JD Health International Inc.'s share pricestood at 56 percent above its initial listing price at closing following itsinitial public offering (IPO) on the Hong Kong stock market on December 8.

Owned by e-commerce giant JD.com.Inc., JDHealth listed its share price at HK$70.58 ($9.11) as the company sought toraise $3.48 billion, making it Hong Kong's largest IPOs since the start of2020. Its value had jumped from $29 billion ahead of the debut to around $53billion, thanks to the increase in its share price.

JDHealth Aims High

JD Health specializes in online medicalconsultation and pharmaceutical sales.Apart from online drug sales, JD Healthalso provides the online medical consultations, the booking of medicalexaminations and vaccine shots.

In the past three years, JD Health derivedclose to 90 percent of its revenues from selling pharmaceutical and healthcareproducts. But according to its listing prospectus, it's actually the thenon-pharmaceutical products, such as medical supplies, devices, contact lenses,and family planning products that are taking up the majority of sales.

JD Health’s IPO prospectus said it had 72.5million annual active users as of June 30, a 36 percent increase from a yearearlier.

JD Health's target valuation is a majorupgrade. Last November, it was valued at about USD7.1 billion after securingUSD931 million in an A-round of financing, led by JD and CICC Capital. TheBeijing-based firm’s valuation reached CNY50 billion (USD7.32 billion) inAugust.

The firm inked a deal for USD830 millionwith Hillhouse Capital Group in a B-round on Aug. 17, according to its parentcompany's earnings report.

JD.Com’s rose to nearly USD60 from USD41during the second quarter. Hillhouse Capital thus raked in about USD168 millionto USD246 million by cutting its holdings of the company’s US stocks.

Surging investor interest prompted manyhealthcare providers, such as Hangzhou TigerMed, Lepu Bio and the US’sChina-centric Exegenesis Bio to seek funding in the first half and achieve highvaluations. Asian healthcare IPOs have raised about USD12.7 billion so far thisyear, more than for any 12-month period in the past 12 years.

If the money comes through, expansion is inthe cards. Forty percent of the IPO proceeds will be used for businessenlargement in the next 36 to 60 months. About 30 percent will be spent onresearch and development in the next 24 to 36 months, and about 20 percent willgo on investments and acquisitions. The remainder will be used as workingcapital.

JD Health made a loss of CNY5.4 billion(USD822.2 million) in the first half, much more than the CNY971.8 million(USD148 million) it lost during the 12 months of 2019. It has not explainedwhy. Revenue jumped 76 percent to CNY8.8 billion in the six months ended Junefrom a year ago. In 2019, the platform was China's biggest online pharmacy byrevenue, according to Frost Sullivan.

JD Health has secured six cornerstoneinvestors who collectively agreed to subscribe to as much as USD1.35 billion instock. They include Singaporean sovereign wealth fund GIC, Hillhouse Capital,and BlackRock.

JD.com'sThree Big Spin-offs

JD Health went independent in May when itsecured USD1 billion in funding to become JD.Com's third unicorn subsidiarybehind its digital technology and logistics arms.

JD Health's main business lines are anonline-to-offline pharmacy, a third-party platform for drug wholesaling andweb-based hospitals. It also partners with medical institutions to offerinformation and smart treatment solutions.

This is not JD.Com's only affiliate withIPO plans.

JD Logistics, which operates JD's logisticsnetwork and fulfillment services since 2017, is seeking a USD40 billionvaluation via a share offering, Bloomberg reported on Nov. 24, citing a personfamiliar with the matter.

JD.Com hasn't officially announced theunit's potential IPO yet, but it could raise "at least" $5 billion,with a valuation of $40 billion, according to Bloomberg. JD's latest reportalso suggests JD Logistics' margins are expanding as it accepts more ordersfrom third-party customers, but we won't know more until it pulls back thecurtain.

JD Digital Technology, also known as JDDigits, offers consumer loans and supply chain financing for companies. JD owns37% of the fintech affiliate, which planned to raise $2.9 billion in Shanghaiwith an initial valuation of about $29 billion.

Earlier this year, JD Digits seemed poisedto benefit from Alibaba-backed Ant Group's IPO. Unfortunately, Ant's IPOcollapsed last month after Jack Ma, Alibaba's co-founder and leading Antinvestor, criticized China's state-backed banks.

JD Digits' microlending business alreadyfaced regulatory scrutiny prior to Ant's IPO, and its failure sparked thecreation of even tougher rules for fintech platforms.

JD Digits filed on Sept. 11 to joinShanghai’s Nasdaq-style Star Market in hopes of raising CNY20 billion (USD3billion).

But it is not clear when JD’s fintech armwill debut as Ant Group's blockbuster IPO was suspended early this month due tothe changing regulatory environment in online microlending.

Its parent JD.com, the second-largeste-commerce player in China, registered its secondary listing in Hong Kong inJune, becoming the third U.S.-listed Chinese firm to make a"homecoming" secondary listing in the global financial hub.

It completed a secondary listing in HongKong in June in which it banked USD4.5 billion. The stock [HKG: 9618] hasclimbed 53 percent since then, after rising 0.8 percent today to HKD345.80.

Last November, JD.com's titan rival AlibabaGroup pioneered the practice under the new regime of the Hong Kong stockexchange.

The company’s first-half revenue jumped76percent to CNY8.8 billion (USD1.35 billion) from a year earlier, while its losswidened to CNY5.4 billion from CNY971.8 million (USD149 million) for the wholeof last year.

ChineseLargest Online Healthcare Platform

Buying almost anything under the sky, andgetting it swiftly delivered. That is the norm in China these days. And now,you can even do it for a wide range of medicinal and healthcare products, withthe delivery time in just 30-minutes.JD Health is just one of the players.

China’s online healthcare providers such asJD Health and rivals Alibaba Health Information Technology, Tencent-backed WeDoctor Holdings and Ping An Healthcare and Technology have benefited aspatients warmed to using digital medical services during the coronavirusoutbreak.

According to business consulting firm Frost& Sullivan, JD Health was the largest online healthcare platform in Chinain 2019 with a total revenue of nearly 11 billion yuan. That's more than 1.5billion US dollars. As of June 2020, JD Health's retail pharmacy business hadmore than 70 million annual users.

Consultations on JD Health’s platformexceeded 16 million from the onset of the coronavirus pandemic at the end ofJanuary to mid-June and its average daily volume of such visits was about100,000 in the period, public records show.

The blockbuster deal and its subsequentfirst-day pop highlight how investors remain interested in health-care namesamid the coronavirus pandemic. Health-care listings have been lapped up thisyear by institutional funds as well as mom-and-pop investors.

Driving the pipeline of listings have beenhigh valuations and a wave of innovation in China’s health-care and biotechindustries, partly accelerated by the pandemic as more people use onlinemedical services.

JD Health’s strong performance also signalsto prospective issuers that the window for IPOs is still open, after the abruptsuspension of Ant Group Co.’s record offering last month.