The market value evaporated by 20 billion overnight and was reduced by Hillhead. What happened to vipshop

On the evening of August 19, vipshop released its unaudited results for the second quarter of this year. According to the financial report, vipshop’s net income in the second quarter reached 24.1 billion yuan, up 6.0% year-on-year, higher than the market’s expected 23.784 billion yuan; under the US accounting standards, the net profit attributable to shareholders of listed companies was 1.536 billion yuan, up 88.9% year-on-year, higher than the market’s expected 1.154 billion yuan; under non-U.S. accounting standards, the net profit attributable to shareholders of listed companies was 1.3 billion yuan, up 24.3% year-on-year. < / P > < p > although vipshop achieved profits for 31 consecutive quarters, and the net profit exceeded the market expectation, the growth rate was obviously behind the top e-commerce platform. Take Jingdong as an example, the growth rate in the second quarter was as high as 33.8%, which was the highest in nearly 10 quarters of the company; the growth rate of net income of pinduoduo has always maintained a three digit growth. On August 20, vipshop once fell more than 20% to close at $19.26, and finally closed down 19.45%, the largest one-day decline since May 2018. At present, the total market value is 13 billion US dollars, and the market value evaporation is more than 3 billion US dollars, which is more than 20 billion yuan. There are voices in the market that vipshop’s share price plummeted may be related to the resignation of CFO Yang Donghao. According to the financial report, Yang Donghao will resign as CFO of the company in November for personal reasons, and the board of directors has appointed him as a new non-executive director. So far, vipshop has not disclosed the new CFO candidates to the public, only said that it has started the investigation procedure of the new CFO. < p > < p > according to public data, Yang Donghao has been serving as CFO of vipshop since 2011, and has experienced such important moments as vipshop listing, alliance with JD Tencent and acquisition of Shanshan Group. During his tenure, Yang Donghao has been interviewed by the media for many times, and conveyed vipshop’s business direction and business focus to the media. < p > < p > more important than Yang Donghao’s resignation, vipshop is pessimistic about the third quarter’s performance estimation. The company’s performance guidance says that the third quarter’s revenue range is 20.6 billion yuan to 21.6 billion yuan, an increase of 5% to 10% over the same period of last year, which is lower than analysts’ expectation. < p > < p > < p > < p > China entrepreneur noted that on August 14, Hillhouse capital was withdrawing from vipshop’s shareholder camp in an orderly manner. Vipshop was included in its list of e-commerce reduction in the second quarter, with a total of 1.5677 million shares, but increased its holdings in Ali and pinduoduo. According to public data, vipshop was established in 2008 as an e-commerce platform specializing in “special sale” of women’s brand clothing. Its main business is online sales of brand discount products on the Internet, covering all categories of famous clothing, shoes and bags, beauty, life and so on. In March 2012, vipshop was listed on the New York Stock Exchange of the United States, which is also the leader of the vertical e-commerce market, but it has been criticized by institutions. < p > in the Internet industry, e-commerce is a typical industry. With the exception of Ali, there are few who maintain long-term profits. Jingdong has been established for 12 years, and only this year has it become profitable. Pinduoduo is also known as a “cash crusher”. Vipshop is an exception. According to vipshop’s financial report, as of March 31, 2020, vipshop has achieved 30 consecutive quarters of profits, that is to say, two years after its establishment, vipshop will be profitable. < p > < p > vipshop’s long-term profit benefits from its business model, special sale, which is to sell “brand tail goods” with “limited time group opening + ultra-low discount”. However, in recent years, vipshop’s net profit growth rate is much higher than its revenue, which is mainly due to the company’s substantial reduction in operating expenses, the shift of low gross profit categories from self-supporting to the supply of third-party businesses, and abandoning the self-supporting logistics company pinjun express. In recent years, vipshop has re focused on the special selling strategy, and has locked its main category into clothing and wear products with high gross profit. In the second quarter, the company’s Gmv of clothing and wearing goods reached 69%, which increased the overall operating profit margin from 2% in the fourth quarter of 2018 to 5% now. Although the company’s low gross profit category to the third-party business affected vipshop’s revenue, it effectively improved the company’s operational efficiency. < p > < p > after abandoning pinjun express and turning to cooperation with SF, vipshop’s performance cost has decreased significantly. The proportion of performance cost in the first quarter and the second quarter accounted for 7.2% and 7% of the net income, far lower than the previous average of more than 9%. < / P > < p > it is worth mentioning that after the closure of pinjun express, vipshop experienced significant staff turnover last year – in 2018, the number of logistics and delivery staff reached 50598, while