HK IPO Subscription: JD Industrial IPO Analysis and Subscription Plan

JD Industrial is China's leading industrial supply chain technology and service provider, offering industrial product procurement, fulfillment, operations, and digitalization services to clients across various industries through its "Taipu" digital-physical integrated full-link intelligent solution. Since 2017, the company has focused on MRO (Maintenance, Repair, Operations) procurement services and has now expanded to BOM (Bill of Materials) products, serving over 11,000 key enterprise clients, covering approximately 158,000 suppliers, with over 81 million SKUs. In 2024, its transaction volume reached RMB 28.8 billion, making it the largest platform in China's industrial supply chain technology and service market.

JD Industrial plans to allocate the net proceeds of approximately HKD 2.827 billion from this fundraising in the following proportions: 35% to strengthen the supply chain, 25% to expand into new regions, 30% for strategic acquisitions, and 10% to supplement working capital, aiming to solidify its core business, accelerate overseas expansion, seize investment opportunities, and ensure liquidity.

Issue Information and Lottery Rate

The company is offering 211.2088 million shares globally, with 200 shares per lot. As of the time of writing, the oversubscription rate is 5.86x. The offering will be conducted under Mechanism B, with 52,802.2 each for Group A and Group B. It is estimated that 150,000 to 190,000 investors will participate, with a one-lot lottery rate of 15%. Applying for 150 lots ensures one lot.

Historical Investor Information and Sponsors

Before its IPO, JD Industrial completed three rounds of financing, with the last Series B round closing on March 9, 2023, at a cost of USD 2.5877 per share, approximately HKD 20.14, representing a 42.9% premium over the issue price. Were all Series B pre-IPO investors left in the lurch? In fact, Series B preferred shares can be converted into more than one ordinary share at zero consideration. Based on conversion adjustments, it is suspected that an additional 10,419,570 ordinary shares were issued to all Series B preferred shareholders. This offering has attracted seven cornerstone investors, subscribing for USD 170 million, approximately HKD 1.323 billion, accounting for 40.4% of the total.

The sponsors are Merrill Lynch, Goldman Sachs, Haitong International, and UBS Securities. Several well-known domestic and international investment institutions have been invited as sponsors. Merrill Lynch's price stabilization is average, with nothing particularly noteworthy—just the usual big institutions lending their names, aiming not to excel but to avoid mistakes.

Lock-up arrangements: Existing shareholders have a 6-month lock-up period, and cornerstone investors are locked up for 6 months.

Industry Prospects and Competitive Landscape

China's industrial goods market is an RMB 11 trillion "supermarket," but currently, less than 10% of transactions are completed online, with the rest relying on offline legwork, phone calls, and faxes. As factory owners increasingly adopt "online shopping-style" procurement, this figure is expected to rise steadily over the next five years, making the track long and wide.

JD Industrial has already captured 4% of this "supermarket," with a transaction volume three times that of the second-place player, resembling a pre-built "superstore": over 80 million products on the shelves, backed by 1.58 million suppliers, with over 10,000 leading factories shopping daily. For others to build a similar store, it would take years to "stock up, hire staff, and set up warehouses."

With the most comprehensive inventory, the most loyal customers, and the fastest delivery, the company has created a "snowball" effect—the more buyers, the more suppliers are willing to set up shop; the more suppliers, the more buyers rely on the platform. New players will find it difficult to replicate this flywheel in a short time, so JD Industrial remains the leader in the industrial goods e-commerce track, with no close competitors in sight.

Financial Performance

Revenue: 2023 revenue: RMB 14.134 billion; 2023 revenue: RMB 17.335 billion; 2024 revenue: RMB 20.397 billion; revenue for the last 12 months as of June 30, 2025: RMB 22.027 billion.

Gross Profit: 2023 gross profit: RMB 2.541 billion; 2023 gross profit: RMB 2.799 billion; 2024 gross profit: RMB 3.313 billion; gross profit for the last 12 months as of June 30, 2025: RMB 3.758 billion.

Annual Loss/Profit: 2023 net loss: RMB 1.384 billion; 2024 net profit: RMB 4.799 million; 2024 net profit: RMB 762 million; net profit for the last 12 months as of June 30, 2025: RMB 922 million.

JD Industrial's cash flow remains positive, with operating net cash flow of approximately RMB 1.4 billion over the last 12 months, fully covering capital expenditures during the same period while still generating incremental cash, demonstrating strong self-sustaining capabilities.

Comprehensive Review

JD Industrial is the largest provider of industrial supply chain technology and services in China, with a market share of 4.1%. Although the industry's concentration is relatively low, JD Industrial's market share is still 20% higher than the combined total of the other top four players in the industry, making it the dominant player in China's MRO sector.

Looking at the global MRO market, currently listed companies include GWW (USD 46.178 billion, 27.22x P/E), FAST (USD 47.322 billion, 38.52x P/E), MSM (USD 4.621 billion, 23.20x P/E), and Zhenkunhang (HKD 4.295 billion, loss-making). Compared to these international MRO giants, JD Industrial's valuation is clearly higher.

However, JD Industrial is a young company with growth rates significantly outpacing its peers. Based on the last 12 months' net profit, its P/E ratio ranges from 33.63x to 41.04x. If priced at the lower end, the JD brand effect and IPO sentiment could drive a 15-20% upside. If priced at the upper end, a 5% gain would be decent, and moving too late might even result in losses after fees.

Looking at the valuations of other JD-affiliated listed companies, JD Group has a P/E of 9.34x, JD Logistics 11.83x, and JD Health 37.20x. JD Industrial's P/E is directly benchmarked against JD Health.

In terms of funding, this offering aims to raise HKD 2.682-3.274 billion, with cornerstone investors locking in HKD 1.323 billion. At the upper price, the free float is HKD 1.951 billion. Merrill Lynch's price stabilization is mediocre, and based on the historical performance of JD-affiliated companies, it's a race to see who can exit fastest.

Subscription Plan:

I will subscribe for fun. The strategies for the two stocks, Yaoyao and Industrial, will be shared on the Star Planet later. Tianyu and Xiaomian's dark pool broke below the issue price, which will once again push IPO sentiment to a low! Tianyu was abandoned as mentioned on the Star Planet, and Xiaomian participated in cash, dodging a bullet by not getting allocated. This wave of capital is all rushing into Zhuoyue, and we should be able to exit safely tomorrow!

$JD INDUSTRIALS(07618.HK)