20220314-招银国际-Factoring_lingering_headwinds_and_soft_macro_4页_844kb

Baozun (BZUN US) Summary

Core Content

Baozun, a leading player in the Chinese e-commerce and digital services sector, reported its 4Q21 results, which were largely in line with expectations. The company's top-line and bottom-line revenue declined by -5% and -72% YoY, respectively, but outperformed the consensus by 0% and 4%. The performance was influenced by lingering headwinds, including the impact of the trade war (BCI) and soft macroeconomic conditions. Despite these challenges, Baozun maintained a focus on its luxury vertical and continued to expand its distribution channels to mitigate the effects of weak consumer sentiment.

Main Points

4Q21 Performance

• GMV: Increased by 14% YoY, with non-distribution GMV up 16% and distribution GMV down 16% YoY.
• Revenue: Declined by 5% YoY, aligning with the consensus.
• Adj. Net Profit: Surpassed expectations by 4%, driven by improved gross margin (GPM).
• Category Performance:
  • FMCG and Electronics: Both showed double-digit YoY growth.
  • Apparel & Accessories: Declined by mid-teens due to defensive strategies by brand partners to protect margins.
• GMV Breakdown:
  • Apparel & Accessories: 40%
  • Electronics: 30%
  • FMCG: 15%
  • Appliance: 5%

Strategic Focus

• Luxury Segment: Continued strong performance, expected to contribute 15%-20% of operating profit (OP) in FY22E.
• Channel Expansion: Non-Tmall channels grew to 26% of GMV in 4Q21 (up from 22% in 4Q20).
• Omnichannel Growth: Omnichannel business with JD more than doubled, and mini program GMV expanded by 70% YoY.

Financial Forecasts

• GMV Growth: Expected to grow at 17% YoY in FY22E, with a decline in 1Q22E to low-single-digit growth.
• Non-GAAP OP: Forecasted at RMB445mn for FY22E.
• Earnings Forecast Trimmed: FY22-24E earnings were reduced by 7%-9% due to persistent headwinds and margin dilution.
• Target Price (TP): Lowered to US$12 (16x FY22E P/E), from the previous TP of US$28.

Key Financials

Earnings Revision

Share Performance

Shareholding Structure

Market and Analyst Outlook

• Analyst Rating: BUY
• Target Price (TP): US$12
• Current Price: US$6.9
• Up/Downside: +74.0%

Risks and Disclosures

• The report contains general market analysis and does not provide personalized investment advice.
• There are potential conflicts of interest as CMBIGM may engage in transactions with the companies mentioned.
• Past performance does not guarantee future results.
• The report is intended solely for the use of designated recipients and may not be reproduced or distributed without written consent.

Auditor

• Auditor: Deloitte

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Conclusion

Baozun is navigating a challenging macroeconomic environment with a focus on its luxury segment and channel expansion. Despite headwinds, the company is expected to show resilience in GMV growth, with a forecasted 17% YoY increase in FY22E. However, the company's earnings forecasts have been adjusted downward, and the target price has been reduced to reflect a lower valuation multiple. Investors are advised to monitor the company's performance and wait for clearer signals of e-commerce recovery and sector sentiment stabilization before making investment decisions.