Jingdong Mall on IPO Fast-Track 京东商城IPO提速

By newsdoug on June 5, 2012

After reports emerged last week that e-commerce giant Jingdong Mall’s on-again-off-again IPO was on again, it now appears the company is fast-tracking the deal with plans to list as soon as September, providing a big test for the anemic market for Chinese Internet IPOs in the US. It’s still too early to say how this IPO will fare, since it’s still at least 4 months away and a lot can happen to broader market sentiment in that time. Reports last week said that revenue at Jingdong, which also is known as 360Buy, reached 21 billion yuan and are expected to double this year. (previous post) The company has yet to provide any profit or loss figures, but I am quite confident it will show quite a big loss for 2011, possibly $100 million or more, when it finally releases that information, as it battles with other e-commerce names like Alibaba and Dangdang (NYSE: DANG) for market share. Lastly, we know from the earlier reports that Jingdong thinks it’s worth around $10-$12 billion, echoing comments from investors when the company received a record-breaking $1.5 billion investment last year (previous post); but the the company’s investment bankers are now saying a $6 billion valuation is much more realistic, meaning a final valuation might come in around $7 billion. Let’s look quickly at the latest reports, which come about a week after Jingdong reportedly held its first official meeting with analysts to discuss its upcoming offer. According to the reports, Jingdong could make its first non-public filings with the US securities regulator as soon as this month, and has hired Kate Kui, a big name former Bank of America Merrill Lynch banker, to lead the IPO charge. (English article; Chinese article). This sudden fast-tracking of the deal marks the latest chapter in schizophrenic signs from Jingdong, whose founder and chief executive Liu Qiangdong said several times early this year that an IPO was at least several years away, even as other unnamed sources said an offering could be coming in the next 12 months. These latest reports seem to indicate the group pushing for an IPO sooner rather than later has taken control of the situation. I find it a big strange that such a cash-rich company wants to make an offering in such a poor IPO climate, though it’s possible Jingdong’s cash situation could be tighter than many people realize. But I suspect the real reason for this fast-tracking is that the investors who bet $1.5 billion on Jingdong last year want to see some quick returns on their investment, since it’s far from clear what China’s e-commerce market will look like a year or more from now due to the rampant competition with the entry of a number of major global players. All that said, I would say the chances for Jingdong to complete its IPO by the end of this year are good, though it’s unlikely to get a great valuation and could end up raising just $1 billion or less due to poor market sentiment towards loss-making Chinese Internet companies.

Bottom line: Jingdong Mall is likely to complete an IPO by the end of the year, but will get a weak valuation on a deal that could ultimately raise only $1 billion or less.

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