VIPS has recently become my favourite Chinese ADR. You can think of them as $AMZN or $ETSY of China. They have a very strong brand and healthy business model, growing in double digits every year.
After massive sell-off of Chinese stocks, especially ADRs quoted in the US, this may be an opportunity of a year. Let us look closer into the business.
Vipshop Holdings Limited is a holding company. The Company is an online discount retailer for brands in China. The Company offers branded products to consumers in China through flash sales mainly on its vip.com Website. The Company's segment is sales, product distribution and offering of goods on its online platforms. The Company conducts its business through its subsidiaries and consolidated affiliated entities in China. Ç
Through its flash sales model, the Company sells limited quantities of discounted branded products online for limited periods of time. The Company offers diversified product offerings from over 17,000 domestic and international brands, including apparel for women, men and children, fashion goods, cosmetics, home goods and other lifestyle products. The Company offers a range of products and services for consumers through lefeng.com, specializing in branded cosmetics, apparel, healthcare products, food and other consumer products. (Source: Refinitiv)
🔹️ Market Cap of 76.03B CNY
🔹️ Revenue of 111.46B growing to 161.63B in FY3
🔹️ PE of 10, PEG of 0.53, Price to Sales at 0.61 (!!)
🔹️ Debt to Capital at 0.39% (!!!)
🔹️ Cash of 14.4B
🔹️ EBIT and Net Margin of above 6%
🔹️ Short interest at 3%
The company is HQed in Guangzhou and employs over 7500 people.
The biggest Institutional Investors are Credit Suisse at 2.94%, Vanguard at 2.56% and Blackrock at 2.22%.
Its EV to EBITDA is 6.58, compared to $BIDU at 11.83 and $BABA at 17.18.
It is undervalued on practically every metric in existence, while having no debt and great growth prospects.
𝟵𝟯% 𝙐𝙥𝙨𝙞𝙙𝙚 𝙋𝙤𝙩𝙚𝙣𝙞𝙖𝙡
The stock has 8 Strong Buy ratings, 13 Buy Ratings and 6 Hold. Average PT is 32.91 and we are currently trading at almost half this, creating a 93% Upside.
Given the recent China clampdown on ADRs and big tech, we have seen a big slump in almost all Chinese businesses. VIPS has entered my radar and I love the simplicity of its business model, the profitability ratios and no debt whatsoever.
YTD performance is -39.31%, so if we just get back to that, we will make almost 40%. ROI is currently above 50% and at 83.85% in FY3 which is the highest I have seen in a while.
VIPS is the leading Online Discount Retailer in China with great growth prospects, no debt and established position in the market. China's Online Retail market grew from RMB 1.9T to 10.8T between 2013 and 2020. That is 10X growth and the industry continues its momentum.
The fragmented market in China creates even more opportunities for VIPS to consolidate its leadership position. More information can be found in the recent (May 2021) Investors Presentation under the following link: https://ir.vip.com/static-files/7bfc3573-5e54-4ca8-b5ba-bf779a2f1941
Let me know your thoughts!
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