JD Logistics, the logistics arm of China's e-commerce giant JD.com, has become the second-biggest IPO in Hong Kong so far this year, with a heavy oversubscription rate.
Analysts said investors still fancy Chinese technology companies, despite tightening regulations on fintech companies and an ongoing crackdown on monopolistic behavior by internet platform companies.
At a price of HK$40.36 ($5.2) per share, JD Logistics is set to raise HK$24.11 billion from its IPO. The shares will start trading on the Hong Kong Stock Exchange on Friday.
The IPO was 715.61 times oversubscribed, with a reported 1 million investors bidding. Shares offered under the international tranche of the IPO were 10.8 times oversubscribed.
Li Daxiao, chief economist at Shenzhen-based Yingda Securities, told the Global Times on Thursday that as the market environment has changed due to authorities' anti-monopoly probes and tighter regulations, investors are revaluing the shares of such companies.
Ant Financial had to halt its planned dual IPO in November 2020, due to a changed regulatory environment, and e-commerce giant Alibaba was given a staggering fine of $2.8 billion in April for monopolistic conduct.
"The new understanding of valuation is more accurate and more rational," Li said.
Liu Dingding, a Beijing-based independent tech analyst who has visited multiple JD warehouses and logistics hubs in the country, told the Global Times on Thursday that even though regulators have raised the bar for fintech firms, the government's support for technology companies persists.
JD Logistics is a "veteran" in the industry and as such is markedly different from companies that raise money from investors with "empty stories," Liu said.
Given JD Logistics' size and market position, more government regulation actually is a boon to its valuation, Liu said.
As the express delivery sector gets crowded with more market participants, companies are fighting a price war and more resources are spent on improving services to vie for customers, financial news portal yicai.com reported.
In this situation, JD Logistics' first-quarter gross profit plunged 72.7 percent year-on-year to 230 million yuan ($36.09 billion).
Chinese internet company NetEase said in a stock filing on Wednesday that it would spin off Cloud Village, its music-streaming service operator, in an IPO in Hong Kong. The IPO could raise a reported $1 billion, according to Bloomberg.com.
The IPOs came as a growing number of Chinese mainland-based companies seek secondary listings in the city amid a US clampdown.
Since 2019, dozens of US-listed companies, including NetEase and JD.com, have chosen Hong Kong for secondary listings.
JD.com established its logistics arm in 2007, and JD Logistics was officially set up in 2012. As of the end of September 2020, JD Logistics had over 800 logistics warehouses across China.