The 32% rise yesterday in the share price of online discount retailer Vipshop Holding added anew to the company’s standing as best-performing Chinese IPO in the U.S. in the past two years.
Vipshop’s huge 30 fold rise from $5.5 per share at the time of its IPO in March 2012 to $169 at closing yesterday morning was four times as big as social site YY, which has returned 670%. Vipshop has had the highest return among all the 11 Chinese IPOs in the U.S. from 2012 to 2013, based on figures presented by Andy Hall, managing director for new listings at the Nasdaq, in a talk organized by the China-U.S. Chamber of Commerce last week in New York.
Shares of New York-traded Vipshop climbed yesterday after the company unexpectedly strong fourth-quarter results. Sales rose 117% from a year ago amid a doubling of active customers. Its gross margin has steadily improved from 21% at the time of its IPO to 24.5% in the fourth quarter. In comparison, Dangdang, another well-known Chinese e-commerce had a margin of 17.6% in the third quarter of 2013.
When I first wrote about Vipshop in November, only one of the co-founders, Eric Shen, met the Forbes China Rich List cut-off line of $600 million fortune. But the recent jump in stock price has also lifted co-founder Arthur Hong into the ranks of the world’s richest people. China has a record 152 members of the new Forbes Billionaires List published this week. Among them are Zhou Hongyi, co-founder of Beijing-based Internet security and search company Qihoo 360 Technology, and Mo Tianquan, chairman of online real estate information provider Soufun.
The five-year-old company has largely relied on organic growth driven by online flash sale of mid to high-end discounted clothing, cosmetics and accessories, in what Deutsche Bank calls an “acutely under-penetrated and still-underestimated China discount market.” In its first acquisition, Vipshop last month bought a 75% stake in Chinese cosmetics online retailer Lefeng for $132 million. It also purchased 23% of Lefeng’s parent company for $56 million. The partnership is expected to generate at least $146 million revenue from Lefeng products in the coming year, according to a press release.
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Source: Forbes Business