On December 21, 2021, we published Taobo's short-term strategy.

In this strategy, we anticipate that supply chain problems are likely to continue at 4QFY22 (December 2021 to February 2022), and that the company's inventory of new products (within 3 months) may become even more scarce than 3QFY22. At the same time, Taobo will face a higher base at 4QFY22. Considering these adverse factors, we expect that it will be difficult for 4QFY22 to show a clear turnaround in retail performance compared to 3QFY22.

Although we believe that supply chain issues will only affect the company's normal sales performance in the short term, they will not affect the company's long-term fundamentals and growth. However, retail performance that fell short of expectations for two consecutive quarters may affect the market's investment sentiment in the company in the short term, ultimately causing stock prices to fall.

Therefore, we judge that within the next two months, Taobo's stock price is likely to fall by 10-15% by 70-80%.

On December 23, 2021, Taobo hit an intraday low of 7.5 Hong Kong dollars. Compared with the stock price on the day our previous short-term strategy was released, it fell 13%, and has already reached the forecast of our short-term investment strategy. Therefore, we promptly close this short-term investment advice.

We reaffirm that as the main retail partner of international brands in China, we have been optimistic about Taobo's digital capabilities and offline operation performance in the field of sportswear retail for a long time. We maintained our 12-month “buy” rating for Taobo.