Revenue for the second quarter of 2024 slightly exceeded market expectations
Baozun 2Q24's revenue also increased 3% to 2.39 billion yuan, exceeding market expectations by 2%, mainly driven by revenue contributions from the brand management business. Non-standard net loss of 3.88 million yuan, lower than market expectations, mainly hampered by investment in brand management business.
Development trends
2Q24 revenue increased 3% year over year to 2.39 billion yuan, mainly driven by the recovery in e-commerce service business. BEC (e-commerce business) product sales revenue was 0.58 billion yuan, down 4.4% year on year, mainly due to relatively weak consumer demand for related categories and the company's continued optimization of the product portfolio in the distribution business. We expect that with the basic completion of product portfolio optimization and the incremental contribution of the general generation business, the BEC product sales revenue growth rate is expected to gradually correct; BEC service business revenue increased 9.4% to 1.52 billion yuan year on year in the second quarter. Among them, revenue from digital marketing and IT solutions increased by 17 year-on-year %. Online store operating revenue increased 14% year over year, mainly driven by the promotion of omni-channel strategies. As of 2Q24, about 45.8% of brand partners cooperated with Baozun in operation on at least two channels, increasing month-on-month; in terms of categories, the operating revenue of sportswear stores achieved double-digit growth. We expect 3Q24 BEC revenue to increase 4% year over year to 1.59 billion yuan. BBM (brand management business) revenue for the second quarter fell 9.8% year on year to 0.29 billion yuan, mainly affected by consumer sentiment. We expect 3Q24 BBM to contribute 0.31 billion yuan in revenue, corresponding to a 5% year-on-year growth rate. We expect 3Q24's overall revenue to increase 4% year over year to 1.9 billion yuan.
2Q24 had a non-common standard net loss of 3.88 million yuan, and the profit side is expected to continue to be pressured during the transformation process. On the gross profit side, the gross margin of the 2Q24 BBM business stabilized at 52.3%, mainly benefiting from the company's control over product discounts. We expect that in the second half of the year, the company may increase discounts due to promotions. The gross margin may be affected, but it is still above 50%. On the cost side, the 2Q24 Group's overall marketing expenses rate increased by 4.9ppt year-on-year, mainly affected by the restoration of brand launch intentions during the 618 period, while the rest of the cost rate declined due to the company's internal cost reduction and efficiency plans. Non-GAAP non-GAAP operating profit for the second quarter changed to $10.04 million, of which the BEC and BBM businesses were 60.21 million yuan and -49.98 million yuan, respectively. Taking into account that BBM's gross margin may decline slightly from month to month, and that the company will continue to invest in the transformation process, we expect the overall non-standard operating loss for 3Q24 to be 76.97 million yuan, and the non-common standard net loss will be 0.1 billion yuan.
Profit forecasting and valuation
Considering that the brand management business is still in the investment period, we lowered our 24-year non-generic standard net profit forecast from 83.22 million yuan to a loss of 39.4 million yuan, lowered the 25-year non-generic standard net profit forecast 15% to 15.9 million yuan, maintain a neutral rating, and lower the target price by 16.7% to $2.5, corresponding 6.5 times the 2025 non-GAAP price-earnings ratio, which has 11% upside compared to the current stock price. Currently, Treasure is trading at 5.8 times the 25-year non-common standard price-earnings ratio.
risks
Macro consumption uncertainty; brand management business losses fell short of expectations; industry competition intensified.