(Bloomberg) —
JD.com reported second-quarter revenue that exceeded estimates, alongside an investment from Hillhouse Capital, after China’s second-biggest online retailer benefited from an increase in spending on its online marketplaces.
The company said in a statement Monday its JD Health division would receive more than $830 million from Hillhouse, the investment firm founded by Zhang Lei with money from Yale University, through the purchase of Series B preference shares. The funds will also be used to strengthen its pharmacy supply chain.
JD reported revenue in the three months ended June rose 34% to 201.05 billion yuan ($29 billion), beating the 190.7 billion yuan average of analyst estimates.
The company’s outperformance provides more evidence that China’s economy is among the world’s fastest to recover from the pandemic, aided by strict virus control measures and a rebound in industry output and consumer sentiment. Both JD and larger rival Alibaba Group Holding Ltd. racked up record sales during the annual “6.18” shopping extravaganza this year, as heavy discounting drew shoppers who had delayed purchases during the worst of Covid-19.
The continued shift toward e-commerce has benefited JD, which is expanding into smaller towns and tapping on strategies like live-streaming to reach new customers and fend off growing competition from the likes of ByteDance Ltd.’s Douyin.
Read more: First Into the Virus Slump, China Is Proving the Fastest Out (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 China’s lockdown in 1Q could support 2Q sales, given the pent-up consumer demand for discretionary items, and higher participation by merchants in promotions such as JD.com’s 6.18 shopping festival.
– Vey-Sern Ling and Tiffany Tam, analysts
Click here for the research.
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 backed JD before its 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 paragraphs)
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