Dada Nexus rides closer to JD.com’s orbit with management shakeup

By Doug Young

Things got quite personal this week at local delivery company Dada Nexus Ltd. (DADA.US), which announced a major shakeup with the departure of both its chairman and CFO. Our description of the changes as “personal” is slightly facetious, as the departures of Chairman Xin Lijun and CFO Chen Zhaoming were both described as for the boilerplate “personal” reasons, according to on Monday.

In this case, the two departures were most likely not voluntary, especially for Xin, who only became chairman a little more than a year ago. Former CFO Chen was at Dada Nexus a while longer, joining in 2018. But his departure also looks staged to pave the way for a replacement from the family of e-commerce giant JD.com (JD.US; 9618.HK), which controls Dada Nexus.

The installation of two JD.com veterans as both the new chairman and CFO aren’t huge surprises, since JD.com has owned a majority of Dada’s shares since last year. What’s more, both of the new executives, Shan Su as chairman and Mao Jun as CFO, have strong ties to JD.com’s Hong Kong-listed logistics unit, JD Logistics (2618.HK).

Thus, this latest shakeup seems to be pulling Dada Nexus closer to JD.com, and specifically more tightly into JD Logistics’ orbit. Accordingly, we wouldn’t be surprised if JD Logistics ultimately offers to buy out Dada, which would only cost it about $400 million, based on Dada’s latest market value. By comparison, JD Logistics has a far larger market cap of about $7.8 billion.

Such a merger would make sense, since both companies are primarily engaged in logistics. But whereas JD Logistics is a more traditional national delivery company like America’s UPS (UPS.US) or China’s ZTO (ZTO.US; 2057.HK), Dada focuses on intra-city services for items like food that need to be delivered from a nearby grocery store to a customer’s home.

To understand what’s happening, we’ll quickly review some history of how Dada Nexus evolved to its current state. The company was formed in 2016 through the merger of an independent intra-city delivery company called Dada, together with JD.com’s similar service called JDDJ. JD.com got 46% of the new company in exchange for JDDJ, and Dada’s original founder Kuai Jiaqi became the new chairman and CEO of the merged company.

Dada Nexus listed in 2020, and its status remained largely unchanged until JD.com invested an additional $546 million in the company in 2022 to boost its stake to the current 52% majority. Since then, JD.com has been trying to integrate JDDJ more closely into its own services, leading JDDJ to pull away from Dada’s original Dada Now service in terms of revenue contribution. Whereas the two services were roughly equal in the past, JDDJ provided 62% of the company’s revenue in its most recent financial report for the third quarter, while Dada Now provided the remaining 38%.

JD.com sent its strongest signal yet that it wanted to have a bigger say at the company when Kuai left Dada Nexus in August last year. He was replaced in his chairman’s role by the now-departed Xin, who became a non-executive chairman. Kuai’s CEO role was never filled after his departure.

Instead of a new CEO, the company named another JD.com veteran, He Huijian, as its new president. A look at Dada’s website shows only two people on the “management” page, led by He. The other is the company’s new CFO, Mao Jun, who replaced the now-departed Chen Zhaoming and whose history we’ll describe shortly.

He Huijian looks like the big fish calling the shots at Dada Nexus now, and his history shows he has a strong background at JDDJ, described as a “core founding member” of the unit.

Meantime, the new chairman, Shan Su, and new CFO, Mao Jun, also both have strong ties to JD.com, and to JD Logistics in particular. New Chairman Shan was named CFO of JD.com in May this year, but previously was CFO for JD Logistics after joining the JD family in 2021 from an investment banking career. New CFO Mao previously worked at JD Logistics for the last three years, most recently as head of investor relations.

We should point out that departing Chairman Xin Lijun also had a long past at JD.com, including roles as head of its JD Retail and JD Health (6618.HK) divisions after joining in 2012. But it appears he fell out of favor in November when he was suddenly replaced as head of JD Retail in an announcement that simply said Xin would “assume a different role at the company.”

The bottom line is that Dada’s top two executive roles and its non-executive chairman’s position are now all occupied by JD.com veterans, all with strong ties to either JDDJ or JD Logistics. That explains our earlier assertion of why it would be quite easy to now merge JD Logistics and Dada, since the latter would be quite affordable at its current price.

While the company’s top ranks got quite shaken, investors didn’t seem too stoked or upset about the big changes. Dada Nexus’ shares see-sawed in the four trading days after the announcement, and are now about 4.6% ahead of pre-announcement levels.

The stock has lost 54% of its value this year, which is quite common for many U.S.-listed China stocks, on pessimism about the Chinese economy and U.S.-China tensions. It currently trades at a price-to-sales (P/S) ratio of just 0.52, which trails domestic peer SF Intra-city (9699.HK) at 0.74 and is way behind U.S. peer Workhorse Group (WKHS.US) with a ratio of 5.55. But Dada Nexus’ ratio is actually ahead of potential suitor JD Logistics’ P/S of 0.33.

While we obviously aren’t privy to any insider information, all the signals coming from Dada Nexus these days, combined with the company’s recent history, seem to point to its closer integration into the JD.com family. Dada Nexus is also expected to become profitable next year after years of losses, which would make it an even more attractive new dance partner for JD Logistics.