A gong stands at the Hong Kong Exchanges and Clearing Ltd Connect Hall in Hong Kong, on June 10, 2020. (PHOTO/BLOOMBERG)HONG KONG - JD Health International Inc surged in the largest stock market debut by a health-care firm in Asia as investors bet that demand for online medical services will continue to grow in the Chinese mainland.
The stock jumped 56 percent to HK$110 at the close of trading in the Hong Kong Special Administrative Region Tuesday after pricing at the high end of the marketed range in its US$3.5 billion IPO.
The stock jumped 56 percent to HK$110 at the close of trading in the Hong Kong Special Administrative Region Tuesday after pricing at the high end of the marketed range in its US$3.5 billion IPO
The first-day gains lifted Beijing-based JD Health to a market value of roughly US$44 billion, surpassing that of rival Alibaba Health Information Technology Ltd. The offering is the largest of this year’s first-time share sales in the HKSAR -- only a second listing by JD Health’s parent company in June was bigger.
The health-care affiliate of mainland e-commerce giant JD.com Inc projects it will reach 100 million users by end-2021, Chief Executive Officer Xin Lijun said in a Bloomberg TV interview, after reaching 56.1 million annual active users at its online retail pharmacy business last year.
Revenue rose 76 percent to 8.8 billion yuan (US$1.35 billion) in the first half of 2020, making it the largest internet health-care platform and online pharmacy by revenue in China, according to its prospectus.
Xin told reporters at a briefing in Beijing on Tuesday that the pandemic has had a “revolutionary impact” on healthcare as both patients and doctors are now more willing to seek and provide treatment over the internet.
The company sold shares in its IPO for HK$70.58 each, pulling in US$3.48 billion and a valuation of US$29 billion.
ALSO READ: JD to raise US$3.5b in biggest Asia health-care IPO
The stock, the Hong Kong Special Administrative Region’s most actively traded stock by turnover, bucked a downward trend in the broader local market with the benchmark Hang Seng Index down 0.5 percent.
Kingston Securities executive director of research Dickie Wong said a market capitalization of such size should see JD Health fast-tracked into the Shanghai Hong Kong Stock Connect and Hang Seng technology index.
“Investors are thinking they don’t want to wait to buy,” he said. “Once the stock moves into the tech index, then index funds have to buy it no matter what they think of the company so investors are taking advantage of the likely move now.”
The debut trading pop could make the stock vulnerable to a swift sell-off, said Everbright Sun Hung Kai research analyst Kenny Ng.
ALSO READ: JD.com to spin off health unit, list in Hong Kong
“JD Health provides a good opportunity for profit-taking in the short term if its share price is above HK$100 since IPO investors have already got around 40 percent return,” he said.
CEO Xin said JD Health might spend some of the IPO funds buying brick-and-mortar pharmacies.
“Investment is needed to bring more pharmacies and hospitals online into our system,” he said.
JD Health’s IPO was the HKSAR’s largest this year, followed by China Bohai Bank Co Ltd’s US$2.05 billion July listing. Dealmakers expect more activity during December.
READ MORE: JD Health 'plans US$1 billion HK IPO filing this month'
The float took the HKSAR’s 2020 IPO proceeds beyond US$25 billion from over 100 deals, on track for the best year in a decade, Refinitiv data showed.
Adding secondary listings - including JD.com’s US$4.4 billion transaction in June - the figure stands at US$39.1 billion.
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