Alibaba’s plan to list Cainiao logistics hub will ‘unlock’ value, analysts say

Alibaba Group Holding’s plan to package a key warehousing hub into a real estate investment trust (Reit) for public listing will benefit the company and its shareholders by redeploying capital into higher-growth opportunities, according to analysts. Alibaba, which two years ago scrapped a plan to publicly list its Cainiao logistics operation, said in a filing on Monday that it had received regulatory approval from the Hong Kong stock exchange to proceed with a proposal to spin off a certain logistics asset and list it as a Reit on the Shenzhen Stock Exchange. “The proposed spin-off reflects a strategic effort by Alibaba to recycle capital and redeploy it into higher-growth opportunities,” said Chelsey Tam, senior equity analyst at investment consultancy Morningstar. Tam said the move could help the e-commerce giant unlock the underlying value of a mature infrastructure asset while maintaining operational flexibility. Alibaba said that the Reit’s underlying asset was Jiaxing Park, one of Cainiao’s key logistics and fulfilment facilities located in Jiaxing city in Zhejiang province. The group has tapped CICC Fund as manager of the Reit, officially known as the CICC Cainiao Logistics Warehouse Infrastructure Reit. The proposal was still subject to approval from the Shenzhen Exchange and China Securities Regulatory Commission, according to the filing. Logistics sector expert Zhao Xiaomin said Cainiao had been reliant on the parent group for support since scrapping the initial public offering. As such, securitising one of Alibaba’s key assets could help Cainiao shore up its capital flow while easing pressure on the parent’s balance sheet, according to Zhao, who is also CEO at Guanshuo Capital. Industry experts noted that Alibaba and Cainiao were capitalising on a trend that saw a handful of logistics firms launch similar Reit funds following the Chinese government’s pledge of support for such initiatives. In a notice published in early April, China’s State Council said it would support the launch of infrastructural Reits as a means to “actively unlock value of incumbent assets”. The pledge followed an initial call to pilot the launch of such funds in 2020. A handful of logistics firms, including SF Express, the country’s largest express delivery firm, and Alibaba rival JD.com have made similar moves to list logistics-related Reits, moves that Morningstar’s Tam said highlighted a broader trend among major Chinese internet platforms to monetise real estate-heavy assets. Li Chengdong, founder and chief analyst at market consultancy Dolphin, said the Reit listing plan came as Alibaba has locked horns with domestic rivals in a costly artificial intelligence battle, which required significant funding and resources to build data centres, procure advanced chips and develop AI models. Li added that securitising Jiaxing Park was the first step for Cainiao and Alibaba to utilise existing assets and recycle capital to support further expansion. Alibaba owns the South China Morning Post. Additional reporting by Ann Cao