Why Baozun Inc (ADR) (NASDAQ:BZUN) Stock Is A Strong Buy!

- July 2, 2017

Baozun Inc (ADR) (NASDAQ:BZUN) is My Value Of The Month For July and I will lay out the reasons why in this article. BZUN is the leading, digital and e-commerce brand service partner in China with 22% market share as of end 2015.  Baozun helps brands and retailers build e-commerce success, similar to what Shopify Inc. (NYSE:SHOP) does.  Baozun ADR (BZUN) Stock floated on the NASDAQ on May, 21 2015 at US $10.00.
The company was founded by Wen Bin Qiu, Jun Hua Wu, and Qing Yu Zhang in August 2007 and is headquartered in Shanghai, China.

Baozun Inc (NASDAQ:BZUN) – The Shopify (NYSE:SHOP) of China is experiencing strong and profitable growth

Baozun (NASDAQ:BZUN) Stock is set to benefit from China’s e-commerce just as Shopify (NYSE:SHOP) stock as done. China brand e-commerce market forecast to grow by a CAGR of 43+% from 2015-2017!

Source iResearch

Baozun’s business

Baozun (NASDAQ:BZUN) provides end-to-end services, including website design, development and hosting, IT infrastructure, customer service, warehousing and logistics services, as well as digital marketing. By enabling a seamless shopping experience across various channels both online and offline, Baozun delivers omni-channel solutions to achieve optimal branding effect and sales results that are responsive to its brand partners’ individual e-commerce objectives.

Source

The Company helps its brand partners establish a market presence and launch products quickly on official brand stores and major online marketplaces in China, such as Tmall, JD.com (NASDAQ:JD) and Amazon (NASDAQ:AMZN), as well as social media platforms such as Weixin.  Baozun’s store operation capabilities, logistics network and warehousing capacities are crucial to its success. Baozun operates seven warehouses with an aggregate gross floor area of 180,000 square meters that can handle 1,100,000 daily orders and 600,000 daily pieces.

The company’s two operating segments are:

Brand E-Commerce – Provides e-commerce solutions to brand partners, including information technology services, store operations, digital marketing, customer services, warehousing, and fulfillment.

Maikefeng – The online retail platform.

Baozun “Bridge Brands to Consumers”

As of March 31, 2017, Baozun had 136 brand partners, mostly Western companies.

Source

Business Model

Baozun earns revenue from one of three options, as described in the chart below.

Source

Revenue growth

The graph below shows revenues grew at a CAGR of 46% from 2014-2016, slowing somewhat so far in 2017 to 20%.

Source

Profitability

Baozun has been profitable since 2016, and revenue and profits are forecast to rise rapidly. Net profit margin is also forecast to increase from just 2.56% in 2016 to 9.89% by 2019.

Baozun financials graph

 

Valuation

Baozun (NASDAQ:BZUN) has a market cap of US $1.17B (compared to Shopify (NYSE:SHOP) at US $8.3B), minimal debt, and a 1 year return of 237%. 2017 PE is 35.2, and 2018 PE is 20.6. Baozun current trades on a 2018 EV/revenue multiple of 1.32x (Shopify is 7.6x).  Shopify is more established, with more customers, but not yet showing profits.  You can read the recent article from BNL Finance on Shopify here.

Conclusion-Why Baozun Is My July Value Of The Month For Members Only

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