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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