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VIPShop PT hiked to $85 at Citi

  • Citi hikes its PT on VIPShop (VIPS) all the way to $85 from $50 previously as the analysts see higher revenue growth, improved operational efficiency, and relaxing warehouse constraints.
  • Analysts Muzhi Li, Ravi Sarathy, and Gregory Zhao think the flash retailer will expand its warehouse space from 220K sq. m to 600K sq. m by 2015, which will eliminate VIPShop's "biggest constraint" to growth.
  • Operationally, as VIPShop moves into higher-end mass market brands like TOD's, Nine West, Lee, LeSportsac, etc., "return rates [~20% according to the company] could edge down in the longer term."
  • The analysts now expect revenue growth of 130% in 2013, 70% in 2014, and 48% in 2015 (slightly above consensus expectations of 128% in 2013 and 62% in 2014).
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