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Could Baozun Be the Next Chinese Internet Winner?

Stock (Symbol)

Baozun (BZUN)

Stock Price

$19

Sector
Retail & Travel
Data is as of
May 9, 2017
Expected to Report
May 22
Company Description
Baozun Inc. is a brand e-commerce solutions company. The Company is engaged in providing end-to-end e-commerce solutions, including the sales of apparel, home and electronic products, online store design and setup, visual merchandising and marketing, online store operations, customer services, warehousing and order fulfillment. Its segments include the brand e-commerce segment, which provides brand-e-commerce solutions to its brand partners, including IT services, store operations, digital marketing, customer services, warehousing and fulfillment, and the Maikefeng segment that operates its retail online platform, Maikefeng. Source: Thomson Financial
Sharek’s Take
David SharekBaozun (BZUN) is China’s version of Shopify, making it easy to set up and market your own online store. The company makes e-commerce and digital marketing a breeze, and has warehouse & fulfilment centers an hour away from central Shanghai. Baozun was founded in 2007 and is backed by Alibaba.  Alibaba is also an owner and advertiser in Weibo. BZUN stock broke out two days ago at $19, and is following through today at $21. The company went public in 2015. Profits have grown from $0.09 in 2015 to $0.32 last year and estimates are for $0.72 this year, $1.14 in 2018 and $1.66 in 2019. The Estimated Long-Term Growth rate of 62% is outstanding and the P/E of 27 makes the stock cheap. BZUN has all the makings of the next Chinese Internet stock market winner, with the potential to go to $30 immediately and perhaps double within the next year. I will add the stock to the Growth Portfolio and Aggressive Growth Portfolio today.
One Year Chart
Wow, this stock was just $5 a year ago. This stock was below the radar, it certainly isn’t anymore as it has been all over Investors.com this week, which pointed out the breakout. During the past 4 qtrs BZUN has beaten the street by a penny or met estimates each time. Last qtr the company made $0.18 vs. $0.06 a year ago, and beat the street by a penny. Qtrly profit Estimates look excellent with 75%, 450%, 50% and 128% profit growth expected the next 4 qtrs. And with a P/E of 27 (note this is when the stock was $19 two days ago) the stock is cheap. The volume this week has been outstanding — I feel this stock is ready to run.
Fair Value
Even with a Fair Value of 40x earnings my Fair Value of $29 is still much higher than the current price. You could give this stock a Fair Value of 60x earnings, which would take the price much higher. Either way, with Chinese Internet stocks red hot right now, this stock has the ability to move appreciably higher.
Bottom Line
Baozun is in the right spot with its e-commerce platform. As traditional retailers struggle to survive, the future is very bright for this industry. In fact, Baozun is mirrors Amazon more than Alibaba, which is more like eBay. WIth excellent profit growth, a low valuation, outstanding estimates, and a strong high volume breakout, this stock has the ability to be one of the top stocks for the next month or even year. I will purchase BZUN for the Growth Portfolio and Aggressive Growth Portfolio, where it will rank 5th in the Power RankingsHome Depot will be sold from the Aggressive Growth Portfolio to create cash for this purchase.
Power Rankings
Growth Stock Portfolio

5 of 29

Aggressive Growth Portfolio

5 of 15

Conservative Stock Portfolio

N/A

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