20231123-招银国际-Eye_on_GAP_revitalization___livestreaming_ecommerce_expansion_6页_1mb

Summary

• Company Focus: Baozun (BZUN US) is a US-listed company with significant exposure to the fashion retail and ecommerce sector, specializing in apparel and accessories through partnerships. Its revenue is driven by segments including Brand Business Management (BBM) and Baozun E-commerce (BEC), with a growing focus on partnerships like GAP and livestreaming platforms.

• Q3 2023 Performance:
  Q3 revenue increased by 4.7% YoY (+5% per report) and was in line with consensus, while the bottom line exceeded expectations (loss of RMB76mn vs. estimate of -RMB98mn). Segment analysis shows BBM contributed significantly to growth (+42% YoY from new stores), while BEC faced headwinds (-17% YoY due to declining consumer sentiment), and services revenue declined.

• Q4 2023 Forecast:
  Earnings view is cautiously positive, with revenue expected to grow 10% YoY, supported by GAP revitalization efforts and new store openings. GAP's margin improvement and path to breakeven by FY2025 are key drivers, while BEC may see moderate YoY declines due to external factors. Non-GAAP OP is projected at -RMB45mn. Adjusted earnings for FY2024-25E were trimmed by 5%-15%, reflecting softer BEC recovery and increased investments.

• Strategic Initiatives:
  Baozun's acquisition of 51% stake in Location, a top-tier Douyin partner, aims to bolster livestreaming ecommerce capabilities and driver GMV growth. This move is expected to have closing in 1Q2024. On partnerships, the collaboration with GAP in Shanghai is offsetting some BEC challenges.

• Valuation and Ratings:
  Maintained BUY rating with reduced target price from US$7.6 to US$6.9 (implying 11x FY2024 EV/EBIT). Current multiples include a P/E of 8.8 vs. prior estimates, with valuation comparisons highlighting potential risks, such as EV/EBIT of 11x. Full-year financials show mixed trends in profitability and revenue growth, with risks around consumer sentiment.

Key Data Highlights