JD.com Grows Revenue 31%, May Avoid Listing Logistics Unit

JD.com JD, a leading Chinese e-commerce company, reported a 31% jump in fourth-quarter revenue totaling $34.4 billion, and total revenue of $114.3 billion for 2020. The company's core retail business saw the largest jump in revenue at $31.9 billion. Year-over-year, the company reported a 30% increase in active users to 471.9 million, it said on a Thursday earnings call.

Earnings per share increased 187.5% year-over-year to 23 cents, beating the 19-cent estimate. The company is currently not issuing any earnings guidance 

JD.com said it would continue to acquire new users and diversify its business for long-term growth. Last year, the company filed listings in Chinese markets for spinoffs including JD Health (HKG: 6618), JD Digits and JD Logistics. JD Health raised $4 billion in its initial public offering in December, while plans for JD Digits and JD Logistics seem to have been put on hold due to Chinese regulation uncertainty.

In November, Alibaba Group Holding Ltd. BABA, JD.com's e-commerce competitor, planned on listing its spinoff Ant Group Co., with plans to raise $35 billion on the Hong Kong and Shanghai markets, but was suspended by Chinese regulators for alleged monopolistic practices. JD Digits has a similar fintech structure to Alibaba's Ant Group.  

Chinese regulators have created a new system of regulations due to large tech firms spinning off into financial institutions. China is concerned these companies disguise themselves as fintech companies, avoiding the regulating and licensing requested from other leaders in the financial sector. After halting Ant Group in November, the central bank directed the company to create a financial holding company, diminishing the company's valuation by 60%. 

Investments continue for JD Logistics

JD Logistics is the spinoff that sets itself apart from its rivals. While Alibaba outsources its logistical needs, JD Logistics has invested heavily in creating a supply-chain powerhouse.  

The company can deliver over 90% of its orders same or next day and has access to 99% of the population. It has been using autonomous vehicles and robots to access residential deliveries. In 2018, it unveiled a warehouse that could handle 200,000 orders a day with only four employees. In total, the company has 730 warehouses covering 17 million square feet.

In the earnings call, JD.com reported that its asset management spinoff, JD Property, is expected to raise $700 million in a Series A funding round led by Hillhouse Capital and Warburg Pincus. In Q4, the logistics property fund launched with $462.4 million of assets under management, led by Singapore's GIC and Abu Dhabi's Mubadala Investment Co., as reported by Tech in Asia.

In January, the JD.com spinoff's 5G logistics park won awards at China's 2020 Science and Technology Awards for the Postal Industry. The park production control system enables the intelligent management of vehicles and workers and can automatically recognize the volume of goods and match it to the best available capacity. JD stated in a release that it reduces turnover days by 10% and improves forecasting efficiency by 500%.

"With our core retail supply chain and logistics capabilities, JD is well established with a convincing value proposition to benefit from the secular trends and drive the long-term sustainable growth of our business in 2021 and beyond," said Sandy Xu, chief financial officer of JD.com, in its Q4 earnings call.