The rapid acceleration of online shopping has made the e-commerce industry one of the best performing sectors during the pandemic era. China is the world’s largest e-commerce market, accounting for more than half of the world’s e-commerce retail sales, totaling $2.1 trillion in 2021. Online shoppers have increased considerably and accounted for more than 812 million people in China last year. The fast-paced economic recovery, coupled with surging consumer confidence, have allowed Chinese e-commerce companies to achieve robust growth over the past two years.
China’s government have issued a plan that set targets to be achieved to increase the digital economy’s share of the nation’s gross domestic product (GDP) to 10% by 2025. According to a report by Morgan Stanley analysts, China’s consumer spending is expected to double to hit $12.7 trillion by 2030. As consumer spending continues to increase, e-commerce is bound to thrive.
Quality Chinese e-commerce stocks Vipshop Holdings Limited (VIPS), Yunji Inc. (YJ), and LightInTheBox Holding Co., Ltd. (LITB) have rallied in double-digits so far this year, reflecting bullish investor sentiment. And as domestic and international demand increases, these stocks are expected to rally further in the near term.
Vipshop Holdings Limited (VIPS)
VIPS is an online discount retailer for various brands. It is headquartered in Guangzhou, the People’s Republic of China. The company operates through three segments: Vip.com; Shan Shan Outlets; and Other. It offers women’s apparel, men’s apparel, skincare and cosmetic products, handbags, footwear and accessories, home furnishings, household appliances, and consumer electronic products. It provides its branded products through vip.com, vipshop.com online platforms, and internet websites.
VIPS’ total net revenue increased 7.5% year-over-year to RMB24.90 billion ($3.93 billion) in its fiscal third quarter, ended Sept. 30, 2021. VIPS’ cash and cash equivalents increased 4.4% over the nine months ended Sept. 30, 2021, to come in at RMB 12.53 billion ($1.98 billion).
Analysts expect VIPS’ revenue for the fiscal year 2021, ended December 31, to be $18.64 billion, representing an 18.2% year-over-year increase.
The stock gained 17.1% in price year-to-date and 12.3% over the past month. VIPS closed yesterday’s trading session at $9.84.
The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting. VIPS has a grade of B for Value. Within the China industry, it is ranked #19 of 50 stocks.
To see additional POWR Ratings (Momentum, Sentiment, Growth, Stability, and Quality) for VIPS, click here.
Yunji Inc. (YJ)
Headquartered in Hangzhou, the People’s Republic of China, YJ operates as a social e-commerce platform. The company provides a wide range of product categories that cater to users' daily needs, including beauty, personal care, household goods, food, electronics, apparel, bags, home appliances, and maternity products.
On Jan. 12, 2022, YJ announced the expansion and development of its private label health food brand Baiyueshan. The product wolfberry puree was recently launched under the brand and generated tens of millions of Renminbi in sales. These launches are expected to cater to a vast customer base and boost YJ’s sales and revenue streams.
On Jan. 7, 2022, YJ launched a new private label Qingziyang brand, probiotics bolus solid beverage. The company is delivering healthy and nutritious products to consumers. With this launch of cultivating products, YJ is expected to boost sales and increase profit margins for the company.
In its fiscal third quarter, ended Sept. 30, 2021, YJ’s income from operations increased 172.2% year-over-year to RMB17.60 million ($2.73 million). YJ’s adjusted net income rose 309.6% year-over-year to come in at RMB76.26 million ($11.84 million). Its net income attributable to ordinary shareholders increased 243.5% from the year-ago value to RMB60.84 million ($ 9.44 million), and its net earnings per share grew 250% from the year-ago value to RMB0.03.
The $1.05 billion consensus revenue estimate for its fiscal year 2021, ended December 2021, represents 22.1% year-over-year growth versus its fiscal year 2020. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
Shares of YJ increased 54.2% in price year-to-date and 13.4% over the past six months. It closed yesterday’s trading session at $0.96.
According to POWR Ratings, YJ has a B grade for Sentiment and Value. Among the 75 stocks in the Technology -Services industry, it is ranked #42. Click here to see the additional POWR Ratings for Momentum, Growth, Quality, and Stability for YJ.
LightInTheBox Holding Co., Ltd. (LITB)
LITB operates as a cross-border e-commerce platform that directly provides products to customers worldwide from the manufacturers. LITB is headquartered in Shanghai, the People’s Republic of China.
The company provides customized, fast fashion apparel products and other merchandise products. In addition, it offers supply chain management, research and development, warehouse management, local delivery services, and IT support services.
In its fiscal third quarter, ended Sept. 30, 2021, LITB’s apparel sales increased 39.6% year-over-year to $61.90 million. Its gross margin grew marginally year-over-year to $43.90 million in its fiscal 2021 third quarter.
The stock has gained 13.9% in price year-to-date and closed yesterday’s trading session at $1.15.
Under the POWR Ratings, LITB is ranked #18 of 54 stocks in the China industry. Click here to see LITB ratings for Momentum, Stability, Growth, Value, Sentiment, and Quality.
VIPS shares were trading at $8.74 per share on Wednesday morning, down $1.10 (-11.18%). Year-to-date, VIPS has gained 4.05%, versus a -9.48% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
3 Chinese E-Commerce Stocks Up More Than 20% Year-to-Date StockNews.com
