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Baozun (BZUN US) Summary

Core Content

Baozun (BZUN US) released its 4Q24 financial results, which show mixed performance compared to market expectations. The company reported total revenue of RMB3.0bn, slightly above the Bloomberg consensus by 3.3%. However, non-GAAP net profit attributable to ordinary shareholders was RMB46mn, which fell short of the consensus of RMB74mn. Looking ahead, the company is expected to focus on operating efficiency for its Baozun E-commerce (BEC) segment and continue driving revenue growth and loss reduction for its Baozun Brand Management (BBM) segment.

Key Financial Performance

4Q24 Highlights:

• Total Revenue: RMB3.0bn (+3.3% vs. consensus)
• Non-GAAP Net Profit: RMB46mn (+23.4% YoY), but below consensus
• BEC Revenue: RMB2.5bn (+6.0% YoY), driven by digital marketing and IT solutions
• BBM Revenue: RMB535mn (+16.9% YoY), fueled by Gap brand sales and new store openings
• Services Revenue: RMB1.9bn (+9.3% YoY), with growth in online store operations (16%) and digital marketing/IT solutions (15%)
• Group-Level Non-GAAP Operating Income: RMB103.3mn (+36.4% YoY), due to improved BEC profitability and reduced BBM losses

Revenue Growth by Segment:

• Product Sales: RMB1.1bn (+5.0% YoY)
• Services: RMB1.9bn (+9.3% YoY)

2025 Outlook

• BEC: Expected to focus on operating efficiency, with non-GAAP operating profit (OP) projected to grow 22% YoY to RMB137mn, and non-GAAP OPM improving to 2.7% (from 2.2% in 2024)
• BBM: Anticipated to achieve non-GAAP OP breakeven in 4Q25, with a projected loss of RMB100mn in 2025E (vs. RMB169mn in 2024)
• Total Revenue Growth for 2025E: 0% for BEC and 15% for BBM

Valuation and Target Price

• Target Price: US$3.53 (up from US$3.10)
• Valuation Methodology (SOTP):
  1. BEC: RMB1.1bn, based on 5.0x EV/EBIT (up from 3.0x EV/EBIT)
  2. BBM: RMB170mn, based on 0.1x EV/sales
  3. Net Cash: RMB2.6bn
  4. Holding Discount: 60% applied to group-level valuation
• Equity Value: US$213mn
• Target Price: US$3.53 per ADS

Share Performance

• 1-Month Return: -19.6%
• 3-Month Return: -4.2%
• 6-Month Return: +11.9%
• 12-Month Return: -17.7% (vs. market)

Financial Metrics

Shareholding and Market Data

• Market Cap: US$179.7mn
• Avg 3-Month Trading Volume (US$ mn): 1.4
• 52-Week High/Low (US$): 4.22/2.20
• Total Issued Shares (mn): 59.9
• Major Shareholders:
  • Schroders: 5.6%
  • TIAA: 4.5%

Analyst Ratings and Recommendations

• Analyst Recommendation: Maintain BUY
• CMBIG Ratings:
  • BUY: Potential return of over 15% over next 12 months
  • HOLD: Potential return of +15% to -10% over next 12 months
  • SELL: Potential loss of over 10% over next 12 months
  • NOT RATED: Not rated by CMBIGM
  • OUTPERFORM: Industry expected to outperform the market
  • MARKET-PERFORM: Industry expected to perform in-line with the market
  • UNDERPERFORM: Industry expected to underperform the market

Disclaimer and Risk Information

• The report is not tailored for individual investors and should not be used as investment advice.
• Past performance is not indicative of future results.
• The value of investments may fluctuate and is not guaranteed.
• CMBIGM is not a registered broker-dealer in the US and is not subject to US research regulations.
• The report may be subject to conflicts of interest and is intended for specific recipients only.

Conclusion

Baozun's 4Q24 results show positive revenue growth, particularly in the BBM segment, with management focusing on improving operating efficiency in 2025. The company's valuation has been adjusted upwards, and the target price has been raised to US$3.53. Despite the non-GAAP net profit falling short of consensus, the outlook remains positive, with expectations for improved profitability and shareholder returns.