Where there is a price, there is a market.

The prosperity and development of e-commerce has led to the rise of the logistics industry, and the rapid upgrading of logistics services has also made the logistics warehousing industry the goal of capital pursuit.

The battle for logistics real estate started as early as a few years ago:

In 2013, it was rumored that the largest e-commerce platform in China was involved in logistics real estate, competing with other e-commerce in the field of logistics real estate.

In 2014, real estate giant 000002.SZ (02202.HK) announced its entry into the field of logistics real estate, and other real estate companies also made simultaneous layouts.

Real estate and finance always complement each other, in the raging development of logistics real estate, there are naturally financial enterprises. Ping an Real Estate under Ping An Insurance (601318.SH, 02318.HK) also entered the logistics real estate market on a large scale at almost the same time. Warburg, Blackstone Group Inc, Hopu, Temasek and other financial institutions have also boarded the ship to keep up with the spring of logistics warehousing assets.

However, "capital" has only gradually emerged in the past two years: logistics real estate transactions are becoming more and more frequent. For example, at the beginning of the year, Blackstone Group Inc Group acquired most of the interests in Guangdong-Hong Kong-Macau Greater Bay Area's largest city logistics park from local real estate tycoons to further consolidate its logistics real estate portfolio. SUNING and GLP, the largest logistics real estate company in China, set up a 3.8 billion yuan logistics real estate fund to acquire warehousing logistics projects. Shunfeng has set up logistics REIT 02191.HK to be listed in Hong Kong; China has formally accepted the declaration of infrastructure public offering REITs products, and GLP REIT is one of them.

These deals provide liquidity and, more importantly, "price" for the booming logistics real estate market.

JD.com (09618.HK, JD.US), who has made great achievements in the logistics industry, seems to expand his logistics industry sooner or later.

JD.com plans to increase his holdings of China's logistics assets

It has been 14 years since JD.com built the logistics system in 2007. A few years ago, the group began to develop a smart logistics real estate business, acquiring scarce land resources by owning, developing and managing logistics facilities and other real estate, and supporting JD Logistics, Inc. and third-party logistics.

Recently, there has been another big move in the business.

On September 3, JD.com, an indirect non-wholly owned subsidiary of JD.com, issued a joint announcement with China Logistics assets (01589.HK) listed on the Hong Kong Stock Exchange (00388.HK): at a price of HK $4.35 per share (or a total cash consideration of HK $3.987 billion), to Li Shifa, the chairman, executive director and current major shareholder of China logistics assets (holding a controlling stake in Yupei International, a major shareholder in China logistics assets). Acquire a 26.38% stake in China's logistics assets.

The offer, that is, HK $4.35, represents a 17.25% premium over the last closing price of HK $3.71 on the last trading day before the suspension announcement of China Logistics assets on August 26, and a premium of 3.08% over the last closing price of HK $4.22 before the announcement of the acquisition.

After the completion of the transaction, JD.com 's ownership of logistics assets in China will be increased from the current 10.64 per cent to 37.02 per cent.

It is worth noting that ESR Cayman Limited (01821.HK), currently the third largest shareholder in China's logistics assets, is one of the largest logistics real estate groups in the Asia-Pacific region, and JD.com is also an important shareholder of ESR Cayman Limited.

What are the benefits of increasing the holdings of Chinese logistics assets?

1、Resource integration

JD.com 's intelligent industry development deal to acquire a stake in China's logistics assets is likely to trigger a mandatory conditional cash offer, a privatisation proposal that could privatize the company if it is accepted by specific eligible shares within four months. Based on the offer of HK $4.35, the total market value of China's logistics assets is HK $15.1 billion.

According to the statement of China Logistics assets, JD.com is its attractive strategic partner. As JD.com has a similar business model, if Jingdong obtains its voting rights of 50% or more, it will promote the resource integration of the two companies. Enhance both business growth and financial prospects, and if China's logistics assets are privatized, both can focus on long-term growth and interest strategic decisions. It is not affected by the regulatory restrictions of listed companies, the pressure of market expectations and stock price fluctuations-that is, JD.com 's ownership or even full ownership will be conducive to the resource integration of logistics assets business.

