Kerry Logistics Network said yesterday that it will expand its operations to serve online retailers on the mainland as the country moves to end the year as the largest e-commerce market. The largest warehouse and distribution centre operator in Greater China and Asean markets will raise up to HK$2.2 billion in its initial public offering. The Hong Kong public offering will begin today with the shares offered in a range of between HK$8.80 and HK$10.20 per share. That would give the firm a market capitalisation of HK$14.58 billion to HK$16.9 billion. "We are already participating in certain e-commerce businesses in China, mainly for back-end warehousing, consolidation and packaging ," George Yeo, the chairman of Kerry Logistics, said yesterday. But the company - which is the logistics arm of Kerry Properties - has refrained from providing the "last mile" transport on the mainland due to low margins. China's logistics market is very fragmented with fierce competition in domestic delivery services. Yeo said the company was banking on rapid trade growth between the China region and Asean countries. It operates 39 million square feet of warehouse and logistics centres in the region, with 11 million sq ft in China and 8.7 million sq ft in Thailand. The company has logistics centres being built in China, Vietnam and Thailand. "Asean will continue to grow at several times the global average," Yeo said. President Xi Jinping has vowed to create a more vibrant trade relationship between the country and Association of Southeast Asian Nations members and aims to expand bilateral trade volumes to US$1 trillion by 2020. Hong Kong warehouses, which account for nearly 30 per cent of the company's operating profit, have showed some signs of topping out, one analyst said. "The rents for warehouses would be vulnerable to an increase in supply when two mega warehouses are launched in Hong Kong next year," the analyst said. The company's warehouses, which have been operating since the 1990s, have staggeringly high operating margins above 50 per cent, compared with 9 per cent for integrated logistics and 2 per cent in freight forwarding. Just before the IPO, the company disposed of a warehouse in Kowloon Bay to its parent Kerry Properties, in favour of a residential project. "Hong Kong warehouse remain a very important business for us," said William Ma, group managing director. "If there are opportunities for us, we will continue to acquire more warehouses in Hong Kong." Kerry Properties is part of the Kerry Group, which controls the company that publishes the South China Morning Post .