20210823-招银国际-2H21E_headwinds_yet_over_4页_782kb

Baozun (BZUN US) Company Update Summary

Core Content

Baozun, a leading e-commerce platform, reported mixed results for the second quarter of 2021 (2Q21). The company's top-line growth was +7% YoY, while bottom-line growth stood at +3% YoY. However, both figures fell -7.7% / +45.5% below the consensus estimates, primarily due to the lingering impact of the BCI (Brexit-related customs and logistics challenges) and softer macroeconomic conditions.

Despite the challenges, the report indicates that the headwinds from BCI are expected to subside by 2H21E, with forecasts of +35% GMV growth and +14% revenue growth YoY. The company's non-Tmall channels contributed 32% GMV in 2Q21, compared to 35% / 25% in 1Q21 and 2020, respectively, suggesting a shift in revenue mix.

The report highlights that electronics and FMCG categories experienced over 100% YoY growth, contributing 25% / 20% to GMV. In contrast, apparel GMV dropped by 23% YoY, which was 35% of total GMV, due to the BCI impact. Meanwhile, luxury GMV saw high-double-digit growth, indicating strong performance in this segment.

Baozun expanded its brand partner base by adding 7 luxury brand partners in 2Q21, and the company is continuing to invest in client services, TP and JD partners, brand partners, and overseas markets to unlock long-term total addressable market (TAM) potential.

The company's data security technology barriers are expected to help it maintain a relatively defensive position amid tightening data regulations.

Key Financial Highlights

Revenue Growth

• FY19A: 35.0%
• FY20A: 21.6%
• FY21E: 15.6%
• FY22E: 21.6%
• FY23E: 21.6%

Adjusted Net Profit

• FY19A: 3.2%
• FY20A: 49.9%
• FY21E: -20.1%
• FY22E: 53.5%
• FY23E: 32.1%

Earnings Per Share (EPS)

• FY19A: 2.0 RMB
• FY20A: 2.8 RMB
• FY21E: 1.9 RMB
• FY22E: 2.8 RMB
• FY23E: 3.6 RMB

P/E Ratio

• FY19A: 20.2x
• FY20A: 14.4x
• FY21E: 20.8x
• FY22E: 14.2x
• FY23E: 11.3x

P/S Ratio

• FY19A: 3.0x
• FY20A: 2.6x
• FY21E: 2.6x
• FY22E: 2.2x
• FY23E: 1.9x

Key Viewpoints

• 2Q21 Performance: Mixed results due to BCI impact and softer macroeconomic conditions.
• 2H21E Outlook: Headwinds are expected to subside, with positive GMV and revenue growth anticipated.
• Segment Performance: Electronics and FMCG grew strongly, while apparel suffered due to BCI.
• Luxury Growth: High-double-digit growth in luxury segment.
• Strategic Expansion: Continued expansion of non-Tmall channels and luxury brand partnerships.
• TAM Opportunities: Long-term growth opportunities from new channels and brand expansion.
• Defensive Position: Strong data security capabilities may help withstand regulatory pressures.
• Earnings Forecast Adjustment: The analyst trimmed FY21-23E revenue and earnings forecasts by 23–28% due to headwinds and margin dilution.
• Target Price: Lowered to US$28 (implying 21x FY22E P/E), with a +47.0% upside from current price (US$18.7).

Key Information

• Auditor: Deloitte
• Target Price: US$28
• Current Price: US$18.7
• Market Cap: US$1,657 million
• Shareholding Structure:
  • Federated Hermes: 13.94%
  • FIL Ltd: 5.47%
  • Vontobel Holding: 3.79%
• CMBIS Rating: BUY
• Earnings Summary:
  • FY21E: RMB428 million
  • FY22E: RMB656 million
  • FY23E: RMB867 million
• Operating Profit:
  • FY21E: RMB376 million
  • FY22E: RMB649 million
  • FY23E: RMB877 million
• Net Profit:
  • FY21E: RMB265 million
  • FY22E: RMB475 million
  • FY23E: RMB653 million

Strategic Initiatives

• Partnerships and M&A: Baozun is expanding through strategic partnerships and M&A, especially in the luxury sector.
• New Channels: The company is focusing on expanding into JD and WeChat mini programs to diversify its revenue streams.
• Logistics Synergies: Potential strategic partnership with Cainiao to enhance logistics efficiency and client network.
• Investment in Services: Continued investment in client services and brand partners to strengthen market position.

Analyst Recommendations

• Maintain BUY: Despite the headwinds, the company is expected to deliver long-term value from new channel expansion and luxury brand opportunities.
• Wait for Signals: The analyst suggests waiting for clearer signals of e-commerce rebound and regulatory stabilization before making further investment decisions.

Risk and Disclaimer

• The report is not tailored to individual investors and should be used as general information.
• Past performance is not indicative of future results.
• Uncertain returns due to market volatility and external factors.
• No liability is assumed for any losses incurred from reliance on the report.
• Distribution Restrictions: The report is intended for major US institutional investors only in the U.S. and is not for general public distribution.