Doubts over Jingdong Mall offering
Jingdong Mall, the mainland's second-largest online retailer, may find it hard to achieve a valuation target for its listing in the United States given the company's loss-making performance and uncertain market environment.
Jingdong, also known as 360buy, was poised for a listing that aimed to raise up to US$5 billion in the US, Reuters reported yesterday. Sources said the company had hoped to achieve a US$6 billion stock market valuation.
'It might be hard for them to achieve their valuation target,' said Feng Lin, an analyst at the China E-business Research Centre.
'Jingdong has been expanding very aggressively. But it's still burning money and not making any profit. Their capital chain has been very tight despite several rounds of fundraising.'
Liu Qiangdong, the founder and chief executive of Jingdong, denied the company would start the listing process next week.
'I will be staying in the middle of nowhere in the Taklimakan Desert [in Xinjiang] next week,' Liu said in response to the market speculation.
A spokesman for the Beijing-based company said the firm had no comment on the report, adding that Liu was on holiday and would be back in Beijing in two weeks.
Originally a distributor of consumer electronic goods, Jingdong ventured into online retailing in 2004 and expanded into books, furniture, apparel, cosmetics, food and beverage and infant products.
The company has become a market leader by selling branded goods at lower prices than street shops. According to its website, it now has 20 million registered users and 1,200 suppliers.
Jingdong competes with Taobao, the country's biggest online retailer, Dang Dang and Joyo in the mainland market.
In April, the company made headlines after it announced it had raised US$1.5 billion in a private round of fundraising. Russian internet investment group DST and Tiger Fund are among the investors.
Before that, Jingdong had raised more than US$30 million from private funds and investors including Hong Kong veteran investor Francis Leung Pak-to.
The funding was used mainly to build logistics centres and call centres across the country.
Liu said earlier this year that sales revenue in the first quarter grew as much as 206 per cent year on year. He raised the annual revenue target for this year to 30 billion yuan (HK$36.6 billion) from 26 billion yuan.
Liu expected the company to become profitable in the second half of next year.
Feng said international investors were wary of mainland firms since some US-listed operations were found to have cheated on results.
'Jingdong originally planned to go public in 2013. It decided to raise funds earlier partly because it has run out of cash.' Feng said.
A person involved in the 360buy listing said: 'I am unsure just what metrics we are meant to be valuing this company on, as it has no cash flow or profits.'
$1.5b
The amount raised by Jingdong, in US$, in April in a private round of fundraising. Investors included Russian group DST and Tiger Fund
