Vipshop, a specialty e-commerce company, recently released its financial report for the third quarter of 2023. The financial report shows that in the third quarter, Vipshop achieved a net revenue of 22.8 billion yuan (RMB, the same below), a year-on-year increase of 5.3%, which is higher than Bloomberg's consensus expectation of 3.8%; Under non US GAAP, the net profit was 1.8 billion yuan, a year-on-year increase of 15.5%, and the overall performance was stable.
It is worth mentioning that Vipshop continues to invest in the ESG sector, becoming a "bonus" for its company's performance. Recently, MSCI Mingsheng, an international authoritative index agency, upgraded Vipshop's ESG rating from "A" to "AA", which is a leading level in the industry.
GMV increased by 13.1% year-on-year to 42.5 billion yuan
SVIP active users contribute approximately 45% of online consumption
According to the financial report, the GMV (total commodity trading volume) of Vipshop platform in the third quarter was 42.5 billion yuan, a year-on-year increase of 13.1%; The number of active users was 42.5 million, a year-on-year increase of 3.5%; The number of orders was 179.9 million, a year-on-year increase of 6.9%. The management of the company stated that the good performance in the third quarter was mainly driven by the continuous growth momentum of the clothing category.
Meanwhile, in the third quarter, Vipshop added various benefits to Super VIP Members (SVIP), driving the continuous expansion of the platform's high-value user base. As of the end of the third quarter, the number of active users of Vipshop SVIP has increased by 17% year-on-year, and has maintained growth for multiple consecutive quarters; At the same time, SVIP active users contribute about 45% of online consumption, and the per capita consumption continues to grow. In this quarter, the unit price of Vipshop was 236 yuan, an increase of 6% compared to the same period last year.
When it comes to the outlook for next year's GMV, the company's management stated that Vipshop is expected to continue to grow steadily in 2024. Our gross and net profit structures are very healthy. We hope to find some good ways to increase user growth and accelerate future business growth. There are indeed uncertain factors in 2024, but I think we will still walk through 2024 with a stable attitude
The management further mentioned that Vipshop has a relatively small share in the entire e-commerce market and has strong confidence in expanding its user base. On the one hand, we need to attract more new customers, and on the other hand, we also need to retain old customers.
In addition to marketing, we need to leverage the brand's special selling advantages, especially differentiated products, including wearable, price competitive, or exclusive products, to create value for users through the products. We need to focus on both aspects, especially the investment in the products. We also need to strengthen the experience service aspect, not only in terms of good products, cheap prices, but also in terms of service quality that makes everyone feel first-class
The reporter noticed that since the beginning of this year, Vipshop has taken a series of measures to improve user experience, including optimizing after-sales service products and strengthening the construction of user feedback channels. Recently, Vipshop has also reached strategic cooperation with China Inspection and Certification Group to upgrade its quality inspection, traceability, and certification systems.
It is worth mentioning that the management also mentioned that under the latest $1 billion repurchase plan, the company has repurchased $448 million and has an authorized limit of $551 million. In the past few years, we have continued to repurchase, from the end of March 2021 to the end of the third quarter, for a total of nearly $2 billion in two and a half years. This reflects our confidence in long-term growth prospects and commitment to giving back shareholder value. In the future, we will continue to flexibly carry out repurchase
After the financial report was released, Citigroup upgraded Vipshop's ADR rating to buy, with a target price of $20. Domestic institutions such as Huatai Securities, Guotai Jun'an, and Guoxin Securities maintain buy/increase ratings.
MSCIESG rating upgraded to AA
Sustainable development performance becomes a "bonus" for the company
According to the third quarter financial report of Vipshop, MSCI Mingsheng, an international authoritative index agency, recently upgraded Vipshop's ESG rating from "A" to "AA", which is an industry leading level.
Environmental, Social and Governance (ESG) is a business management and investment concept proposed by the United Nations in 2004, emphasizing the coordinated development of economy, environment, and society, and leveraging the power of capital to solve social and environmental problems. In the past two decades, the ESG concept has been widely practiced and promoted among global governments and market entities, and has become one of the mainstream investment concepts and practical strategies in developed and emerging market countries.
With the deepening global consensus on sustainable development, society's requirements for enterprises in green development, energy conservation and emission reduction, social responsibility, honest operation, and compliance management are also increasing and stricter. ESG also provides a comprehensive framework for businesses and investors to integrate environmental, social, and corporate governance. Research has shown that while benefiting sustainable social development, ESG performance and its three dimensions can significantly improve corporate performance and innovation level.
The 2022 ESG report released by Vipshop this year shows that Vipshop has established a three-level governance system of "Board of Directors ESG Committee ESG Working Group" and formulated an ESG strategy with the goal of "creating a sustainable new life together", exploring the path of sustainable development from five aspects: sustainable new choices, happy consumption, inclusive vitality, a better society, and building trust.
Among them, in response to climate change, Vipshop has released a group level carbon neutrality goal, promising to "achieve carbon neutrality for its own operations no later than 2030, and achieve a 50% reduction in category three carbon emission intensity no later than 2030. Recently, Vipshop has significantly accelerated its progress in promoting green and low-carbon development. Taking the third quarter of this year as an example, in terms of clean energy applications, Vipshop's total photovoltaic power generation was 18.71 million kilowatt hours, equivalent to reducing carbon emissions by approximately 10671 tons; In terms of biodiversity conservation, Vipshop has formulated the "Vipshop Biodiversity Conservation Commitment" to clarify biodiversity conservation strategies.
The motivation for enterprises to practice ESG is diverse, and there is currently no globally accepted system for ESG evaluation. There is an industry consensus that localization should be reflected while aligning with international standards. It can be seen that Vipshop has been exploring a unique ESG model that aligns with its platform operations and is expected to bring more positive impacts to the capital market.
Wen/Liu Chang
Proofreading Zhao Lin