2Q22 revenue beats; non-GAAP net profit exceeds market consensus
　　Vipshop announced its 2Q22 results: Revenue dropped 17% YoY to Rmb24.5bn, 7% higher than market consensus, thanks to higher-than-expected sales during the 618 Shopping Festival in mid-June. Non-GAAP net profit rose 8% YoY to Rmb1.6bn in 2Q22. Its non-GAAP net profit was 39% higher than market consensus thanks to the firm's higher-than-expected gross profit margin （GPM） and effective control of marketing expense. The non-GAAP net profit implies non-GAAP net margin of 6.5%. The company expects revenue to ｄｒｏｐ 15-10% YoY to Rmb21.2-22.4bn in 3Q22, lower than our previous forecast.
　　Trends to watch
　　Consumer demand recovering as impact of COVID-19 eases; the firm to recover steadily in 3Q22. The company's revenue dropped 17% YoY in 2Q22 to Rmb24.5bn as COVID-19 resurgence weighed on parcel delivery in early 2Q22. That said, its revenue slightly beat market consensus as COVID-19 resurgence was brought under control and consumer demand recovered in late 2Q22. Data from National Bureau of Statistics shows that retail sales of physical products at online stores continued to increase （up 6.3% YoY in July）。 We believe the firm will recover slowly in 3Q22, as: 1） uncertainties in the macroeconomic environment may continue to weigh on consumer discretionary products; and 2） the launch of new products in the upcoming autumn may face headwinds from weather and COVID-19. We estimate that the firm's revenue will ｄｒｏｐ 10% YoY in 3Q22 to Rmb22.4bn.
　　Efforts to reduce costs and expenses pay off; non-GAAP profit notably beats expectation. Vipshop's GPM reached 20.5% in 2Q22 （vs. 20.1% in 2Q21） thanks to the firm's efforts to fine-tune its product mix and increase the proportion of high-GPM products. The company reduced marketing expenses, citing the weak macroeconomic environment in 2Q22. Marketing expenses as a percentage of revenue dropped to 2.3% in 2Q22. As a result, its non-GAAP net margin reached 6.5%. We estimate that in 3Q22, its non-GAAP net profit will increase 14% YoY to Rmb1.17bn and non-GAAP net margin will come in at 5.2% as we think its marketing expenses will gradually recover and the firm will maintain its disciplined marketing policy after restarting its customer acquisition initiatives in 3Q22.
　　Adding brands and distribution channels; utilizing high-quality products to retain high-value customers. In 2Q22, Vipshop continued to add high-end brands to its brand portfolio and utilize new distribution channels to sell products under these brands. The company also increased product categories to improve user experience and maintain customer stickiness. In 2Q22, the number of users in its super VIP （SVIP） system increased 21% YoY despite the impact of a relatively weak macroeconomic environment. Revenue from such users as a percentage of total revenue reached 38% in 2Q22. We suggest paying attention to the boost from the SVIP system to the firm's revenue growth.
　　Financials and valuation
　　We maintain our 2022 and 2023 revenue forecasts, but raise our non-GAAP net profit forecasts by 6% to Rmb6.13bn for 2022 and 12% to Rmb6.9bn for 2023 to reflect the firm's efforts to improve its GPM and reduce expense ratios. The stock is trading at 7x 2022e and 6x 2023e P/E. We maintain an OUTPERFORM rating, and raise our target price by 11.3% to US$12.8. Our TP implies 9x 2022e and 8x 2023e P/E, offering 28% upside.
　　Risks
　　Uncertainty in COVID-19 conditions or macroeconomy; intensifying competition; slower user growth.
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【免责声明】本文仅代表第三方观点，不代表本站立场。投资者据此操作，风险请自担。