On Wednesday, Citi maintained its Buy rating and $21.00 price target for Vipshop Holdings (NYSE:VIPS), following the company's release of its fourth-quarter results for 2023.
The online discount retailer for brands reported quarterly revenue that exceeded expectations, with total net revenue reaching 34.7 billion yuan, a 9.2% increase year-over-year. This performance surpassed the projected guidance range of 31.8 to 33.3 billion yuan and was higher than both Citi's and the consensus estimates of 33.0 billion yuan and 33.2 billion yuan, respectively.
Vipshop also saw growth in its customer base and order volume during the quarter. Active customers increased by 2.3% year-over-year to 48.5 million, and the total number of orders grew by 7.2% to 234.3 million. Additionally, the company's Gross Merchandise Volume (GMV) saw a significant rise of 21.9% year-over-year, reaching 66.4 billion yuan.
The company's non-GAAP net income showed a remarkable year-over-year increase of 43.4%, amounting to 3.20 billion yuan. This figure exceeded Citi's and consensus projections by 18% and 15%, respectively, with estimates at 2.72 billion yuan and 2.77 billion yuan.
The higher-than-expected net income was attributed to the revenue outperformance, improved gross profit margin (GpM), and lower-than-anticipated sales and marketing (S&M) and general and administrative (G&A) expenses, which were partially offset by increased fulfillment costs and research and development (R&D) expenses that aligned with forecasts.
Looking ahead to the first quarter of 2024, Vipshop has guided for revenues of 27.5 to 28.9 billion yuan, representing a flat to 5% year-over-year growth, or a sequential decrease of 21% to 17%. This guidance is slightly below the mid-point of Citi's and the consensus estimates of 28.8 billion yuan and 28.5 billion yuan, respectively.
Citi suggests that the company's guidance may be conservative, considering the uncertainties around return rates and demand trends going into March.
InvestingPro Insights
In the wake of Vipshop Holdings' (NYSE:VIPS) positive fourth-quarter results, Citi has reaffirmed its Buy rating with a $21.00 price target. To further understand the company's financial health and stock potential, let's delve into some key metrics and InvestingPro Tips.
InvestingPro Data indicates a robust market capitalization of $9.4 billion, a testament to the company's significant presence in the market. The P/E ratio stands at a competitive 9.34, reflecting investor confidence in Vipshop's earnings potential. Additionally, the company's revenue growth for the last twelve months as of Q3 2023 was a solid 4.18%, showcasing steady top-line expansion.
Two InvestingPro Tips shed light on Vipshop's financial prudence and market valuation. Firstly, the company holds more cash than debt on its balance sheet, indicating a strong liquidity position that can offer resilience against market volatility. Secondly, Vipshop is trading at a low P/E ratio relative to near-term earnings growth, suggesting that the stock might be undervalued compared to its growth prospects.
For readers interested in a more comprehensive analysis, InvestingPro offers additional tips that could be crucial for investment decisions. In total, there are 9 more InvestingPro Tips available, including insights on earnings revisions by analysts and the company's performance within the Broadline Retail industry.
To access these insights and further refine your investment strategy, consider using the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. The insights gleaned from these tips could be the key to unlocking the potential of Vipshop Holdings as a part of your investment portfolio.
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