What happened
Shares of Baozun (BZUN +5.44%) were climbing last month after the Chinese e-commerce services provider posted better-than-expected earnings results during the peak of China's coronavirus lockdowns. That sparked a rally that propelled the stock up 45% over the course of the month, according to data from S&P Global Market Intelligence.
As you can see from the chart below, the gains came in two separate spurts.
So what
Baozun began the month with a burst, jumping 10.8% on June 1 in anticipation of its earnings report the following day and then gaining another 10.7% after the report came out. During the pandemic-afflicted quarter, Baozun's revenue rose 18.4% to $215.2 million, easily beating estimates of $202.3 million. Higher-margin services revenue grew even faster, rising 22.9% to $116.2 million. On the bottom line, adjusted profit per share fell by about half to $0.06, though that was ahead of expectations of $0.02. Management cited incremental costs from the pandemic weighing on profits, but also said the crisis helped it reinforce its market leadership.
Image source: Baozun.
Investors were also encouraged by second-quarter guidance; the company sees sales accelerating as the Chinese economy reopens, forecasting gross merchandise volume (GMV) growth of at least 25%, up from 17.6% in the first quarter. It also called for revenue growth of 20% to 23% for the quarter.
Later in the month, Baozun got another boost, climbing 11.5% on June 17. Investment research company Zack's called it its Bull of the Day, rating it a strong buy.
Now what
Baozun has jumped out to a hot start in July as well, climbing 9.6% in the first two sessions though there was no company-specific news out. Instead, investors seem to be keying in on Chinese e-commerce stocks just as they have with their U.S. e-commerce counterparts, as the Chinese e-commerce sector is likely to benefit from the pandemic as well. Stocks like JD.com, Pinduoduo, and Alibaba have all hit all-time highs in recent weeks, riding a tailwind in the sector. Baozun is still down about a third from its all-time high in 2018, but that could change if this recent momentum continues.
