Vipshop Holdings Limited (NYSE: VIPS), a leading China-based online discount retailer for branded products in the country, is expected to report its earnings for the fiscal quarter ending December 2020 this Thursday 25th February before market open.
Driven by a surge in the number of active customers by 36% (y/y), or 11.4 million to a total of 43.4 million, and the company’s success in customer retention with the implementation of effective merchandising and branding strategies as well as a solid supply chain network, VIPS reported satisfying financial results during the third quarter of 2020. For instance, total net revenue has recorded gains of 18.2% (y/y) to $3.4B, mostly attributed to the 172.8 million total orders that were placed by customers, up 35% from a year ago.
Figure 1: Reported EPS versus Analyst Forecast, by quarterly and annually. Source: https://money.cnn.com/quote/forecast/forecast.html?symb=VIPS.
For the upcoming announcement, earnings per share (EPS) is expected to hit $3.13, up 55.74% from the previous quarter. The target for yearly EPS growth is set to record an over 15% increase from the previous year to $8.54.
Figure 2: Reported Sales versus Analyst Forecast, by quarterly and annually. Source: https://money.cnn.com/quote/forecast/forecast.html?symb=VIPS.
On the other hand, consensus forecast for reported sales in Q4 2020 is $35.0B, up by over 50% from the previous quarter. It is also expected that annual reported sales will hit $100.7B, up 8.27% from a year ago.
Consensus median price estimates given by 23 analysts stand at $28.65, down 21.49% from the latest close price at $36.49. From the statistics given, forward P/E of VIPS stands at 21.48. This reading is much lower in comparison to its sector (consumer cyclical) and industry (internet retail), which stand at 28.01 and 39.85 respectively, indicating pessimistic market sentiment for the company’s growth within the period, thus explaining the downward revision of its share price. Even so, the company is still being rated “Buy” among polled investment analysts, considering the company’s robust fundamentals which have evidently supported the growth of its revenue and earnings by over 200% in the past 5 years.
The Weekly chart shows that the #Vipshop share price has initiated a second round of bullish thrust following its rebound from a session low at $14.85 in early October last year. To date, gains from the second wave have exceeded 140%, with the share price well supported above $35.00. Indicators are bullishly aligned, with MACD lines extending towards north, while RSI and Stochastics are seen hovering around the overbought zone.
On the other hand, the Daily chart shows the #Vipshop share price testing the important resistance zone $35.00 – $37.20. If the breakout attempt is successful, the next resistance levels to watch are $43.35 (D1 FE 100.0) and $47.45 (W1 FE 161.8). Otherwise, if price retraces below the zone, support levels to focus on are $30.87 (Jan 2021 High), $27.30 (W1 FE 61.8) and $24.00.
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Larince Zhang
Market Analyst
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