宝尊电商：Better-than-expected 3Q results drove enhanced full-year outlook

Investment Rating - The report maintains a "BUY" rating for the company with a target price adjusted to US$3.1, reflecting a potential upside of 30.3$2.38 [1]. Core Insights - The company reported better-than-expected results for Q3 2024, with total revenue reaching RMB2.1 billion, which is 9% above Bloomberg consensus estimates. The non-GAAP net loss attributable to ordinary shareholders narrowed to RMB67 million from RMB76 million in Q3 2023, outperforming the consensus estimate of an RMB80 million loss [1]. - The company's e-commerce segment (BEC) achieved a revenue growth of 14%, an improvement from 6% in Q2 2024, driven by high-quality new distribution businesses and an increase in services revenue from emerging e-commerce channels. The Baozun Brand Management (BBM) segment also turned around with a 10% year-over-year growth [1]. - The overall adjusted operating loss narrowed in Q3 and was better than expectations, with product sales revenue increasing by 11% year-over-year to RMB783 million, and services revenue rising by 14% year-over-year to RMB1.3 billion [1]. Financial Performance Summary - For FY2024, total revenue is estimated to grow by 14% for BBM and 6% for BEC, with a forecasted non-GAAP operating profit of RMB5 million, improving from a loss of RMB23.7 million in 2023. The company anticipates achieving non-GAAP operating breakeven in 2024 [1][3]. - The financial summary indicates a projected revenue of RMB9.420 billion for FY2024, with a year-over-year growth of 6.9%. The adjusted net profit is expected to improve to a loss of RMB21.1 million, compared to a loss of RMB65.1 million in FY2023 [3][7]. - The report highlights a significant improvement in operating efficiency, with a forecasted return to profitability in FY2025, projecting a net profit of RMB185.2 million [3][11]. Valuation Metrics - The SOTP-based valuation consists of RMB526 million for BEC based on a 3.0x 2024E EV/EBIT, RMB144 million for BBM based on a 0.1x 2024E EV/sales, and RMB2.6 billion in net cash, applying a 60% holding discount to the group-level valuation [1][5]. - The report provides a P/E ratio of 16.9x for FY2025 and 9.8x for FY2026, indicating a potential recovery in earnings [3][11].