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Vipshop Holdings Ltd 6-K Analysis & Summary – 2/21/2025

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Vipshop Holdings Ltd
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Filing date:

02/21/2025

TLDR:

Vipshop Holdings Limited announced its unaudited financial results for the fourth quarter and full year 2024, reporting RMB33.2 billion in total net revenues for the quarter and RMB108.4 billion for the year, along with a dividend declaration and continued share repurchase program.

ELI5:

Vipshop, a discount online retailer, had a tough year with sales and profits going down. They’re trying to fix things and give money back to shareholders, but sales might keep dropping in the next few months.

Accession #:

0001193125-25-031252

Published on

Analyst Summary

  • Q4 2024 revenues decreased to RMB 33.2 billion (US$4.6 billion) from RMB 34.7 billion in Q4 2023.
  • Full-year 2024 revenues decreased to RMB 108.4 billion (US$14.9 billion) from RMB 112.9 billion in 2023.
  • Q4 2024 GMV was RMB 66.2 billion, slightly lower than RMB 66.4 billion in Q4 2023.
  • Full-year 2024 GMV increased slightly to RMB 209.3 billion from RMB 208.0 billion in 2023.
  • Q4 2024 saw 45.7 million active customers compared to 48.5 million in Q4 2023.
  • The full year saw 84.7 million active customers compared to 87.4 million in 2023.
  • Q4 2024 saw 217.5 million orders compared to 234.3 million in Q4 2023.
  • The full year saw 757.5 million orders compared to 812.3 million in 2023.
  • Gross Profit Margin FY increased from 22.79% to 23.49%, an increase of 3.07%.
  • Operating Profit Margin FY increased from 8.07% to 8.46%, an increase of 4.83%.
  • Net Profit Margin FY increased from 6.86% to 7.14%, an increase of 4.08%.
  • Return on Assets (ROA) FY decreased from 10.70% to 10.33%, a decrease of 3.46%.
  • Return on Equity (ROE) FY decreased from 20.07% to 18.63%, a decrease of 7.17%.
  • Current Ratio increased from 1.23 to 1.26, an increase of 2.44%.
  • Quick Ratio (Acid-Test Ratio) increased from 1.04 to 1.09, an increase of 4.81%.
  • Cash Ratio increased from 0.89 to 0.94, an increase of 5.62%.
  • Debt-to-Equity Ratio decreased from 0.88 to 0.80, a decrease of 9.09%.
  • Debt-to-Assets Ratio decreased from 0.47 to 0.45, a decrease of 4.26%.
  • Interest Coverage Ratio (Times Interest Earned) decreased from 397.01 to 159.05, a decrease of 59.95%.
  • Inventory Turnover increased from 15.44 to 15.55, an increase of 0.71%.
  • Days Sales Outstanding (DSO) increased from 2.52 days to 3.08 days, an increase of 22.22%.
  • Days Payable Outstanding (DPO) decreased from 72.32 days to 66.88 days, a decrease of 7.52%.
  • Asset Turnover decreased from 1.56 to 1.45, a decrease of 7.05%.
  • Price-to-Earnings Ratio (P/E) is 2.95.
  • Price-to-Book Ratio (P/B) is 0.55.
  • Price-to-Sales Ratio (P/S) is 0.21.
  • Enterprise Value to EBITDA (EV/EBITDA) is -0.10.
  • Revenue Growth FY decreased by 3.93%.
  • Net Income Growth FY decreased by 4.64%.
  • EPS Growth FY Basic decreased by 0.48%.
  • EPS Growth FY Diluted decreased by 0.49%.
  • Free cash flow decreased from RMB9,288,740 to RMB5,621,990, a decrease of 39.47%.

Potential Implications

Vipshop Holdings Ltd. – Form 6-K Report Analysis (February 21, 2025)

Executive Summary

This report analyzes Vipshop Holdings Ltd.’s Form 6-K, filed on February 21, 2025, focusing on the unaudited fourth quarter and full-year 2024 financial results. The analysis reveals a mixed performance. While the company exceeded revenue expectations in Q4, both revenue and net income attributable to shareholders decreased year-over-year for both Q4 and the full year. However, the company is taking actions to improve profitability and has committed to returning value to shareholders through share repurchases and dividends. The outlook for Q1 2025 suggests a potential continued revenue decline. Overall, a **hold** rating is recommended, pending further evidence of a return to sustainable growth.

