Stock (Symbol) |
Baozun (BZUN) |
Stock Price |
$38 |
Sector |
| Retail & Travel |
Data is as of |
| January 30, 2018 |
Expected to Report |
| Feb 19 |
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), China’s version of Shopify, had a 71% increase in the gross market value of (GMV) merchandise it sold last qtr. That’s huge for this Shopify-type of operation. Additionally, the company raised 2017 GMV guidance from 50% to 60% and now 70% the last two qtrs. Baozun makes it easy for brands to enter, set-up, and market an online store in China. The company is the leading brand e-commerce solution in that country, 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. 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 — and is now in a long base. Even after such a huge run, the stock has a P/E of only 33. The Est. LTG of 69% a year is outstanding, and profits are expected to climb an average of 76% the next 4 qtrs (but this is with currency translation to USD, would be around 40-50% in CYN). Baozun is trying to go from a distribution model to a nondistribution model. That’s a reason profits rose 13% last qtr. But honestly, stocks with this rapid growth often have P/Es of 60 or more. Something is holding this stock back, perhaps something I don’t know. Or maybe BZUN is just setting up for another run higher? I don’t know. |
One Year Chart |
 BZN reports earnings in Chinese Yuan. When I do my calculations, I convert CNY to USD. As F/X adjusts, I don’t go back to change last year’s figures — it’s in the books. I move on. But now with currency fluctuation BZUN has Estimates of 72%, 71%, 73% and 89% profit growth the next 4 qtrs. When i do hand calculations I get around 40-50% profit growth (CNY to CNY). So my way of doing things may be inflating profit growth numbers. Either way the numbers look great. There were two negatives last qtr. BZUN missed the 10 cent estimate by 1 cent, and annual profit estimates declined from $1.23 to $1.17. Beating the street and increases in profit Estimates are the two biggest traits superstar stocks possess. |
Fair Value |
 Fair Value P/E will stay at 37 this qtr, which would be a breakout on the chart — and likely make me more bullish on the stock. So if that happens I’ll likely bump the Fair Value to 45x earnings. |
Bottom Line |
 There’s a lot to digest with Chinese Internet stocks. Some work out and some don’t. Some I’ve owned and they were great, then the wheels fell off the wagon. Baozun looks great on the ten-year chart, and profits are growing rapidly, but something seems to be holding the stock back. What it needs is institutional buying in a big way. That would be a high volume breakout over $45 a share. If it gets that the stock could resume its uptrend. BZUN ranks 29th in the Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
29 of 39Aggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
