Consumer Discretionary
The recent slowdown in Chinese retail sales of apparel seems to have been factored into the company’s 1Q24 revenue growth expectations whilst bottom-line growth is supported by margin expansion. With net cash at ~40% of its market cap, the share price should be supported by the ongoing share repurchase programme and its inaugural annual dividend policy. Its 6.6x NTM PE ratio (~4x ex-cash) seems extremely attractive for a highly cash-generative business set to (conservatively) grow earnings at high-single-digits while buying back shares and paying dividends.
Edition: 186
- 17 May, 2024
China eCommerce primary research report
Consumer Discretionary
Based on a variety of data and feedback from 27 eCommerce professionals, Westlake observed 1Q apparel sales recovered the strongest among online discretionary categories, cosmetics rebounded modestly but appliances sales softened slightly. Mar & Apr saw a marked acceleration in online discretionary category sales growth (except for skincare), likely due to further consumption recovery and a low base last Mar & Apr. Alibaba, JD.com, Pinduoduo, Vipshop and Kuaishou eComm can likely at least meet 1Q China-related eComm sales or marketing revenue expectation. JD Retail had relatively weaker 1Q given the restructuring and soft appliance & general merchandise sales.
Edition: 160
- 12 May, 2023
China eCommerce primary research report
Consumer Discretionary
Westlake observed online discretionary spending (except for cosmetics) recovered gradually in Jul & Aug, but softened slightly in Sept & Oct given rising community lockdowns. They expect Alibaba, JD, Pinduoduo, Vipshop and Kuaishou will meet 3Q Street expectations. Given modest improvements in business and consumer confidence, they anticipate further 4Q sales recovery for leading Chinese eComm players driven by 11.11 promotions and likely continued government consumption coupons. If Covid restrictions gradually ease after the 20th party congress, a broad-based recovery will help boost consumer spending.
Edition: 146
- 14 October, 2022
Consumer Discretionary
The stock has meaningfully outperformed local peers, the Hang Seng index, and broader Emerging Markets index in the last 6 months, when Wium Malan argued that VIPS’ valuation multiples had de-rated to levels where it was an attractive takeover target. Trades on a paltry 3.8x forward PE ratio (ex-cash) and looking purely from an infrastructure perspective, trades at a c.50% discount to JD.com on a per square metre basis. Given the recent rebound in Chinese retail / apparel sales growth and the pessimistic expectations from the sell-side, Wium expects the current earnings upgrade cycle to continue.
Edition: 146
- 14 October, 2022
Consumer Discretionary
Cheapest it has ever been - following an exceptionally volatile 12-months VIPS has derated from a peak forward PE ratio of 25.3x to only 6.9x. Wium Malan takes a closer look at the meaningful market events which have driven the sell-off as well as the short- and longer-term earnings outlook for the company. Trading on an estimated 5.3x ex-cash forward PE ratio, Wium believes we are nearing the point of peak pessimism.
Edition: 123
- 12 November, 2021