$VIPS: Undervalued & Oversold

u/Trading-Resources
Apr 16, 2021
3 min read

Updated: Apr 24, 2021

Vipshop Holdings Ltd ($VIPS) was caught up in the massive Archegos margin call resulting in the forced unwinding of stocks for a $2 billion loss for the over-leveraged hedge fund. The particulars of the margin call aren’t important, although its unclear if more selling is imminent. However the resulting value left behind in the Archegos wake presents a buying opportunity. And among my favorites is VIPS. I’ve been following VIPS since it was trading below $10.00 per share. Currently trading with a trailing P/E of 21.81 and a forward P/E of 16.31, analysts are expecting some serious growth in the next 12 months. The company has $795m in debt and are sitting on $2.96b in cash. VIPS is still likely in oversold territory. The stock stood up fairly well amid all of the recent sell offs as a result of rising bond yields, but the price couldn’t stand up to the forced liquidation of billions in Archegos stock amid a margin call. From March 23rd to March 26th VIPS dumped from over $45 per share to $26 per share. In short, the fundamentals of VIPS today remain the same as before March 23rd, with no news, no bad PR, and no change in their finances to justify such a harsh drop. As a result there is plenty of money to be made here at her new discounted price. Particularly if company finances continue to perform as indicated below! Additionally VIPS recently announced a $500,000,000 share buyback (Which I believe is their way of saying “hey, we’re fine.”) which should narrow the float quite a bit, by roughly 3-4%, resulting in even more value per share. This is a strong buy if there ever was one.

Remember as a Chinese based company VIPS isn’t beholden to the same reporting requirements as US based companies. Although I’ll be the first to admit they have perhaps one of the best investor relations webpages I’ve seen! And when dealing in international investments, particularly those in China, there are a whole other set of risks you’ll need to pay attention to. Communist Party regulatory issues, international trade disputes, currency devaluation, human rights issues, tension in the South China Sea, possibilities for sanctions, and other geopolitical issues (among the unforeseen), all add an extra layer of risk to investing in Chinese companies.

04/01/2021

Statistics

Current Value: $29.86
Market Cap: $20.265B
Trailing P/E: 21.81
Forward P/E: 16.31
Price to Sales (TTM): 1.26
EPS: 1.323
PB (MRQ): 0.60
Book Value Per Share (MRQ): $6.39
Revenue Per Share (TTM): $23.14
Gross Profit (TTM): $21.29b
Cash Per Share (MRQ): $4.37
Operating Cash Flow (TTM): 1.82B
Operating Cash Flow YoY Growth: 109.4%
Total Cash (MRQ) 2.96B
Debt to Asset Ratio 50.14%
Quarterly Revenue Growth YoY: 22%
Quarterly Revenue Growth YoY: 67.7%
EBITDA: 1.03B
Float: 428.09M
Institutional Ownership: 61.44%
Insider Ownership: 7.94%
Analyst Ratings: 24% Hold / 52% Buy / 24% Strong Buy out of25 analysts (Webull)
Price targets Low Med High: $19.18/$40.68/$51.94Projected Earnings Date: 5/26/2021 Pre Market (Usually Overnight for Chinese Companies)

Previous Earnings:

-Feb. 25, 2021 5:11 AM ET Vipshop (NYSE:VIPS): Q4 Non-GAAP EPS of $0.57 beats by $0.09; GAAP EPS of $0.54 beats by $0.09. Revenue of $5.48B (+30.2% Y/Y) beats by $90M.
-Nov. 13, 2020 5:09 AM ET Vipshop (NYSE:VIPS): Q3 Non-GAAP EPS of $0.30 beats by $0.04; GAAP EPS of $0.27 beats by $0.07. Revenue of $3.4B (+24.1% Y/Y) beats by $150M. Q3 GMV increased 21% Y/Y to RMB38.3B. The number of active customers increased 36% Y/Y to 43.4M; Total orders increased 35% to 172.8M.
-Aug. 19, 2020 6:05 AM ET Vipshop (NYSE:VIPS): Q2 Non-GAAP EPADS of $0.27 misses by $0.01; GAAP EPADS of $0.32 beats by $0.09. Revenue of $3.41B (+3.3% Y/Y) in-line. Gross profit for the quarter was RMB4.9B (about $699.2M), as compared with RMB5.1B in the prior-year period.
-May 27, 2020 6:05 AM ET Vipshop (NYSE:VIPS): Q1 Non-GAAP EPADS of $0.20 beats by $0.09; GAAP EPADS of $0.14 beats by $0.07. Revenue of $2.65B (-11.7% Y/Y) beats by $130M.