【Company Research】Baozun Inc. (9991 HK) – TAM expansion with new channels and M&A

As a brand e-commerce service leader in China, we expect Baozun to surf the growing retail digitalization tailwinds while benefiting from COVID-19. We forecast its revenue/ adj. net profit will grow at 28%/ 28% in FY20-23E, backed by a solid partner pipeline, new channels expansion (e.g. mini program), growing brand coverage and cost optimization. Initiate with BUY with DCF-based TP of HK$130.

  

  1. One-stop shop for e-commerce solutions. Baozun is China’s Top1 brand e-commerce service provider in 2019, according to iResearch, and we expect it to strengthen leadership with all-category, full-service, omni-channel solution capabilities. We forecast Baozun to deliver 29%/28%/28% GMV/ rev/earnings CAGR during FY20-23E, thanks to new channels expansion, growing brands and M&A synergies.

 

  1. Prioritizing new channels expansion in medium-term plan. Mgmt guided its new 3-5 year target at RMB150bn GMV (+22%-39% CAGR) and non-GAAP operating profit of RMB2bn. Baozun will prioritize on its new strategic plan with: 1) “customer-first” to drive growth; 2) new business expansion; and 3) cost structure optimization. We see high visibility for Baozun to explore new channels (e.g. Wechat, Douyin, JD, etc.) to unlock its TAM. We are bullish on private domain opportunities, and expect ICLK investment to: 1) create synergy with Baozun’s SaaS+ solutions in WeChat ecosystem, 2) cross-selling effect; and 3) strengthening digital marketing. We expect its topline to accelerate in FY21E, and surge at 28% CAGR in FY20-23E.

 

  1. Growing brands with category optimization. We expect Baozun to continue high-quality brand expansion with category optimization. Currently, we estimate its apparels/electronics/FMCG to account for 55%/20%/10% of total GMV in 2020. Going forward, we see growing opportunities in luxury brands, beauties and health care products, backed by 1) Baozun’s acquisition of Full Jet, and 2) the accelerated digitalization of FMCG post-COVID. Short-term margin dilution from reinvestment would be manageable, and we expect long-term margin improvement from operating leverage and cost optimization.

 

  1. Initiate with BUY. We set our DCF-based TP at HK$130 (implying 37x/ 28x FY21/22E P/E), in line with industry average. Key market concerns lie in short-term margin dilution from heightened competition and reinvestment but have been well priced in, in our view. Further catalysts: 1) WeChat traffic to unlock; 2) premium brands penetration; and 3) M&A synergies.
点击阅读原文

公司地址:香港中环花园道三号冠君大厦45-46楼

电话:(852)3900-0888 传真:(852)3761-8788

招银国际版权所有 Copyright © 2019-2024 CMB International Capital Corporation Limited. All rights reserved.