Alibaba’s subsidiary, Cainiao Smart Logistics Network Ltd., is preparing to become the first of five Alibaba group companies to pursue an independent listing in the equities market. Despite being considered a technology company, Cainiao’s operations are more aligned with logistics companies like FedEx and ZTO Express, using software and hardware to optimize package delivery. This unique positioning between tech and non-tech sectors has garnered the interest of global investors, especially considering the lackluster IPO performances of technology companies this year.
Cainiao’s potential $1 billion share sale in Hong Kong would rank below ARM Holdings’ $5.3 billion listing but above Instacart’s $660 million offering, both of which experienced significant first-day jumps before falling below their sales prices. Despite accounting for only 9.2% of Alibaba’s group revenue, Cainiao is the second-largest contributor to Alibaba’s profit growth. This impressive performance within the Alibaba empire makes it an attractive choice for investors looking at subsequent IPOs from the group.
While Alibaba and its domestic peers face challenges in China, Cainiao has managed to operate independently. Only 30% of its sales come from Alibaba, and it has successfully expanded internationally, something Alibaba’s e-commerce arm has struggled to achieve. Cainiao’s global presence, with operations in multiple countries including the US, provides protection against the ongoing US-China tech Cold War. Additionally, changing shopping trends favoring Chinese providers and the need for nimble logistics companies present opportunities for Cainiao.
Alibaba has lauded Cainiao for its global logistics network and proprietary technology that optimizes efficiencies across various stages of delivery. The company aims to further improve its delivery speed, potentially challenging Amazon’s competitive advantage. This highlights the growing importance of worldwide logistics companies in global commerce. Overall, Cainiao’s unique position and potential for growth make it an intriguing prospect for investors amidst an uncertain tech IPO market.