Shares of JD.com jumped after the e-commerce major said it would spin off its property and industrial units and list them in Hong Kong, joining Alibaba Group Holding in unveiling the latest restructuring of China’s technology giants.
JD.com surged as much as 8.1 per cent before paring gains to 5.4 per cent to HK$172.00 on Friday. The company’s American depositary receipts gained 7.8 per cent on Nasdaq overnight.
Beijing-based JD.com proposed spinning off its subsidiaries JD Property and JD Industrials and separately list them on the Hong Kong stock exchange, according to two separate filings on Thursday night.
After the spin-offs, JD.com will continue to hold more than 50 per cent stake in the two units.The move came days after rival Alibaba, the largest technology conglomerate in China, announced that it would overhaul its US$257 billion empire and split them into six units, its biggest restructuring since its founding two decades ago.
Alibaba will reorganise its businesses into six independently run entities: Cloud Intelligence Group, e-commerce under Taobao-Tmall, smart logistics operations under Cainiao, Local Services Group, Global Digital Business Group, and Digital Media and Entertainment Group, according to a letter to employees on Tuesday. Alibaba owns the South China Morning Post.
The move by the two tech giants has been welcomed by the market, which expects the corporate overhauls to add to the market rally seen in the past three weeks.
“It’s positive as investors regard the measures as beneficial for enhancing their efficiency and releasing the potential [of the subsidiaries],” said Kenny Wen, head of investment strategy at KGI Asia.
Wen said that while such measures are no indication of more Chinese tech companies undertaking similar measures in the short term, he did not rule out the possibility of tech companies gradually following suit after seeing the market’s reaction.
China’s crackdown on the tech industry had hurt the shares of many companies. For example, JD.com’s Hong Kong shares are still down 22 per cent this year, after falling for two consecutive years.
The details of the size and structure of the initial public offerings have not been finalised, JD.com said. The proposed spin-offs are also subject to approvals by regulators and the boards of directors, shareholders of JD.com and the subsidiaries, it added.
JD.com has previously undertaken efforts to streamline operations. It listed its healthcare arm JD Health in December 2020 followed by its logistics unit JD Logistics in May 2021.
Competition in China’s e-commerce sector is heating up, as players led by JD.com recently engaged in a price war with a subsidy campaign of 10 billion yuan (US$1.4billion), amid Beijing’s efforts to revive consumption and drive economic growth.
