Shares of JD Health have surged 34% above the issue price in Hong Kong’s biggest share market debut of 2020.
JD Health is the online pharmaceutical and healthcare spinoff of China’s second-biggest online retailer JD.com.
The stock opened at HK$94.50 (Â£9.13 ; $12.19), well above the list price of $9.11.
The company raised $3.48bn and was valued at $29bn ahead of its trading debut.
JD.com will still retain a majority stake in JD health, which will remain a subsidiary of the e-commerce giant.
The company hopes to cash in on China’s large and growing market for health services and pharmaceuticals.
According to the consultancy Frost and Sullivan, China is the world’s second-largest market for health care, reaching $998bn in 2019.
What is JD Health?
JD Health started as an online pharmaceutical and healthcare product retailer, but has branched out into other healthcare services.
The firm’s IPO prospectus showed it had 72.5 million annual active users as of June 30, compared to 53.5 million at the same time last year.
It is one of China’s biggest pharmaceutical retailers, selling both to businesses and consumers, with a 30-minute drug delivery service to its users.
The company also offers a variety of online telemedicine services, including specialist medical services and traditional Chinese medicine.
JD Health launched an online primary care channel in August, with a target of serving 50 million Chinese families in the next five years.
According to the prospectus, the company makes more than 80% of its revenues from pharmaceutical and healthcare products.
However, the company said that in the first half of 2020, it had an average of approximately 90,000 daily online consultations, an almost six-fold increase from the same quarter in 2019.
More listings ahead
JD Health isn’t the only division of JD.com that’s expected to list.
JD.com also has plans to list JD Digits, a consumer credit and supply chain financing company in which it owns a 37% stake.
The company also plans to list its logistics arm in the first half of next year, in a share market debut that it expects could raise up to $3bn.
Like many other e-commerce companies, JD.com saw strong growth during the pandemic.
The company’s revenues were $25.7bn in the third quarter of 2020, an increase of 29.2% over the same quarter in 2019.
Annual active customer accounts increased by 32.1% to 441.6 million in the 12 months ending in September, according to JD.com.
Strong year for share market debuts
JD Health’s listing comes during a particularly strong year for initial public offerings (IPOs) on the Hong Kong exchange.
The boom has been partly fuelled by US-listed Chinese companies seeking second listings in Hong Kong due to continuing trade tensions between China and the US.
JD Health’s parent company JD.com was among those companies. The New York-listed company raised $4bn when it listed in June.
It’s competitor Alibaba also listed in Hong Kong late last year.
Yum China, which operates KFC, Taco Bell and Pizza Hut in China, also listed in Hong Kong in September.
However, at least one other attempt to list in Hong Kong this year has gone wrong.
The Chinese government pulled the plug on the dual Shanghai and Hong Kong listing of Ant Financial, which was set to sell shares worth about $34.4bn (Â£26.5bn).
The company is backed Jack Ma, billionaire founder of JD.com’s e-commerce rival Alibaba.