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(Bloomberg) -- Chinese ride-hailing company Didi revealed a $1.6 billion net loss for 2020 as it moves ahead with plans for a U.S. initial public offering.The company in its first public filing for the IPO listed the offering as $100 million, a placeholder that will change when the company discloses terms for the share sale. Didi filed Thursday under the business name Xiaoju Kuaizhi Inc., with Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co. leading the offering.Didi, one of the
(Bloomberg) -- JD Logistics Inc. rose as much as 18% on its first day of trading after raising $3.2 billion in Hong Kong’s second-largest initial public offering this year.Shares of the delivery arm of Chinese e-commerce giant JD.com Inc. climbed to as high as HK$47.75 in Hong Kong on Friday, before giving up some of their gains. The stock had been priced at HK$40.36, the lower end of its offered range, fueling concern that demand for new listings in the Asian financial center has cooled after the blockbuster coming-out party of Kuaishou Technology earlier this year. JD.com was little changed.The listing will allow JD Logistics to expand its network of more than 900 warehouses into less-developed regions of China and new markets overseas, while adding to the $782 million it’s spent on technology between 2018 and 2020. The company joins internet giants from Alibaba Group Holding Ltd. to Tencent Holdings Ltd. and Meituan in boosting spending, as increased antitrust scrutiny from regulators in Beijing threatens their most lucrative businesses from e-commerce to fintech.“Frankly speaking, the focus for next few years will still be growth,” Chief Executive Officer Yu Rui said in an interview with Bloomberg Television. “We will focus on business expansion and revenue growth for the next several years. Our net margin will keep improving in the long-term.”Created in 2007 and set up as a standalone unit under JD.com a decade later, JD Logistics’ networks include both so-called last mile and longer distance lines, as well as cold chain and bulky item networks, according to its prospectus. It is still loss-making, reporting a net loss of 4.1 billion yuan ($642 million) last year.What Bloomberg Intelligence SaysJD Logistics’ IPO valuation of up to $32 billion is reasonable compared with peers given its stronger growth prospects, despite the likelihood of further losses in 2021, in our view. Earnings volatility can be expected while the company prioritizes business and market-share growth over profitability in the near to medium terms.-- James Teo and Chris Muckensturm, analystsClick here for the researchWith just a 2.7% share of the logistics industry, JD Logistics is seeking to expand its footprint outside China, including into Europe, where rivals like Alibaba’s Cainiao have also been growing. The company will probably set up logistics centers on the continent within a year, Yu said in the interview. The intense competition in the business of providing logistics to other enterprises means JD Logistics will be relatively insulated from Chinese scrutiny as it ventures overseas, he added.“JD Logistics is doing better than any other companies in B2B sector in terms of ensuring the benefits of our front-line workers and regulatory compliance,” said Yu, a JD Group veteran of 13 years. “From our point of view, we don’t see much potential risks in regulation.”JD Logistics’ debut is far more muted compared with the 161% first-day surge for short-video platform Kuaishou. It is the second unit to be spun off from JD.com in the past six months, following the December listing of JD Health International Inc. The e-commerce operator had also sought to list its fintech division last year before a crackdown on the sector forced it to shelve its plans.Decoupling from its parent will allow JD Logistics to tap new customers, including short video platforms like ByteDance Ltd.’s Douyin and Kuaishou that are increasingly expanding into online shopping, according to Jacob Cooke, chief executive officer at e-commerce and technology consultancy WPIC. That will allow the firm to expand its market share and bring about economies of scale that will help it achieve profitability, he added.“JD Logistics fits in very well with the regulatory plans of the Chinese government in breaking up these monopolies and really allowing them to go get a new customer base operating independently, like they are now,” Cooke said in a Bloomberg Television interview. “Now that they’re independent -- and there’s so much that goes on with data sharing in China too -- but that’s really going to make other platforms and other brands feel more comfortable using JD Logistic’s products to help with their fulfillment.”(Updates shares, adds analyst comment.)More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Kuaishou Technology shares tumbled after the rival to TikTok-owner ByteDance Ltd. reported a faster decline in its livestreaming business while boosting investments in newer businesses.The stock slumped nearly 8% in Hong Kong Tuesday, after analysts at brokerages including Morgan Stanley cut their share-price targets. While revenue climbed 37% to 17 billion yuan ($2.65 billion) in the three months ended March, sales from its livestreaming business fell almost three times faster than a year earlier. Sales and marketing expenses surged to roughly 69% of revenue, while spending on R&D tripled after the short-video giant boosted hiring to grow advanced technologies like artificial intelligence.Kuaishou, the operator of China’s most popular short-video platform after ByteDance’s Douyin, is trying to establish its place among a generation of mega-startups like food delivery giant Meituan and ride-hailing leader Didi. Shares in the Tencent Holdings Ltd.-backed outfit had more than doubled since its February initial public offering, the top performer among recent major Chinese tech listings in Hong Kong.But founder Su Hua’s company, which is expanding beyond its roots in video content, is grappling with an influx of rivals from up-and-comers like Bilibili Inc. to WeChat. Tencent’s ubiquitous social app is venturing into TikTok-style clips, taking a page straight out of ByteDance and Kuaishou’s playbook. Advertising has surpassed virtual gifts or tips during live-streaming to become Kuaishou’s biggest earnings driver, while its nascent online marketplace continues to grow several-fold from a low base.“Though Kuaishou’s diversified revenue mix helps absorb decline in its core live streaming revenues, given the intense competition in the online advertising and livestreaming markets in China, we would be reluctant to make an entry despite the drop in Kuaishou’s multiples,” LightStream Research analyst Shifara Samsudeen wrote in a note published on the Smartkarma website.Read more: Ex-Googler Turns Virtual Gifts Into a $61 Billion BusinessKuaishou’s results are closely watched by investors who fancy a slice of the Chinese social video market before ByteDance’s eventual stock market debut. The world’s most valuable startup is seeking to boost Chinese ad revenue by more than 40% and triple the size of its e-commerce business this year, according to an internal memo.Results unveiled by the smaller company suggest the competition could be heating up. Kuaishou’s monthly active users expanded slower to 520 million, up from the 495 million users a year earlier. Growth in online advertising sales eased to 161%, versus 170% in the December quarter. Livestreaming revenue fell 20%, accelerating from the 7% decline in the prior quarter, in part because of strict quarantine measures imposed at the start of 2020.The division that includes e-commerce posted the strongest sales growth, rising seven fold, after the firm recorded gross merchandise value of 118.6 billion yuan, more than tripling from the year-earlier period.Kuaishou boosted spending on infrastructure and tools for online shopping during the first quarter as well as in acquiring users overseas. Having amassed more than 300 million daily users across its domestic platforms, the company now hopes to replicate its success globally with apps like Kwai and Snack Video. Outside China, the company had more than 150 million users in April, up from over 100 million in the first quarter, the earnings results showed.The overseas expansion comes as Kuaishou faces tougher antitrust scrutiny at home. It was among 34 leading Chinese internet firms ordered to comply with anti-monopoly rules in April and the company was recently rapped by the cyberspace regulator for its data-collection policies.“At Kuaishou, we believe strongly that one shall have peace of mind when he possesses a piece of land, and one possesses a piece of land when he has peace of mind,” it said Monday. “Starting in the first quarter of 2021, we have put greater emphasis on improving the value of our content creator’s private domain, the place on our platform where all content and products of a creator can be found and where creators build and nurture their followings.”More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.