JD Health Hong Kong IPO Through Hearing $3 Billion Fundraising Countdown Positive PK Ali Health Moment

Jingdong health Hong Kong is on the countdown.

On the evening of November 15, the official website of the Hong Kong Stock Exchange disclosed the post hearing information collection of Jingdong health Co., Ltd. (hereinafter referred to as "Jingdong health"), which means that the IPO of the company in Hong Kong has been approved and a series of publicity work on stock issuance will be started soon.

According to previous reports in Hong Kong local media, Jingdong health's goal of raising funds reached 3 billion US dollars, which will be used for business expansion, research and development, potential investment and acquisition, and general corporate purposes. If it is successfully listed, the $3 billion fund-raising amount may make Jingdong health the largest new share in Hong Kong since ant group's suspension of listing.

According to the public data, JD health is the third Unicorn enterprise of Jingdong group in addition to Jingdong Shuke and Jingdong Logistics. It is also the group's fourth largest business sector after retail, logistics and digital departments. Its main business is retail pharmacy and online medical and health services.

The new crown pneumonia epidemic has brought a new round of development opportunities to the big health industry. Internet + medical health has become a new topic in the current environment. According to frost Sullivan's report, China's share of medical and health expenditure ranks second in the world in 2019, reaching 6.52 trillion yuan in 2019 and expected to reach 10.62 trillion yuan by 2024. In this trillion level market, how does Jingdong health make use of the capital market to stand out?

Expansion of Jingdong system

Since this year, JD has made frequent actions in the capital market.

First, on June 5, dada group, which owns more than 40% of JD shares, was officially listed on the NASDAQ IPO, raising more than $300 million. After that, Jingdong group realized "secondary listing" in Hong Kong. On September 11, the IPO application of Jingdong science and technology innovation board was accepted by Shanghai Stock Exchange. Now, the countdown to the listing of Jingdong health in Hong Kong has started.

At present, only Jingdong Logistics and Jingdong industrial products, which have just been separated and operated independently this year, have not yet made a clear IPO plan, but they have also continued to "race around the ground" in the primary market.

After several years of separation, Jingdong will enter the market in succession. Liu qiangdong's capital map will no longer be limited to e-commerce, but a diversified ecology integrating financial technology, logistics and health.

Judging from the timetable, the listing process of Jingdong health in Hong Kong is rapid. On September 27, the application for listing on the main board of the stock exchange of Hong Kong was formally completed in September. After the hearing, the company and the Underwriters can start a series of stock issues.

In terms of performance, Jingdong health revenue from 2017 to 2019 was 5.6 billion yuan, 8.2 billion yuan and 10.8 billion yuan respectively. In the first half of 2020, the income of Jingdong health reached 8.8 billion yuan, up 76% year on year. After adjustment, the net profits of the company from 2017 to the first half of 2020 are 210 million yuan, 250 million yuan, 340 million yuan and 370 million yuan respectively, and the profitability continues to grow.

It is not difficult to find that in the first half of this year, Jingdong's health income increased significantly. According to the prospectus, the public's demand for online medical and health services has increased, and the demand for drugs has also increased, possibly because of the general decline in consumer spending caused by the epidemic, increased public awareness of health products and services, and a large number of unmet demands.

According to the prospectus, the business of JD health has two parts: one is online retail pharmacy business, the other is online medical health service. The online retail pharmacy business is operated through three modes: self operated, online platform and omni channel layout. The self operated mode mainly refers to Jingdong pharmacy; the online platform mode mainly refers to the third-party business settlement.

At present, online retail pharmacy business is the most important income source of Jingdong health. In 2017, 2018, 2019 and the six months ended June 30 this year, product sales accounted for 88.4%, 88.8%, 87.0% and 87.6% of JD health's total revenue, respectively.

As of June 30, 2020, Jingdong health's online e-commerce platform has more than 9000 third-party merchants, with 72.5 million active users; in the first half of 2020, the daily average online consultation volume of Jingdong health was nearly 90000, and the cumulative users of the platform were 150 million. According to the revenue in 2019, JD health is the largest online medical and health platform in China and the largest online retail pharmacy in China.

