20220530-招银国际-VAS_enrichment___resilient_GMV_ahead_4页_845kb

Baozun (BZUN US) Summary

Core Content

Baozun (BZUN US) reported its 1Q22 financial results, showing a revenue decline of -2% YoY but a significant GMV growth of +28% YoY, surpassing expectations. The company's non-GAAP operating profit was RMB4.7 million, which was ahead of estimates but below consensus. The performance highlights a resilient GMV outlook for 2Q22E, expected to grow by +21% YoY, driven by strong performance in FMCG and electronic categories and M&A contributions, despite epidemic-related challenges.

Main Points

• 1Q22 Performance:

  • GMV growth: +28% YoY, 15% above estimate.
  • Revenue: -2% YoY, 5% above consensus.
  • Non-GAAP OP: RMB4.7mn, ahead of estimate.
  • Adj. net profit: RMB1.2mn, ahead of estimate but lower than consensus.

• Category Performance:

  • Apparel & accessories: +6% YoY, with luxury segment showing strong growth at +30% YoY.
  • Appliances: -6% YoY.
  • Electronics: -37% YoY.
  • Beauty and cosmetics: +2% YoY.
  • Others: -43% YoY.
  • VAS services (warehouse & fulfillment, digital marketing & IT solutions): +26% and +39% YoY respectively, indicating a strategic shift towards value-added services.

• Outlook:

  • 2Q22E GMV growth: +21% YoY.
  • 2Q22E revenue: -14% YoY.
  • Non-GAAP OP: RMB3.5mn.
  • FY22E GMV growth: +16% YoY.
  • FY22E non-GAAP OP: RMB300mn.
  • Earnings forecast for FY22E was trimmed by 30% due to epidemic impact, while FY23-24E forecasts remain unchanged.

• Valuation:

  • Target Price (TP): US$12, implying a 14x FY23E P/E.
  • Current Price: US$9.3.
  • Up/Downside: +29.0% from current price to TP.

• Financial Highlights:

  • Revenue for FY20A to FY24E is projected to grow from RMB8,852mn to RMB12,549mn.
  • Adj. net profit is expected to increase from RMB256mn (FY22E) to RMB571mn (FY24E).
  • Operating margin is projected to improve from 3.1% (FY22E) to 5.6% (FY24E).
  • Adj. net margin is expected to rise from 2.7% (FY22E) to 4.5% (FY24E).
  • ROE is expected to grow from 4.0% (FY22E) to 7.7% (FY24E).

• Shareholding and Stock Data:

  • Market Cap: US$512mn.
  • Avg 3 mths t/o: US$12.81mn.
  • 52w High/Low: US$38.15 / US$5.41.
  • Total Issued Shares: 63mn.

• Key Ratios:

  • Sales mix: Services are growing from 55.9% (FY21A) to 68.6% (FY24E).
  • Gross margin is expected to increase from 69.0% (FY22E) to 69.7% (FY24E).
  • Adj. net margin is expected to rise from 2.7% (FY22E) to 4.5% (FY24E).

Key Information

• Analyst Recommendations:

  • Maintain BUY rating.
  • TP: US$12.
  • Earnings Forecast: Trimmed FY22E by 30% due to epidemic impact; FY23-24E remain unchanged.

• Strategic Focus:

  • Emphasis on high caliber and value-added services (VAS) to counter macroeconomic challenges and weak consumer sentiment.
  • Channel expansion is ongoing, with non-Tmall channels contributing 40% of GMV in 1Q22, up from 26% in 4Q21.

• Financial Summary:

  • Revenue is expected to grow steadily, with FY22E at RMB9,647mn and FY24E at RMB12,549mn.
  • Adj. net profit is forecasted to rise from RMB256mn (FY22E) to RMB571mn (FY24E).
  • Cash flow is expected to remain positive in the long term, with a focus on operating cash flow and investing activities.

Related Reports

• Factoring lingering headwinds and soft macro (14 Mar 2022)
• China Internet Analyst Marketing Takeaway (31 Jan 2022)
• China Internet: Embracing a new normal of regulation (8 Nov 2021)

Auditor

• Deloitte is the auditor for Baozun.

Analyst Certification

• The analyst certifies that the views expressed accurately reflect personal views.
• No compensation was directly or indirectly related to the views in the report.
• The analyst did not trade in the stock covered in the report within 30 days prior to the report's issue, and will not do so within 3 business days after the report's issue.
• The analyst does not serve as an officer of any Hong Kong listed companies covered and has no financial interests in them.

CMBIGM Ratings

• BUY: Potential return of over 15% over next 12 months.
• OUTPERFORM: Industry expected to outperform the relevant broad market benchmark over next 12 months.

Disclosures

• CMBIGM does not provide individually tailored investment advice.
• The report is for the use of intended recipients only and may not be reproduced or distributed without written consent.
• CMBIGM is not a registered broker-dealer in the U.S. and is not subject to U.S. rules regarding research reports.
• The report is distributed in Singapore by CMBISG, an Exempt Financial Adviser, and may not be provided to non-accredited investors without prior consent.

Legal and Compliance Notes

• The report is subject to change without notice.
• CMBIGM may issue other reports with different information or conclusions.
• There may be potential conflicts of interest due to investment banking relationships.

Summary

Baozun delivered a 1Q22 result with a strong GMV growth despite a revenue decline, showing resilience in the face of the epidemic. The company is focusing on value-added services and channel expansion to drive long-term growth. While FY22E earnings were trimmed by 30% due to macroeconomic headwinds, FY23-24E forecasts remain unchanged. The BUY rating is maintained with a target price of US$12, indicating strong potential for future performance. The company's services segment is growing rapidly, and the strategic shift towards VAS is expected to provide a competitive edge in the market.