Vipshop Holdings (VIPS) PT Lowered to $19 at HSBC, 'Q1 demand could disappoint'

HSBC analyst Charlene Liu lowered the price target on Vipshop Holdings (NYSE: VIPS) to $19.00 (from $22.90) while maintaining a Hold rating.

The analyst commented: '1Q24 demand could disappoint: After a solid 2023 and signs of sustained recovery in 4Q23, we anticipated the 2024 growth rate would slow down. There are a few reasons, 1) tougher y-o-y comps, 2) continual decline in MAU and DAU and 3) macro uncertainty which can dampen order frequency. However, a lukewarm 38 shopping festival and colder-than-
expected weather in March hurt spring apparel sales, collectively dragging the 1Q24 outlook. Even though product return rate is expected to improve sequentially after the promotion season, it is still going up on a yoy basis, which again reflects users' cautious approach to consumption. We take 2024-26e revenue down by c2%. We assume earnings for the period to be down c2% as well, as margins will likely stay resilient on disciplined S&M cost control. Factoring a higher 5-year weekly beta and lower terminal growth rate, our DCF TP is revised down to USD19.00 (from USD22.90), implying c18% upside and 7.4x 2024e PE. We think the valuation is fair and maintain Hold rating. VIPS remains committed to investor returns with an annual dividend policy (2.5% yield in 2023). It still has a USD548m unused quota for share buybacks to March 2025, which is c6% of the current market cap.'

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