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What is the quality of Jingdong Logistics for IPO in Hong Kong?

via:博客园     time:2021/2/23 19:22:54     readed:65


Wen / Li Ping

Source: Lishi Business Review (ID: LiBusiness)

After nearly four years of independent operation, Jingdong Logistics officially launched the IPO process, and 48 year old Liu qiangdong will welcome the third listed company after Jingdong group and Jingdong health.

On February 16, 2021, Jingdong Logistics formally submitted an application for share offering to the stock exchange of Hong Kong. The detailed information about the financial data, customer structure and asset status of Jingdong Logistics was disclosed for the first time.

In April 2017, Jingdong Logistics decided to transform from enterprise logistics to social logistics and began to undertake socialized orders. With the establishment of integrated supply chain service advantages, Jingdong Logistics has become the third pole besides rookie and Shunfeng in the red sea of express logistics. The proportion of the company's external order revenue is also rising, showing the success of its social logistics transformation.


The gross profit margin level continues to rise and is close to achieving profit and loss balance

After the outbreak of SARS in 2003, Jingdong decided to transform into Internet retail. At that time, the service level of private express delivery was uneven, which led to more than 70% of the company's complaints related to logistics, which prompted Liu qiangdong to decide to build his own logistics system.

With the gradual growth of warehousing, distribution facilities and self-supporting team, Jingdong Logistics began to have the strength and capital for social opening. In 2016, integrated warehouse distribution supply chain service, express delivery and logistics cloud became the first three service systems of JD logistics as an independent brand to open to the society.

On April 25, 2017, Jingdong Logistics Group was established, which transformed from enterprise logistics into an independent logistics enterprise, and began to undertake social orders.

In February 2018, Jingdong Logistics completed a round of equity financing, with investors including highland capital, Tencent investment, Sequoia Capital China, China Life Insurance and China Merchants venture capital injecting a total of US $2.5 billion, which is the only equity financing before the company's listing.


After only one round of financing, the impact of IPO listing, there is a view that it is because of the huge loss of Jingdong Logistics, PE institutions are not interested in it, and the main reason for the listing of Jingdong Logistics is the urgent demand for funds. Another point of view is that the company's operation has greatly improved, IPO listing has become a matter of course. Based on the analysis of the financial data in the prospectus, the latter view seems to be more in line with the facts.

Financial data, Jingdong Logistics is indeed in a state of loss, but the amount of loss has been greatly reduced. According to the prospectus, from 2018 to 2019, the losses of Jingdong Logistics were 2.8 billion yuan and 2.2 billion yuan respectively. In the first three quarters of 2020, the company's loss is only 11.714 million yuan, which is close to break even.

The decline of expense rate and the improvement of gross profit rate become the key to turn losses on a large scale. From January to September in 2018, 2019 and 2020, the operating expense rate of Jingdong Logistics was 10.2%, 9% and 8% respectively, showing an obvious downward trend. During the same period, the company's operating gross profit margin was 2.9%, 6.9% and 10.9%, respectively, and its profitability improved significantly.


In terms of revenue, from January to September in 2018, 2019 and 2020, the operating revenue of Jingdong Logistics was 37.9 billion yuan, 49.8 billion yuan and 49.5 billion yuan respectively, with corresponding growth rates of 31.6% and 43.2% in the latter two periods. The rapid growth of revenue is the key reason for the scale effect of Jingdong Logistics Cost side to be reflected, and the company's established strategy of relying on scale effect and efficiency to achieve profitability has also been realized.

It is worth mentioning that while keeping the overall cost rate down, Jingdong Logistics has not relaxed its investment in R & D, especially in supply chain technology. In each reporting period, the company's R & D expenses were 1.52 billion yuan, 1.68 billion yuan and 1.44 billion yuan respectively. As of December 31, 2020, Jingdong Logistics has owned more than 4400 patents and calculator software copyrights, of which more than 2500 involve automation and unmanned technology.



43.2% of approved external customers of integrated supply chain services

In addition to profitability, investors are also more concerned about the operational independence of Jingdong Logistics. From the data of the prospectus, the company's social development has achieved initial results, from an enterprise logistics development to the whole industry logistics service platform. By the end of September 2020, the proportion of external customer income of JD logistics has reached 43.4%, an increase of 14.5 percentage points compared with the end of 2018 (29.9%). At the same time, the customer satisfaction of Jingdong Logistics Express also ranked among the top three in the industry for three consecutive years, with 0.002 effective complaints per million packages, the lowest level in the industry.

