What happened

Shares of Baozun (BZUN 3.81%) were climbing for the second day in a row today, after the Chinese e-commerce services provider announced its acquisition yesterday of Full Jet Limited, a luxury-focused brand-management company in China.

The stock closed today's session up 9.6% after adding 8.5% yesterday.

The word Baozun made up of its clients' logos

Image source: Baozun.

So what

Baozun, which provides e-commerce services like warehousing, IT, and customer services to multinational brands like Microsoft and Nike, did not disclose a price tag, but said it was paying 12.5 times Full Jet's 2020 EBITDA.   

The deal with Full Jet -- which works with brands such as Under Armour, Lacoste, and adidas -- will expand the company's customer base and add to its exposure in luxury brands. In the press release, Baozun noted that China's personal luxury market was expected to grow by 45%.

Baozun CEO Vincent Qiu said, "We are excited about the acquisition of Full Jet. Baozun and Full Jet share the ambition of helping international luxury and premium brand partners enter China's fast-growing e-commerce sector." He also said the combination would help the company unlock $3 billion in new gross merchandise volume over the next three to five years.

Baozun may also have benefited from a short squeeze over the last two sessions as nearly 20% of the stock is sold short.

Now what

Last week, Baozun also unveiled a strategic partnership with Chinese online marketing company iClick. That move, along with the Full Jet acquisition, it is helping Baozun consolidate its lead in e-commerce brand services, where it has about a 25% market share.

Baozun has underperformed in recent years, especially compared with other Chinese e-commerce stocks, but these moves seem to be drawing attention to this undervalued stock. Keep an eye on the upcoming earnings report as the stock looks ready to soar on the next piece of good news.