In a report released yesterday, Saiyi He from CMB International Securities maintained a Buy rating on Baozun (BZUN – Research Report), with a price target of $3.53.
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Saiyi He has given his Buy rating due to a combination of factors that highlight Baozun’s potential for growth and improved profitability. The company’s recent financial results showed a total revenue of RMB3.0 billion, which exceeded Bloomberg’s consensus expectations. Although the non-GAAP net profit was below consensus, it still marked an improvement from the previous year. The growth in Baozun’s E-commerce and Brand Management segments, driven by increased demand for digital marketing and IT solutions, as well as strategic efforts in optimizing merchandising plans, particularly for the Gap brand, were significant contributors to this positive outlook.
Saiyi He anticipates further improvements in 2025, with a focus on enhancing operating efficiency for Baozun E-commerce and achieving revenue growth and loss reduction for Baozun Brand Management. The expectation is for Baozun Brand Management to reach a breakeven point by the end of 2025. The valuation of Baozun has been adjusted to reflect these positive prospects, with a new target price set at US$3.53. This valuation is based on a sum-of-the-parts analysis, considering the company’s earnings growth potential and net cash position, which is expected to enhance shareholder returns.