Digital Freight Platform Logory Logistics Debuts on HKEx
Logory Logistics, a digital freight platform, was officially listed on the Hong Kong Stock Exchange on March 9. Following Full Truck Alliance’s listing in the US in 2021 and GOGOX’s listing in Hong Kong in 2022, Logory Logistics became the third freight platform in China to go public.
Logory Logistics’ stock opened at HK $2.81, a 3.1% decline from its issue price of HK $2.9. However, the stock managed to close at HK $2.84, resulting in a market value of HK $3.959 billion. The company offered 43.211 million shares globally at a price of HK $2.9 per share and raised approximately HK $125 million.
Founded in 2002, Logory Logistics is one of the earliest digital platforms serving the field of highway logistics in China. According to the prospectus, as of the end of September 2022, it had provided services to more than 11,600 shippers and 2.7 million truck drivers, and completed a total of 36.2 million orders. Furthermore, the company’s gross transaction value in recent years has made it become one of the largest digital freight platforms in China.
According to the prospectus, Logory Logistics’ founders, Feng Lei and Du Bing, collectively hold almost 40% of the company’s shares. Shanghai Yunxin Venture Capital Co., Ltd., a wholly-owned subsidiary of Ant Group, is the largest external shareholder, owning approximately 14% of the company’s shares. Yunxin Venture Capital has collaborated with Logory Logistics on financial payment services and blockchain technology.
From 2019 to 2021, the annual income of Logory Logistics was about 3.561 billion yuan ($511 million), 4.665 billion yuan and 6.297 billion yuan respectively, with a compound annual growth rate of 33.0%. The net profit was about -3.298 million yuan, 26.07 million yuan and 50.744 million yuan respectively. Affected by the epidemic, Logory Logistics expects its net profit in 2022 to be much lower than that in 2021.
For a long time, the domestic road freight market in China has been highly fragmented, resulting in an unequal distribution of information between shippers and truck drivers. As a response to this issue, digital freight platforms emerged, including Full Truck Alliance, Logory Logistics, FOR-U, and G7e6. “After 20 years of entrepreneurship, from SaaS services to operations and ecological construction, we have truly embarked on a ‘difficult and correct’ road,” said Feng at the listing ceremony.
According to China Insights Consultancy, the penetration rate of digital freight platforms in the whole transportation market in 2021 is only 10.7%. The institution predicts that by 2026, the penetration rate will reach 16.8%.
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On February 15, 2022, China promulgated the Network Security Review Method, which requires data processors who have more than 1 million users’ personal information and plan to go public abroad, to apply for a network security review. If the authorities believe that any data processing activities affect or may affect national security, they have the right to initiate a network security review on them. At present, Logory Logistics collects, stores and processes more than 2,490GB of personal information about digital freight businesses, covering more than 2.7 million individuals. Therefore, it is crucial to monitor and prevent improper handling or unauthorized access to this data, as it may have adverse effects on the company.