Stock (Symbol) |
Baozun (BZUN) |
Stock Price |
$27 |
Sector |
| Retail & Travel |
Data is as of |
| August 29, 2017 |
Expected to Report |
| Nov 14 |
Company Description |
 Baozun Inc. is a brand e-commerce solutions company 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 |
 Baozun (BZUN) stock got dumped by investors after it reported earnings last qtr. Baozun is China’s version of Shopify, making it easy for brands to set up and market an online store in China. The company is the leading brand e-commerce solution in China, with around 20-25% of the country’s market share. Brands partner with Baozun to develop websites, integrate with online sellers like JD.com, and provide digital marketing. Then Baozon handles logistics, customer service, and has warehouses and fulfillment centers an hour away from Shanghai. Brands that work with BZUN include Nike, Toyota, Microsoft, and Johnson & Johnson. Last qtr the number of brand partners increased from 98 to 125 year-over-year, with gross merchandise sales up 61%. Baozun was founded in 2007 and is backed by Alibaba. Annual profits continue to surge and estimates (e) look outstanding:
2015 $0.09 BZUN was a hot stock recently — going from $15 to $35 in just three months — then broke down after it reported earnings then didn’t raise estimates as much as people wanted. Now around $27 the stock has a P/E of 37, with an Estimated Long-Term Growth Rate of 69% per year. So the price is good. Profit estimates increased a bit this qtr, so fundamentally the stock is fine. But technically it’s not. |
One Year Chart |
 First, let’s look at estimates. If they fell, that’s bad. If they rose it’s OK. This qtr 2017 estimates increased slightly from $0.69 to $0.71. 2018’s rose from $1.17 to $1.23. Good. Qtrly profit Estimates are 25%, 122% and 29% and 64%. That’s solid. But BUZN has beaten the street by a penny the last 3 qtrs and met the other qtr, so what we see is probably close to what we’re gonna get. What’s alarming about this stock isn’t shown here: when BZUN dropped a few weeks back, the volume was almost 4x the previous weekly high. This stands out on the chart and is a huge warning sign. |
Fair Value |
 Fair Value P/E will stay at 37 this qtr, which means the stock is really where it should be. Upside to 2018 is excellent though. |
Bottom Line |
 Baozun has cracked under selling pressure, but is still looking good on the long-term view. The company is in the right spot with its e-commerce platform, and China’s regulations regarding the Internet make it so brands need assistance selling goods online in that country. I felt with the selloff that profit estimates would take a hit, but they didn’t. Still, the high volume is a clear sign institutions dumped the stock, and we should sell some too. BZUN drops in the Growth Portfolio Power Rankings from 11th to 24th. I will sell the stock in the Aggressive Growth Portfolio as I feel it will take a while for the stock to recover. |
Power Rankings |
Growth Stock Portfolio
24 of 33Aggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
