Chinese e-commerce giant JD.com (NASDAQ: JD) is preparing to spin off another business, this time its logistics unit, following plans to separate both its healthcare business and its fintech division.
The company is reportedly looking to hit the markets in an initial public offering in Hong Kong with a valuation of $40 billion.
Narrowing down the business
JD Logistics, which operates over 800 warehouses, was previously spun off from its e-commerce parent as a stand-alone business in 2017. While it began offering its services to third-party companies then, it can also fulfill 90% of JD’s direct sales in China within 24 hours.
The presence of the logistics unit had differentiated JD from much larger rival Alibaba (NYSE: BABA), which uses third-party delivery services in which it owns a stake. Yet it also meant that where JD generated more revenue than Alibaba, it did so at much lower profit margins, which is why an IPO has been an oft-discussed possibility.
JD has also laid the groundwork for IPOs for JD Health, which is selling almost 382 million shares in Hong Kong in a bid to raise $3.5 billion, and JD Digits, its fintech unit that filed to go public in September on the Shanghai exchange hoping to raise $2.9 billion. However, its micro lending business is at odds with new regulations that were recently promulgated and were the reason Ant Group pulled its IPO earlier this month.
The IPO for JD Logistics is still in its early stages, and Bloomberg reports that the size of the IPO and the location of the listing could change.
Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alibaba Group Holding Ltd. and JD.com. The Motley Fool has a disclosure policy.
10 stocks we like better than JD.com
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now… and JD.com wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of November 20, 2020