Company Overview

Vipshop Holdings Limited (NYSE: VIPS) is a leading online discount retailer for brands in China. The company offers branded products at discounted prices. The Chinese e-commerce market is highly competitive and subject to evolving consumer preferences and regulatory changes.

Detailed Analysis

Revenue and GMV Analysis

* **Total Net Revenues:** Q4 2024 revenues decreased to RMB 33.2 billion (US$4.6 billion) from RMB 34.7 billion in Q4 2023. Full-year 2024 revenues also decreased to RMB 108.4 billion (US$14.9 billion) from RMB 112.9 billion in 2023.
* **Gross Merchandise Value (GMV):** Q4 2024 GMV was RMB 66.2 billion, slightly lower than RMB 66.4 billion in Q4 2023. Full-year 2024 GMV increased slightly to RMB 209.3 billion from RMB 208.0 billion in 2023.
* **Active Customers:** The number of active customers decreased in both Q4 and the full year. Q4 2024 saw 45.7 million active customers compared to 48.5 million in Q4 2023. The full year saw 84.7 million active customers compared to 87.4 million in 2023.
* **Total Orders:** Total orders also decreased. Q4 2024 saw 217.5 million orders compared to 234.3 million in Q4 2023. The full year saw 757.5 million orders compared to 812.3 million in 2023.

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Vipshop Holdings Limited Financial Analysis – 2024

1. Financial Ratio and Metric Analysis:

Profitability:

  • Gross Profit Margin:

    • Calculation:
      • Q4 2023: (8,232,854 / 34,674,476) = 23.75%
      • Q4 2024: (7,627,538 / 33,223,842) = 22.96%
      • FY 2023: (25,720,892 / 112,856,020) = 22.79%
      • FY 2024: (25,469,654 / 108,420,832) = 23.49%
    • Trend:
      • Q4: Decreased from 23.75% to 22.96%, a decrease of 3.33%
      • FY: Increased from 22.79% to 23.49%, an increase of 3.07%
    • Industry: The online retail industry generally has gross margins ranging from 20% to 40%. Vipshop’s gross profit margin is within this range. Key competitors like Alibaba and JD.com have similar gross profit margins.
  • Operating Profit Margin:

    • Calculation:
      • Q4 2023: (3,668,279 / 34,674,476) = 10.58%
      • Q4 2024: (2,851,228 / 33,223,842) = 8.58%
      • FY 2023: (9,104,135 / 112,856,020) = 8.07%
      • FY 2024: (9,173,253 / 108,420,832) = 8.46%
    • Trend:
      • Q4: Decreased from 10.58% to 8.58%, a decrease of 18.90%
      • FY: Increased from 8.07% to 8.46%, an increase of 4.83%
    • Industry: Operating margins in the e-commerce sector can vary widely, typically ranging from 5% to 15%. Vipshop’s operating margin is on the lower end of this range.
  • Net Profit Margin:

    • Calculation:
      • Q4 2023: (2,952,147 / 34,674,476) = 8.51%
      • Q4 2024: (2,446,679 / 33,223,842) = 7.36%
      • FY 2023: (7,739,935 / 112,856,020) = 6.86%
      • FY 2024: (7,739,935 / 108,420,832) = 7.14%
    • Trend:
      • Q4: Decreased from 8.51% to 7.36%, a decrease of 13.51%
      • FY: Increased from 6.86% to 7.14%, an increase of 4.08%
    • Industry: Net profit margins for e-commerce companies typically range from 2% to 10%. Vipshop’s net profit margin is within this range.
  • Return on Assets (ROA):