In terms of equity structure, Jingdong group directly holds 81.04% shares of Jingdong health, and it is expected that Jingdong group will still hold no less than 50% equity after IPO.

In addition, JD health also owns a series of star shareholders: baring Asia, cpechina fund, CICC and China Life Insurance holding 3.16%, 3.16%, 2.37% and 2.26% shares respectively. Hillhouse capital completed the b-round investment of more than $830 million in Jingdong health in August this year. It held 4.49% of the shares before the IPO, which was the largest institutional investor. The chief investment officer of Hillhouse capital, Yi nuoqing, served as the non-executive director.

Zhang Xiaorong, President of the Institute of deep science and technology, former senior vice president of a securities firm and chief Internet analyst, said, "judging from the growth rate, it is the peak time of Jingdong's healthy development speed. Jingdong health spin off is relatively late, but the pace of listing is relatively fast. It is speculated that it wants to sell a good price at the best time of enterprise development. "

Facing Ali health

China's medical and health expenditure is huge and growing steadily, but China's health care industry is still in the early stage of digitization. According to frost Sullivan report, in 2019, only 2.4% of drugs in China were distributed through out of hospital online retail pharmacies. With the acceleration of relevant policies, technologies and new epidemic situation, it is estimated that the market scale of digital health will increase to 1.13 trillion yuan by 2024; in terms of industry segmentation, the market scale of online retail pharmacy is expected to reach 456 billion yuan, and the online consultation market will grow to 155 billion yuan, which will become the main way of medical consultation.

The capital with a keen sense of smell has long aimed at the online medical track, and a number of giants such as Ali health, baidu health, Ping'an good doctor and Ding Xiangyuan were born early. As early as 2015, Ali health was listed on the back door, and Ping An Hao doctor was listed in Hong Kong in 2018. At present, the market value of Ali health is nearly HK $270 billion (about US $34.8 billion), and the market value of Ping An Hao doctor is over HK $120 billion (about US $15.5 billion).

At present, the valuation of JD health in the primary market has caught up with that of its competitor Ali health, and its valuation after the completion of round a financing is about 7 billion US dollars. In August 2020, Jingdong Health announced that it had obtained $830 million b-round financing from Hillhead capital, and the post investment valuation has reached as high as US $30 billion, which is not far from Alibaba health.

Compared with profitability, JD health's business revenue in 2019 will reach 10.8 billion yuan, and it has achieved profitability. However, the revenue of Ali health in fiscal year 2020 (as of March 31, 2020) was RMB 9.6 billion, with a loss of 15.7 million; the revenue of Ping an good doctor in 2019 was 5.065 billion yuan, with a loss of 1.83 billion yuan. Jingdong health has become "the first brother in the industry".

Zhu Haibin, chief analyst of the new third board, pointed out that from the perspective of business model, JD health and Ali health are relatively similar, mainly focusing on pharmaceutical retail, and then expanding to other links. The development path is mainly based on the parent company's flow and supply chain advantages, starting from the pharmaceutical e-commerce, and gradually improving the industrial layout of Internet Medical. However, Pingan good doctors do not have the natural e-commerce gene advantages like the former two, focusing on providing medical services, and then expanding to other links. "All three companies have advantages in synergy with the parent group."

There is no doubt that the uneven offline medical resources exposed by the epidemic have accelerated the opening of the trillions blue ocean market of Internet medicine. The medical and health field has become a big market coveted by many giants. More and more competitors are rushing in.

"Compared with the platform model of micro medicine, doctor clove and doctor Chunyu, traffic is an obvious advantage for Internet giants to lay out online medical services. However, how to form a stable profit model and solve the face-to-face diagnosis and treatment needs such as palpation or outpatient service are issues that all internet medical enterprises need to consider. " A medical industry analyst pointed out.

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