After the completion of the transaction, JD.com Intelligent Industry Development will become the largest shareholder in China's logistics assets, with 37.02% equity, the second largest shareholder is private equity fund RRJ, with 21.94% equity, and JD.com 's ESR Cayman Limited, the third largest shareholder, holds 18.10% equity.

From the perspective of the shareholder structure after the completion of the transaction of China's logistics assets, even if it is not privatized, JD.com can still have a greater say, which should be more beneficial to its integration of resources, which is very obvious.

2. Expand the territory

The continuous development of domestic consumption and domestic and foreign trade demand has promoted the development of the warehousing and logistics industry. In the past, owners of logistics real estate provided rental services for logistics facilities for e-commerce companies such as BABA (09988.HK) and JD.com, and earned rental income.

However, with the acceleration of the large-scale development of e-commerce, the requirements for distribution efficiency, compliance, data integration and analysis are greatly improved, and e-commerce may hope to have greater control over the layout of warehousing and logistics facilities. therefore, the demand for self-built logistics warehousing centers of e-commerce giants and logistics enterprises is increasing.

On the other hand, these e-commerce enterprises may rely on their technology, scale, employment and other advantages, and it is easier to obtain scarce warehousing and logistics land.

In addition, JD.com has already deposited a wealth of logistics warehousing technology, which can provide advanced solutions for third-party logistics and other e-commerce warehousing services, which may lay the foundation for him to become an owner.

Statistics from Jones Lang LaSalle, one of the five major international property evaluation institutions, show that the share of logistics assets in China's real estate bulk trading market increased significantly from about 5% to 10% in 2020, thus it can be seen that the demand for logistics real estate is becoming more and more tight, with the booming development of e-commerce.

At present, GLP is a well-deserved leader in domestic warehousing and logistics enterprises, according to its REIT prospectus, the market share may reach 28.5%, as for the subsequent operators, the rankings of each platform are different, but not more than 10%. According to the author's statistics, Vanke's logistics platform Wanwei, Nanshan Holdings (002314.SZ) and Nanshan Group jointly build Baowan Logistics, Yupei (a project of China's logistics assets), ESR Cayman Limited, Cainiao, JD.com and so on are the main operators.

According to the mid-term report of GLP China Bond 2021, the largest provider and service provider of modern logistics and industrial infrastructure in China owns and operates logistics infrastructure covering an area of about 67.49 million square meters with a total construction area of about 47.26 million square meters and worth about $62 billion (about 400 billion yuan) in China as of June 30, 2011. the warehouse area has been built of about 34.99 million square meters.

By contrast, data on China's logistics assets show that JD.com 's intelligent industry holds and operates more than 13 million square meters of real estate in China and manages total assets of more than 30 billion yuan.

ESR Cayman Limited's latest performance shows that his funds and investment companies managed in China on June 30, 2021 have a construction area of 8.946 million square meters and assets under management of US $7.38 billion.

The results of China's logistics assets in the first half of 2021 show that the completed logistics park has a construction area of 3.7 million square meters, together with the construction, repositioning of the logistics park and holding land for future development, the total construction area is about 4.6 million square meters.

As can be seen from these data, JD.com and his affiliated companies still have a much lower market share than GLP China, but as the market share of other small share participants is relatively scattered, JD.com logistics real estate may form a second strong market force through the integration of resources, resulting in synergy.

3. Realize value

JD.com is very good at spinning off assets and listing at the right time.

When technology stocks were in their heyday in the capital market, JD.com successfully spun off JD Health (06618.HK) and JD Logistics, Inc. (02618.HK) to list on the Hong Kong stock market; when Chinese stocks were very popular on Wall Street, Dada Nexus Limited, the last kilometer logistics service provider, successfully listed in the United States. These assets are valued fairly well in the capital markets.

We released "Caihua Insight" as early as May. JD.com: e-commerce giant or unicorn incubator? It is mentioned that JD.com is good at incubating high-quality assets and achieving high-value spin-off and listing. JD.com 's intelligent industry, JD.com Digital, which is integrated into cloud computing and AI business, JD MRO, which is engaged in industrial maintenance and operation, Jing Teng Yun Cang jointly launched with Tencent (00700.HK), e-commerce businesses such as Jingxi and offline 7FRESH, and so on, are all independent assets with stories.

Realizing the integration of resources and then choosing another good opportunity to re-list will bring higher value to JD.com, so why not do it?

Mao Ting