(Yicai Global) May 6-- JD Logistics expects its loss to widen significantly this year after the delivery arm of China’s second-biggest e-commerce platform lost nearlyCNY9 billion (USD1.4 billion) in the three years through 2020.

The prediction is based mainly on a change in the fair value of preferred shares, decreasing Covid-19-related government support, and increasing expenses for administration, marketing, sales, as well as research and development, according to the Beijing-based firm’s updated listing prospectus filed on May 2.

Set up in 2007 to courier for parent JD.Com, JD Logistics had a net loss of CNY4 billion last year, while revenue rose more than 47 percent to CNY73.4 billion (USD11.3 billion). Excluding non-operating losses, it made a profit of CNY1.7 billion.

JD Logistics plans to use the proceeds from its Hong Kong initial pubic offering to expand and upgrade its network, including automation, over the next 12 to 36 months, the prospectus said, without disclosing a target sum.

Even though Amazon surpasses it for air freight, JD Logistics links with JD.Com and JD Technology -- which involves goods, logistics, and capital -- are a key advantage for the firm, transport expert Yang Daqing told Yicai Global.

Though mainly set up to serve the needs of JD.Com, the delivery company’s external business is becoming increasingly important. External customers accounted for a 46.6 percent share of business last year, up from 29.9 percent in 2019. JD Logistics also invested CNY5.3 billion in technology over the past three years.

JD.Com indirectly owns more than 79 percent of JD Logistics, while Richard Liu, the online retailer’s founder, has nearly 77 percent of JD.Com’s voting rights. JD Logistics will remain a subsidiary after the IPO.

Editor: Emmi Laine, Xiao Yi