest service provider in the sector, with a market share of 4.1 percent, it says.
Its key accounts include around half of China's Fortune 500 companies and more than 40 percent of Global Fortune 500 companies with operations in China.
However, the businesses capitalize and depend on the JD group and its associates to a large extent.
The revenue generated from the group's platforms was 6.66 billion yuan in 2022, 7.52 billion yuan in 2023 and 3.66 billion yuan in the first half of 2024 respectively, making up 47.1 percent, 43.4 percent and 42.5 percent of total revenue respectively.
Therefore, any negative developments in its relationship with the JD group or unfavorable publicity concerning the group could adversely impact the business and brand, the company warns.
The listing plan is not new: JD.com had announced plans back in March 2023 to spin off JD Industrials and JD Property for separate listings in Hong Kong.
JD Industrials was reportedly looking to raise US$1 billion (HK$7.8 billion) when it filed for an initial public offering last year but the attempt was unsuccessful due to market volatility and its financial losses at the time.
If JD Industrials completes its IPO this time round, it will be JD.com's third successful spinoff after JD Logistics (2618) and JD Health International (6618).
JD.com's fintech arm JD Technology had also attempted unsuccessfully to go public on the Shanghai Stock Exchange's Star market back in 2020.
Merrill Lynch, Goldman Sachs and Haitong International Capital are the sponsors of the share sale.