The continuous improvement of external revenue share and good customer satisfaction reflect the competitiveness of JD logistics in the industry, especially its integrated supply chain service advantage is becoming a powerful weapon for the company to continuously improve its market share.

At present, Jingdong Logistics divides customers into two types: integrated supply chain customers and other customers. As more and more b-end customers realize the great role of the company's integrated supply chain, the revenue of customers from the integrated supply chain of JD logistics continues to increase, accounting for more than 80% of the total revenue.


According to the prospectus, from 2018 to January to September 2020, the number of customers in the company's integrated supply chain increased from 32465 to 46083, with an increase rate of 42%. By the end of 2020, Jingdong Logistics has provided integrated supply chain services to more than 190000 enterprise customers, covering FMCG, clothing, household appliances, furniture, 3C, automobile and fresh food industries.

The rapid development of China's digital economy has given birth to the diversification of logistics demand, while the domestic logistics undertaking and service form is relatively single, and the capacity is obviously lacking. The integrated supply chain solutions and logistics service providers are expected to continue to benefit. According to the forecast of the insight consulting report, from 2020 to 2025, the market scale of China's integrated supply chain logistics service industry will increase from 2.0 trillion yuan to 23.2 trillion yuan, with a compound annual growth rate of 9.5%, which is about 1.8 times of the growth rate of China's logistics expenditure in the same period.

However, due to the large scale of the market and the different demands in different vertical fields, the domestic integrated supply chain logistics service market is still highly dispersed. In 2019, the top ten enterprises accounted for only 7.9% of the total market share in terms of revenue, and JD logistics ranked first with 2.2% of the market share.


For Jingdong Logistics, the increase of customer income in the integrated supply chain comes from the increase of company customers on the one hand, and also from the expansion of customer income scale on the other hand. One stop solution can help enterprise customers avoid tedious process and communication cost, and then improve enterprise operation efficiency.

In addition, the increase in the number of customers in the integrated supply chain means that the number of customers who purchase and use Jingdong logistics warehouse inventory management and logistics technology services is also increasing, and the output amount of the company's single customer is growing. As of September 30, 2020, the average revenue generated by customers of Jingdong Logistics Integrated Supply Chain was 241622 yuan, an increase of 13.15% over the same period of last year (213538 yuan).


Fixed assets surpass SF in financing in Hong Kong

Facts have proved that Liu qiangdong has a better strategic vision. The success of Jingdong Logistics is one of the key factors for Jingdong group to rise and grow in the field of e-commerce. In other words, it is the door-to-door service of Jingdong Logistics that makes Jingdong group the largest retailer in China and the second largest e-commerce platform in China.

In addition, since its establishment, Jingdong Logistics has paid special attention to user experience and won by service, which is the key to its successful transformation from enterprise logistics to social logistics. As early as 2017, Liu qiangdong made an outlook on the future industry pattern, believing that the future express industry will eventually leave Shunfeng and Jingdong, and other express companies will only become employees of Ali.

For a long time, Shunfeng has been dominating the high-end time effective parts market by taking advantage of its self operated outlets, freighter resources and Trinity logistics network, which is hard to match. However, with the dense layout of Jingdong's front warehouse and the rapid expansion of express delivery team, Jingdong Logistics has not lost to Shunfeng in terms of timeliness.


As of the third quarter of 2020, the fixed assets scale of Jingdong Logistics has reached 21.58 billion yuan, while the data of Shunfeng in the same period is 20.33 billion yuan. With continuous heavy investment, Jingdong Logistics has become the only player in the industry who can comprehensively compete with Shunfeng.

In this listing in Hong Kong, the funds raised by JD logistics are mainly used to upgrade and expand the logistics network, develop advanced technologies related to supply chain solutions and logistics services, expand the breadth and depth of solutions, cultivate existing customers and attract potential customers. Among them, the infrastructure network construction and supply chain integration scheme are the core of the future layout of Jingdong Logistics. According to a number of foreign media reports, Jingdong Logistics plans to raise about US $4 billion.

Those who do not plan for the world are not able to plan for the moment, and those who do not plan for the overall situation are not able to plan for one domain. With the IPO financing funds in place, Jingdong's ambition in the field of logistics will also be realized in a larger scope. Whether Jingdong Logistics can compete with Shunfeng and rookie will be the main focus of express industry in the next decade.

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