China Stock Investment Advisory
China Ecommerce Growth Stock
July 01 2019 - IBD Stock Of The Day: Baozun Fueling China's E-Commerce Growth By Investors Business Daily
Baozun (BZUN), an expert in helping exporters thrive in the Chinese e-commerce market, is the IBD Stock Of The Day. Baozun stock is nearing a buy point.
The Shanghai-based company provides e-commerce services that help companies sell goods online. It offers end-to-end services such as information technology, digital marketing, customer services, warehousing and fulfillment.
Baozun serves many Western brands seeking help in competing in China's vast e-commerce market, the world's largest.
Founded in 2007, Baozun held its initial public offering in 2015, pricing shares at 10. Alibaba (BABA), China's largest e-commerce company, is a partner in Baozun.
IBD Stock Analysis
Shares cleared cup base June 20, but then dipped; now in cup-with-handle pattern Earlier buy point was 49.20, but in cup-with-handle, strike price now is 52.14
Stock now on IBD Leaderboard list of top-perfoming stocks near buy point.
Baozun Stock Action
Baozun stock was up 0.5%, near 49.80, during afternoon trading on the stock market today, and is treading toward its buy point. Shares are up about 69% this year.
On June 20, Baozun cleared a cup-shaped base with a 49.20 buy point, but the stock quickly fell 7% below the entry. That created a sell signal but makes the current entry point of 52.14 more palatable as a cup-with-handle base. Handles usually form below the peak of the base, but this slightly higher handle is still proper.
Baozun started forming a late-stage base, then peaked in June 2018. But the stock went into a deep decline, correcting nearly 60%. The huge drop served to reset the base count. The stock has carved a much smaller cup-with-handle within the larger pattern.
China stocks have risen and fallen in response to the trade brawl between the U.S. and China. The tit-for-tat sanctions and threats between the two countries are hostile to investor confidence. China stocks are doing better again as hopes for settlement grows. President Donald Trump is meeting with Chinese President Xi Jinping Saturday morning.
Baozun is on the IBD Leaderboard watch list of top stocks near a buy point. It's also an IBD 50 stock.
Consistent Double-Digit Growth Baozun reported first-quarter results on May 29 that beat Wall Street estimates. Revenue of $191.7 million jumped 40% in local currency from the year ago period, driven by healthy growth from both product sales and services.
The company has posted double-digit revenue growth going back more than four years, also showing a profit the entire time. Adjusted earnings in the fourth quarter jumped 44% from the year-ago period, to 13 cents a share.
Gross merchandise volume processed by Baozun soared 58% to $1.1 billion.
The number of brand partners using its platform reached 200, up from 156 a year ago. The new additions were primarily in consumer goods, apparel, food and health and cosmetics categories. The company also added cloud computing operations to its business.
Early this year Baozun restructured into three groups. One focuses on e-commerce, another on logistics and supply chain, and the third on technology innovation.
"I strongly believe this reorganization will enhance our creativity, improve efficiency and bring more value to our brand partners and shareholders," said Chief Executive Vincent Qiu, in the earnings conference call with analysts.
Focusing On High-Quality Growth Qiu said a goal this year "is to focus on high-quality growth as we begin to benefit from the additional capacity and expanded addressable market."
The IBD Stock Checkup Tool shows that Baozun has an IBD Composite Rating of 99 out of a best-possible 99, meaning the stock ranks high in terms of key performance metrics and technical strength. It has a Relative Strength Rating of 91, which also reflects strong stock market performance.
It has a stellar 97 EPS Rating, which compares quarterly and annual earnings-per-share growth to all other stocks.
The company currently holds the No. 1 ranking among its peers in IBD's Computer Software-Enterprise industry group. ServiceNow (NOW) is second, followed by Paycom Software (PAYC).
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