What happened
Shares of Baozun (BZUN -2.63%), the Chinese provider of e-commerce services for multinational companies, was moving higher today, even though there was no apparent news about the company. The gains came as a number of smaller Chinese stocks rose by double digits, including Bilibili and Huya, indicating that investors may be rotating into the sector.
As of 3:08 p.m. EST, Baozun was up 9.8%, while the MSCI China ETF had gained 1.1%, even as the S&P 500 was nearly flat. That may offer further evidence of a rotation into Chinese stocks, although there was no specific market-moving news out of China.
Image source: Baozun.
So what
Baozun shares have been surging recently as the company announced two significant deals in back-to-back weeks. First came a strategic partnership with iClick, a Chinese online marketing company, which also included Baozun's taking a small equity investment in the company. Last week, the company followed that up by acquiring Full Jet, a peer in e-commerce services that will give it better access to the luxury market.
After years of middling results, Baozun, which has long seemed undervalued, may be getting "rerated" by the market -- the company is earning a higher valuation because of those forward-looking moves. Baozun may also be benefiting from a short squeeze, as nearly 20% of the stock's float is sold short.
Now what
If there was a reason for Chinese stocks' outperformance today, it may be because of anticipation for the Chinese new year holiday this Friday. This tends to be a major sales driver for e-commerce companies, which largely benefitted from the pandemic.
As for Baozun, the stock is now up more than 60% year to date. That's a big move on relatively little news, but the stock may be making up for missing out on the e-commerce rally last year, even though its growth was solid.
Looking ahead, the company's next earnings report is due out in March. Analysts are expecting 32% revenue growth in the fourth quarter to $526.2 million, and a rise in earnings per share from $0.38 to $0.50.