in 2019, the warehouse management (i.e. the remaining employees of logistics delivery after pinjun closed) was only 12750. According to the annual report data, vipshop had 58702 full-time employees at the end of 2017 and 57638 at the end of 2018. In 2019, the number of full-time employees of vipshop decreased to 20442, a decrease of 64.53% year-on-year. In addition, vipshop reduced its staff in various departments such as commodity sales, technology research and development, marketing, Internet finance, administration and customer service last year, of which Internet Finance lost more than 50%. Vipshop disclosed in the document that the company’s severance payment amounted to 652 million yuan last year, while the capital impairment of closing pinjun express was 154.2 million yuan. In the second quarter of this year, vipshop’s overall operating expenditure was 3.8 billion yuan, down 9% from 4.2 billion yuan in the same period of last year. Yang Donghao said the company invested the savings in operating expenses into the reinvestment of the business, including providing more discounts and discounts for users, which drove a 17% year-on-year increase in new users in the second quarter. < p > < p > vipshop’s revenue growth has slowed down significantly in recent years, and the company’s net income growth rate has decreased to single digit. The direct reason lies in the stagnation of new users and the difficulty in increasing the customer price, which also triggered the survival crisis of vipshop. < / P > < p > the turning point lies in the continuous blood transfusion of giants. Since 2017, Tencent and JD have continued to add vipshop. In 2018, Tencent and JD invested $43.4 million and $120 million respectively to increase their holdings of vipshop. < / P > < p > although it has access to wechat and Jingdong traffic, vipshop has a limited number of new users. In terms of the number of active users, vipshop’s monthly active users this year hovered around 30 million. Last year, the number of active users was only 69 million, which can not be compared with the 400 million to 700 million volume of Alibaba, pinduoduo and Jingdong. < / P > < p > from the perspective of the market, the 10 billion subsidy war initiated by pinduoduo has spread to all major head platforms and almost all common categories. Vipshop’s off season clearance discount has been eclipsed. In addition, the “lowest discount price of the whole network” as the representative of the head anchor with goods will further force the price war to the hinterland of the old platform. In order to develop new sources of income and customers, vipshop has begun to test new retail in recent years. In addition to opening a large number of offline physical stores, the company also set a price of 2.9 billion yuan to acquire Shanshan Lyon. According to the data disclosed in vipshop’s 2019 annual report, as of the end of last year, the company had about 200 vipmax stores and 300 offline vipshop stores. Vipshop did not disclose the revenue and net profit of offline stores. In the annual report, offline stores and Internet finance were combined into “other income”, and the net income of this part was about 2.639 billion yuan last year. However, the revenue and Gmv of shanshan-l’ao have been included in the annual report of vipshop. According to the documents, the net income and net profit of shanshan-l’ao were about 246 million yuan and 6.255 million yuan respectively. However, due to the interference of Xinguan epidemic, the purchase did not play its due role. On the contrary, the direct seeding delivery increased rapidly due to the epidemic situation. Shen Ya, chairman and CEO of vipshop, said on the conference call that vipshop has been trying to carry goods live for more than four months. The company has seen some positive trends, but it is still in the early stage of exploration. The company will continue to explore new models including short videos. At present, 50% of vipshop’s online gmvs are concentrated in the “fast track” and “crazy grab” channels. The management believes that these two channels will not affect the company’s overall gross profit margin. Shen Ya reiterated that there is still a high inventory problem in the domestic clothing market at present, and this trend will continue in the second half of this year and even next year. The company believes that there will be a large number of clothing inventory waiting to be cleared in the next few years. He believes that vipshop’s potential users are as high as 300 million, and as the epidemic situation improves, the company will actively invest in marketing to attract more new users. < / P > < p > in addition, vipshop has briefly been involved in financial business. However, in the process of financial products providing credit services, accounts receivable and other receivables and prepayments are increasing, resulting in the risk of bad debts. Vipshop has announced that it will split the Internet financial business, but there is no further disclosure in the follow-up financial report. < / P > < p > vipshop has also tried to tear off the special sale label and transform from “a website specializing in special sales” to “global selection, authentic products and special sale”. However, after the change was hindered, vipshop returned its strategic adjustment to the special sale and focused on the core clothing categories. At the mid-2018 strategy meeting, Shen Ya said: “vipshop will return to the ‘special sale’ strategy and do what you are good at.”