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Based in Beijing, CH24, LightInTheBox Holding Co., Ltd. (NYSE:LITB) scheduled a $79 million IPO with a market capitalization of $446 at a price range mid-point of $9.50 for Thursday, June 6, 2013.

Three other IPOs are scheduled for this week. The full IPO calendar is here.

  • F-1A filed May 31
  • Manager; Joint Managers: Credit Suisse; Stifel
  • Co-Managers: Pacific Crest; Oppenheimer; China Renaissance Securities

Each ADS represents two ordinary shares. The ADSs will initially be evidenced by ADRs

SUMMARY

LITB is a China-based global online retailer, sourcing most products from China. Growth has been rapid over the past several years. LITB just turned profitable in the March quarter 2013 quarter.

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing March qtr

Cap (MM)

Sales

Earnings

BkValue

TangBV

in IPO

LightInTheBox Holding

$466

1.6

44.8

5.6

5.6

17%

Glossary

COMPARE

Mrkt

Price /

Price /

Price /

Price /

Gross

annualizing March qtr

Cap

Sales

Earnings

BkValue

TangBV

Margin

LightInTheBox Holding

$466

1.6

44.8

5.6

5.6

45%

Vip Shop (NYSE:VIPS)

$1,520

1.2

65.5

8.3

8.3

23%

Amazon (NASDAQ:AMZN) ($mm)

$122,555

1.9

373.6

14.5

20.8

27%

The most recent successful China-based IPO was Vipshop Holdings Limited , which IPO'd March 22, 2012 at $6.50 and recently traded at $30.

Notice that LITB has the highest gross margin of the three, the lowest P/E ratio, and the lowest price-to-book value.

CONCLUSION

Buy LITB on the IPO. To put the above conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced earlier:

BUSINESS

LITB is a global online retail company that delivers products directly to consumers around the world. LITB offers customers a convenient way to shop for a wide selection of lifestyle products at attractive prices through lightinthebox.com, miniinthebox.com and our other websites, which are available in 17 major languages and cover more than 80.0% of Internet users globally, according to Internet World Stats.

LITB sources most of its products directly from China-based manufacturers and works closely with them to re-engineer their manufacturing processes to achieve faster time-to-market with a greater variety of products.

In 2012, LITB ranked number one in terms of revenue generated from customers outside of China among all China-based retail websites that source products from third-party manufacturers, according to a report conducted at LITB's request by iResearch, an independent market research firm.

As of March 31, 2013, LITB had more than 220,000 product listings. In the three months ended March 31, 2013, LITB added an average of more than 14,000 new product listings each month.

MARKETS

LITB's major markets are Europe and North America. LITB uses global online marketing platforms such as Google and Facebook to reach consumers. Payments are accepted through all major credit cards and electronic payment platforms such as PayPal. Goods are delivered through major international couriers, including UPS (NYSE:UPS), DHL and FedEx (NYSE:FDX).

SEGMENTS

LITB traditionally focused on the sale of apparel and electronics and communication devices and derived a large percentage of net revenues from such product categories.

LITB has since expanded offerings by increasing the number of products in core categories of small accessories and gadgets and home and garden, as well as introducing additional categories such as sports and outdoor.

LITB has also introduced new websites which focus on certain specific products, such as the miniinthebox.com website for the sale of small accessories and gadgets.

In 2012, LITB derived 40.2%, 21.0% and 20.3% of net revenues from the sale of apparel, electronics and communication devices and small accessories and gadgets, respectively.

In the three months ended March 31, 2013, LITB derived 30.8%, 14.1% and 39.1% of net revenues from these categories, respectively. Small accessories and gadgets increased to 39% from 20%.

PRICING

In general, LITB aims to set products at competitive prices. For example, in the United States, average spending on a wedding dress was $1,166 in 2011, according to The Wedding Report, Inc. LITB offered customized wedding dresses at an average price of $209 in 2011.

At any time, a customer shopping for a special occasion dress on LITB's site can have her dress made-to-measure, choosing from more than 4,300 distinctive designs.

MARKETING

Currently, LITB actively manages millions of keywords in 17 languages and display advertising on over 100,000 publisher sites.

In addition, LITB actively engages with users on social networking sites.

SUPPLY CHAIN

LITB sources 70% of its products directly from factories in China. LITB has a comprehensive supplier qualification system and has over 2,300 selected active suppliers, which increased from over 600 in 2010.

SEASONALITY

LITB experiences seasonality in the business, reflecting seasonal fluctuations in online and offline retail patterns in general and for product categories. For example, sales may be higher in the fourth quarter of a calendar year due to the Christmas holidays.

USE OF PROCEEDS

LITB expects to net $72 million from its IPO. Proceeds are allocated as follows:

• $15 million for investments in fulfillment and technology infrastructure;

• $15 million for expansion of product offerings and categories;

• $15 million for customer acquisition and brand building; and

• $1.1 million for payment of interest accrued for convertible notes issued in March 2012.

The remaining portion of the net proceeds will be used for general corporate purposes.

Disclaimer: This LITB IPO report is based on a reading and analysis of LIBT F-1A filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Source: IPO Preview: LightInTheBox Holding