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E-COMMERCE | Staff Reporter, China
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Pharmacy unit IPO a win for JD's growth plans: report

The company is expected to spend part of the IPO proceeds for business expansion and R&D.

JD.com's proposal to list its pharma subsidiary, JD Health, will support its growing spending plans, according to a report from S&P Global Ratings.

The company is expected to largely deploy the $3.4b raised from the IPO for organic business expansion, research and development, investments, mergers and acquisitions, and strategic alliances.

"We believe the listing will improve transparency within JD.com's multiple business segments, although cash leakage could make it harder to upstream dividend when necessary," the report stated.

JD.com is projected to continue recording a healthy revenue growth of more than 18% and an EBITDA growth of over 22% in the next 12-24 months.

Meanwhile, China's proposed anti-trust guidelines aimed at preventing online platforms from blocking fair competition are unlikely to hurt JD.com over the next 12 months, but could have greater implications in the longer term.

"In our view, the removal of anti-competitive behavior, such as asking merchants to be exclusive on only one platform, could increase the number of merchants on JD.com's platform," the report added.
 

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