(Bloomberg) –
JD.com reported second-quarter revenue that surpassed estimates, in addition to an investment by Hillhouse Capital, after China’s second-largest online retailer benefited from an increase in spending on its online marketplaces.
The company said in a statement Monday that its JD Health division would receive more than $ 830 million from Hillhouse, the investment company founded by Zhang Lei with money from Yale University, through the purchase of preferred Series B shares. The funds will also be used to strengthen their chain of pharmacy.
JD reported that revenue in the three months to late June rose 34% to 201.05 billion yuan ($ 29 billion), beating the average of 190.7 billion yuan of analytical estimate. Shares in JD rose as much as 4.3% in early trading in New York.
The company’s performance provides more evidence that China’s economy is among the fastest in the world to recover from the pandemic, helped by strict virus management measures and a rebound in industrial exports and consumer sentiment. Both JD and larger rival Alibaba Group Holding Ltd. increased record sales this year during the annual “6.18” shopping extravaganza, as heavy discounts lured buyers who had delayed purchases at least Covid-19.
The continued shift to e-commerce has benefited JD, which is expanding into smaller cities and tapping into strategies such as live streaming to reach new customers and protect growing competition from the likes of ByteDance Ltd.’s Douyin.
Read more: First in virus drop, China proves the fastest (1)
What Bloomberg Intelligence says
JD.com’s 2Q results could show a complete normalization of its business operations from the coronavirus pandemic in China. Accelerated customer growth driven by the closure of China in 1Q could support 2Q sales, see consumer demand for discretionary items, and higher participation by buyers in promotions such as JD.com’s 6.18 retail festival.
– Vey-Sern Ling and Tiffany Tam, analysts
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The company completed a second listing in Hong Kong in June, raising $ 3.9 billion that will be used to build its logistics and delivery network.
Hillhouse had JD support for his IPO. The transaction will close in the current quarter, and the retailer will remain the majority shareholder of JD Health, according to the statement.
(Updates with Hillhouse Capital investment in first, second and last paragraph, equities.)
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