BEIJING (AP) — Shares in China's biggest online health care platform rose 50% in their Hong Kong stock market debut Tuesday, reflecting investor enthusiasm for the fledgling industry as the country emerges from the coronavirus pandemic.
JD Health, an arm of JD.Com Inc., China's biggest online retailer, sells medications, hospital care packages and online consulting by doctors.
Chinese internet companies increasingly offer health services in a society where hospitals are crowded and distribution of drugs and medical supplies outside major cities is uneven. Online consulting with Chinese-speaking physicians is popular with families from China who live in the West or in developing countries.
Other competitors include e-commerce giant Alibaba Group's Alibaba Health; Baidu Health, run by search giant Baidu.com Inc.; and WeDoctor, run by Tencent Holding, operator of the popular WeChat messaging service.
The coronavirus pandemic has boosted demand for Chinese online platforms.
Investors have "high hopes for this kind of companies to develop in China," said Jackson Wong, asset management director for Amber Hill Capital Ltd. in Hong Kong.
The ruling Communist Party has encouraged growth of the industry by authorizing online pharmacies to deliver prescription drugs.
JD Health speeded up its stock market debut due to the spike in industry growth caused by the pandemic, said CEO Lijun Xin.
"The capital market is positive about our prospects, but we know very clearly that what it's positive about is the entire health market in China," Xin told reporters at the company's Beijing headquarters.
"The pandemic boosted the entire health industry, so we had to act fast," Xin said. "Originally the (development) speed for health may be one, but now it's three."
During the pandemic, patients switched from going online only for urgent care to staying in touch with doctors about chronic conditions, according to industry analyst Kevin Chang of Bain & Co.
"This new pattern of digital engagements is likely to continue and to increase the frequency of consultations," Chang said in a report.
Consumer spending and business activity have rebounded to above pre-pandemic levels after China, where the pandemic emerged in December, declared the disease under control in March and eased most controls. Restrictions on travelers coming from abroad still are in place and visitors to public buildings are checked for fever.
JD Health raised about $3.8 billion by selling 20% of the company to public shareholders.
It was Hong Kong's second-biggest stock offering this year behind parent JD.Com, which has shares traded in New York and raised $4.5 billion in June when it joined the Hong Kong exchange.
The ruling party is encouraging use of online health services to reduce the burden on hospitals.
JD Health said it plans to expand its online pharmacy and develop "smart healthcare solutions" supported by artificial intelligence to work with physicians.
The company says it had 72.5 million active users in June, up 30% from a year earlier.
The industry might face tougher competition once the coronavirus is brought under control and patients have more offline options, Wong said.
"If vaccines are very effective and people start going out again, the growth of these online service providers might not be as high," he said. "That would be the biggest risk for this kind of company."
___
Associated Press journalists Alice Fung in Hong Kong and Sam McNeil in Beijing contributed to this report.
___
JD Health (in Chinese): https://jiankang.jd.com