    • Calculation:
      • FY 2023: (7,739,935 / 72,322,594) = 10.70%
      • FY 2024: (7,739,935 / 74,936,126) = 10.33%
    • Trend:
      • FY: Decreased from 10.70% to 10.33%, a decrease of 3.46%
    • Industry: The average ROA for the retail industry is around 5%. Vipshop’s ROA is relatively high, indicating efficient asset utilization.
  • Return on Equity (ROE):

    • Calculation:
      • FY 2023: (7,739,935 / 38,559,758) = 20.07%
      • FY 2024: (7,739,935 / 41,549,229) = 18.63%
    • Trend:
      • FY: Decreased from 20.07% to 18.63%, a decrease of 7.17%
    • Industry: An ROE of 10-15% is generally considered good. Vipshop’s ROE is above this range, suggesting strong profitability relative to shareholder equity.
  • Earnings Per Share (EPS) – Basic and Diluted:

    • Calculation:
      • Q4 2023 Basic: 27.22 RMB
      • Q4 2023 Diluted: 26.75 RMB
      • Q4 2024 Basic: 23.83 RMB
      • Q4 2024 Diluted: 23.46 RMB
      • FY 2023 Basic: 73.32 RMB
      • FY 2023 Diluted: 72.11 RMB
      • FY 2024 Basic: 72.97 RMB
      • FY 2024 Diluted: 71.76 RMB
    • Trend:
      • Q4 Basic: Decreased from 27.22 RMB to 23.83 RMB, a decrease of 12.45%
      • Q4 Diluted: Decreased from 26.75 RMB to 23.46 RMB, a decrease of 12.30%
      • FY Basic: Decreased from 73.32 RMB to 72.97 RMB, a decrease of 0.48%
      • FY Diluted: Decreased from 72.11 RMB to 71.76 RMB, a decrease of 0.49%
    • Industry: EPS varies significantly across the e-commerce industry. It’s best compared against direct competitors.

Liquidity:

  • Current Ratio:

    • Calculation:
      • 2023: (37,560,598 / 30,624,136) = 1.23
      • 2024: (37,802,559 / 29,927,001) = 1.26
    • Trend:
      • Increased from 1.23 to 1.26, an increase of 2.44%
    • Industry: A current ratio between 1.5 and 2 is generally considered healthy. Vipshop’s current ratio is slightly below this range, indicating moderate liquidity.
  • Quick Ratio (Acid-Test Ratio):

    • Calculation: (Current Assets – Inventory) / Current Liabilities
      • 2023: (37,560,598 – 5,644,713) / 30,624,136 = 1.04
      • 2024: (37,802,559 – 5,032,069) / 29,927,001 = 1.09
    • Trend:
      • Increased from 1.04 to 1.09, an increase of 4.81%
    • Industry: A quick ratio of 1 or greater is generally considered acceptable. Vipshop’s quick ratio is around 1, suggesting reasonable short-term liquidity.
  • Cash Ratio:

    • Calculation: (Cash and Cash Equivalents + Short Term Investments) / Current Liabilities
      • 2023: (25,414,729 + 1,983,201) / 30,624,136 = 0.89
      • 2024: (26,352,161 + 1,872,756) / 29,927,001 = 0.94
    • Trend:
      • Increased from 0.89 to 0.94, an increase of 5.62%
    • Industry: A cash ratio of 0.5 or higher is often considered a sign of good liquidity. Vipshop’s cash ratio is relatively high, indicating a strong ability to cover short-term liabilities with cash and near-cash assets.

Solvency/Leverage:

  • Debt-to-Equity Ratio:

    • Calculation: Total Liabilities / Total Equity
      • 2023: 33,762,836 / 38,559,758 = 0.88
      • 2024: 33,386,897 / 41,549,229 = 0.80
    • Trend:
      • Decreased from 0.88 to 0.80, a decrease of 9.09%
    • Industry: A debt-to-equity ratio of 1 or lower is generally considered healthy. Vipshop’s debt-to-equity ratio is below 1, indicating a relatively conservative capital structure.
  • Debt-to-Assets Ratio:

    • Calculation: Total Liabilities / Total Assets
      • 2023: 33,762,836 / 72,322,594 = 0.47
      • 2024: 33,386,897 / 74,936,126 = 0.45
    • Trend:
      • Decreased from 0.47 to 0.45, a decrease of 4.26%
    • Industry: A debt-to-assets ratio below 0.5 is generally considered good. Vipshop’s debt-to-assets ratio is below this level, indicating a healthy level of solvency.
  • Interest Coverage Ratio (Times Interest Earned):

    • Calculation: Income from Operations / Interest Expense
      • 2023: 9,104,135 / 22,932 = 397.01
      • 2024: 9,173,253 / 57,676 = 159.05
    • Trend:
      • Decreased from 397.01 to 159.05, a decrease of 59.95%
    • Industry: A ratio above 1.5 is generally considered safe. Vipshop’s interest coverage ratio is very high, indicating a strong ability to meet its interest obligations.

Activity/Efficiency:

  • Inventory Turnover:

    • Calculation: Cost of Revenues / Average Inventory
      • 2023: 87,135,128 / ((5,644,713+5,644,713)/2) = 15.44
      • 2024: 82,951,178 / ((5,644,713+5,032,069)/2) = 15.55
    • Trend:
      • Increased from 15.44 to 15.55, an increase of 0.71%
    • Industry: Inventory turnover varies widely in the retail industry. Vipshop’s inventory turnover is relatively high, indicating efficient inventory management.
  • Days Sales Outstanding (DSO):

    • Calculation: (Accounts Receivable / Total Net Revenues) * 365
      • 2023: (778,767 / 112,856,020) * 365 = 2.52 days
      • 2024: (915,158 / 108,420,832) * 365 = 3.08 days
    • Trend:
      • Increased from 2.52 days to 3.08 days, an increase of 22.22%
    • Industry: A low DSO is desirable. Vipshop’s DSO is very low, indicating efficient collection of receivables.
  • Days Payable Outstanding (DPO):

    • Calculation: (Accounts Payable / Cost of Revenues) * 365
      • 2023: (17,259,395 / 87,135,128) * 365 = 72.32 days
      • 2024: (15,190,560 / 82,951,178) * 365 = 66.88 days
    • Trend:
      • Decreased from 72.32 days to 66.88 days, a decrease of 7.52%
    • Industry: DPO varies by industry. Vipshop’s DPO is moderate, indicating a reasonable payment cycle to its suppliers.
  • Asset Turnover:

    • Calculation: Total Net Revenues / Total Assets
      • 2023: 112,856,020 / 72,322,594 = 1.56
      • 2024: 108,420,832 / 74,936,126 = 1.45
    • Trend:
      • Decreased from 1.56 to 1.45, a decrease of 7.05%
    • Industry: Asset turnover varies by industry. Vipshop’s asset turnover is relatively high, indicating efficient use of its assets to generate revenue.

Valuation:

  • Price-to-Earnings Ratio (P/E):

    • Calculation: Market Cap / Net Income
      • Market Cap = $14.73 * 106,074,914 shares / 5 = $3,126,889,788.80 USD
      • Net Income = $1,060,366,000 USD
      • P/E = 3,126,889,788.80 / 1,060,366,000 = 2.95
    • Industry: The average P/E ratio for the S&P 500 is around 20. Vipshop’s P/E ratio is significantly lower, potentially indicating undervaluation or investor concerns.
  • Price-to-Book Ratio (P/B):

    • Calculation: Market Cap / Book Value of Equity
      • Market Cap = $14.73 * 106,074,914 shares / 5 = $3,126,889,788.80 USD
      • Book Value of Equity = $5,692,222,000 USD
      • P/B = 3,126,889,788.80 / 5,692,222,000 = 0.55
    • Industry: A P/B ratio of 1 is considered fair value. Vipshop’s P/B ratio is below 1, potentially indicating undervaluation.
  • Price-to-Sales Ratio (P/S):

