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Global TMT analyst with Asia ex-Japan focus.

Mitchell Kim

Equity Bottom-Up

<p>The stock has had a phenomenal run from the 12-month low of USD6.26, nearly providing a 200% return at the recent peak of USD18.80 on 16 April 2020.  Given such a salivating return, I hear investors asking whether the stock is returning to its glory days of $28-30 level or whether this is a head fake.  As I highlighted in my previous <a href="https://www.smartkarma.com/entities/vipshop-holdings-ltd-adr" target="_blank" data-smartkarma-citation="entities:1088:1" rel="noopener">Vipshop Holdings (VIPS US)</a>  report, <a href="https://www.smartkarma.com/insights/vipshop-turned-the-corner-but-caveat-emptor" target="_blank" data-smartkarma-citation="insights:38906" rel="noopener">Vipshop: Turned the Corner, but Caveat Emptor</a>, the company has capitalized on the power of the WeChat mini-program and made some sound strategic decisions.  But is it sustainable?  </p><p>I was looking for some directions in the 1Q20 results, but the jury is still out as key metrics did not provide strong indications. I give due credit to the management for the positive changes, but I am cautious for the three reasons elaborated in the detailed section:</p><ol>
<li>Customer growth</li>
<li>Margins</li>
<li>Chinese consumption downturn risk</li>
</ol>

The stock has had a phenomenal run from the 12-month low of USD6.26, nearly providing a 200% return at the recent peak of USD18.80 on 16 April 2020.  Given such a salivating return, I hear investors asking whether the stock is returning to its glory days of $28-30 level or whether this is a head fake.  As I highlighted in my previous Vipshop Holdings (VIPS US)  report, Vipshop: Turned the Corner, but Caveat Emptor, the company has capitalized on the power of the WeChat mini-program and made some sound strategic decisions.  But is it sustainable?  I was looking for some directions in the 1Q20 results, but the jury is still out as key metrics did not provide strong indications. I give due credit to the management for the positive changes, but I am cautious for the three reasons elaborated in the detailed section:
Customer growth
Margins
Chinese consumption downturn risk


Vipshop Holdings

Vipshop (VIPS US): Priced for Perfection