The discount e-commerce company, which has been profitable since 2013, said it will pay a dividend of 2$500 million, thus giving back to investors.
Highlights:
Vipshop said that according to the newly announced dividend policy, it will rebate 2$500 million, the payout ratio is equivalent to about 23%, which is relatively low.
With a focus on apparel and a relatively small average order value, the company looks in a relatively well-positioned position to withstand China's economic slowdown.
This article was written by Yang Ge.
It's one thing to give back to shareholders through buybacks**. But giving back to shareholders with dividends is another matter entirely, because dividends are stuffed directly into the pockets of shareholders.
Discount e-commerce companiesVipshop Holdings***(vips.us) in the last weekAnnouncing the latest resultsAt the same time, a dividend policy was announced, and although the payout ratio was not too impressive, shareholders expressed their gratitude for it. After the news was announced, the company's stock price was **126%, the highest since June 2021. This ** also made the stock take the lead this year, and it has **9% since January, and there are not many Chinese concept stocks that can do this.
It may be an oversimplification to attribute all of the enthusiasm of investors to the newly announced dividend policy. The reality is that Vipshop has been one of the better-run e-commerce companies in China, making a profit every quarter since 2013. It focuses on discounted items from relatively well-known brands, which also puts it in a strong position in the current environment where Chinese consumers are becoming more cautious.
Chairman Shen Ya pointed out that the company's average order value is usually between 200 yuan and 300 yuan, which is relatively more affordable for consumers who reduce the purchase of large items of thousands of yuan or more.
We think that's an affordable range," he said in response to a question about China's slowdown and consumers becoming more cautious as the economy slows. "So we're not too worried about that. ”
In the current environment, a well-run and cash-rich company like Vipshop seems to be able to not only withstand China's economic slowdown, but also become the darling of investors. Because they can use their vantage point to return cash to investors through buybacks and dividends that loss-making or cash-starved companies can't.
To be honest, Vipshop's dividend policy is a bit vague, and the payout ratio is nothing to be excited about. But something is better than nothing, and the company had 26.3 billion yuan in cash as of the end of last year, and of course has the ability to pay dividends. In its dividend policy, Vipshop simply stated that the board of directors "retains the discretion" to announce annual dividends, meaning that it does not even guarantee that annual dividends will become routine.
Based on the share price before the release of the latest earnings report, the dividend per American Depositary Receipt (ADS) is 0$43, the rate of return is equivalent to 25%, which is relatively low. The dividend will cost the company a total of 2500 million US dollars, equivalent to the company's annual net profit of 1.1 billion yuan, about 23%. Again, this percentage is relatively low compared to the usual dividend payout standard for listed companies, which is a payout ratio of 30% to 50%.
Vipshop is fairly conservative financially, which is one of the reasons why it has been able to remain profitable for more than a decade, while many of its direct competitors have gone out of business. Therefore, it is understandable that its dividend policy is relatively conservative, and it is likely to increase its dividend payout ratio in the future.
Tightening the general environment
Next, let's take a look at Vipshop's latest financial data, which shows the aforementioned economic slowdown and increasingly difficult environment. The main signal is the rapid slowdown in the company's revenue growth.
Vipshop expects revenue in the first quarter to be between 27.5 billion yuan and 28.9 billion yuan, implying a growth rate of up to 5%, and a worst-case scenario of 27.5 billion yuan in the same period last year. In either case, the final figure will be slower than the revenue of 34.7 billion yuan in the fourth quarter of last year, an increase of 92% growth.
The growth rate in the fourth quarter was actually ahead of the 53%, but less than 136%, so the overall revenue growth rate last year was 94%。Nearly half of the company's sales in the fourth quarter came from super VIP members, which is also a growing trend as consumers look to spend their money more effectively through such programs.
Here, we should also point out that the company's growth in the fourth quarter easily exceeded the previous maximum of 33.3 billion yuan. It seems to indicate that consumption on its platform is increasing, which may be due to more consumers looking for something more cost-effective.
Vipshop's GMV grew by 21 percent in the fourth quarter9% to 66.4 billion yuan, all growth rates are far behind. It seems to reflect that the company's revenue per dollar worth of goods sold is decreasing, indicating that many **merchants are increasingly in a difficult financial situation.
As we mentioned earlier, Vipshop is a fairly financially conservative company and has also done a pretty good job of keeping costs under control. Its operating expenses increased by only 4 percent in the fourth quarter8%, about half the revenue growth, which makes its operating margin up from 7.5% a year ago9% to 106%。Boosted by this, quarterly profit increased by 32% year-on-year to 3 billion yuan.
Even after the stock price rally, Vipshop's price-to-earnings ratio is still relatively low, only 11 times, withJD.com(jd.us; 9618.HK) was flat, but lagged behindAlibaba(baba.us; 9988.hk) 14 times, also far belowPinduoduo(pdd.US), Pinduoduo's stock price has risen sharply recently due to high hopes for overseas temu services.
All in all, Vipshop looks like a long-term survivor of China's e-commerce scene, and its relative conservatism and focus on its core discount e-commerce business are attractive. Returning more money to investors through dividends may make it more attractive to investors, but it will definitely be more generous if you want to win the hearts and minds of more investors.