    • Calculation: Market Cap / Total Net Revenues
      • Market Cap = $14.73 * 106,074,914 shares / 5 = $3,126,889,788.80 USD
      • Total Net Revenues = $14,853,593,000 USD
      • P/S = 3,126,889,788.80 / 14,853,593,000 = 0.21
    • Industry: The average P/S ratio for the retail industry is around 1. Vipshop’s P/S ratio is significantly lower, potentially indicating undervaluation.
  • Enterprise Value to EBITDA (EV/EBITDA):

    • Calculation: (Market Cap + Total Debt – Cash) / EBITDA
      • Market Cap = $14.73 * 106,074,914 shares / 5 = $3,126,889,788.80 USD
      • Total Debt = $328,748,000 USD
      • Cash = $3,610,231,000 USD
      • EBITDA = Net Income + Interest + Taxes + Depreciation and Amortization = 1,060,366 + 57,676 + 317,224 + (18,292,771-16,882,100)/8.16 = $1,598,000,000 USD
      • EV = 3,126,889,788.80 + 328,748,000 – 3,610,231,000 = -$154,593,211.20 USD
      • EV/EBITDA = -154,593,211.20 / 1,598,000,000 = -0.10
    • Industry: An EV/EBITDA ratio between 10 and 15 is generally considered fair value. Vipshop’s EV/EBITDA ratio is negative, potentially indicating undervaluation or financial distress.

Growth Rates:

  • Revenue Growth:

    • Calculation: (Current Year Revenue – Previous Year Revenue) / Previous Year Revenue
      • FY: (108,420,832 – 112,856,020) / 112,856,020 = -3.93%
    • Trend:
      • FY: Decreased by 3.93%
    • Industry: The e-commerce industry is generally experiencing high growth rates. Vipshop’s revenue growth is negative, indicating underperformance relative to its peers.
  • Net Income Growth:

    • Calculation: (Current Year Net Income – Previous Year Net Income) / Previous Year Net Income
      • FY: (7,739,935 – 8,116,624) / 8,116,624 = -4.64%
    • Trend:
      • FY: Decreased by 4.64%
    • Industry: Net income growth varies widely in the e-commerce industry. Vipshop’s net income growth is negative, indicating underperformance relative to its peers.
  • EPS Growth:

    • Calculation: (Current Year EPS – Previous Year EPS) / Previous Year EPS
      • FY Basic: (72.97 – 73.32) / 73.32 = -0.48%
      • FY Diluted: (71.76 – 72.11) / 72.11 = -0.49%
    • Trend:
      • FY Basic: Decreased by 0.48%
      • FY Diluted: Decreased by 0.49%
    • Industry: EPS growth varies significantly across the e-commerce industry. It’s best compared against direct competitors.

Other Relevant Metrics:

  • Gross Merchandise Value (GMV): GMV increased by 0.6% year over year to RMB209.3 billion. This indicates a slight increase in the total value of goods sold through Vipshop’s platforms.
  • Active Customers: The number of active customers decreased from 87.4 million to 84.7 million, a decrease of 3.09%. This suggests a potential issue with customer retention or acquisition.
  • Total Orders: Total orders decreased from 812.3 million to 757.5 million, a decrease of 6.75%. This indicates a decrease in transaction volume.
  • Non-GAAP Net Income: Non-GAAP net income attributable to Vipshop’s shareholders for the full year of 2024 was RMB9.0 billion (US$1.2 billion), compared with RMB9.5 billion in the prior year, a decrease of 5.26%. This metric excludes certain items like share-based compensation and impairment losses, providing a potentially clearer view of core operational profitability.
  • Free Cash Flow: Free cash flow decreased from RMB9,288,740 to RMB5,621,990, a decrease of 39.47%. This indicates a decrease in the cash available for discretionary spending.

2. Commentary:

Vipshop’s financial performance in 2024 presents a mixed picture. While the gross profit margin and operating profit margin increased slightly for the full year, revenue and net income experienced declines, indicating challenges in top-line growth and overall profitability. The decrease in active customers and total orders raises concerns about customer retention and transaction volume. Despite these challenges, the company maintains a strong balance sheet with healthy liquidity and solvency ratios, and the low valuation ratios suggest potential undervaluation.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️