Hong Kong Stock Market Review: Two major platforms experienced significant declines
Hong Kong stock analysis shows that Vipshops and KUAISHOU-W's stock prices plummeted due to poor GMV performance. Vipshops' Q1 growth of 8% dropped to flat in Q2, with an expected year-on-year revenue decline of 5-10% in Q3, along with a $206 million stock repurchase. KUAISHOU-W's GMV growth slowed down, with only 700 million yuan in stock repurchase funds in Q2 due to intense price competition. The overall e-commerce market performance is disappointing, with only Pinduoduo bringing hope. However, the lack of certainty in continuous stock price growth remains unresolved until geopolitical risks are addressed
Both Vipshops and KUAISHOU platforms experienced significant declines after their earnings reports, mainly due to GMV issues. The former's growth went from 8% in Q1 to flat in Q2, while the latter's growth slowed from 28% in Q1 to 15% in Q2.
Vipshops' Q2 revenue was within the company's guidance, and its GMV slightly missed market expectations. However, the Q3 guidance is relatively poor, with expected revenue to decrease by 5-10% year-on-year. In the weakening consumer brand sector, Vipshops' flash sale business naturally did not perform well.
During Q2, Vipshops repurchased $206 million worth of stocks, with $330 million remaining in the buyback program. The company has also approved a new $1 billion buyback plan, which will take effect within 24 months after the current plan ends, representing over 20% of the company's market value after the recent decline. This year's buybacks and dividends are equivalent to a payout ratio of 75%. Despite the significant efforts, it may not be able to offset the downward trend in fundamentals in the short term.
As for KUAISHOU, the slowdown in GMV growth was due to the lack of increased subsidies during major promotions and intensified competition. Given the current macroeconomic situation and the ongoing market correction, the lack of certainty has led to a significant drop in stock prices.
The company's buyback efforts in Q2 weakened to only 700 million yuan, compared to 1.3 billion yuan in Q1. However, based on the company's automatic buyback plan involving a total of 6 billion yuan until the end of May 2025, executed by Morgan Stanley, it is expected to be fully implemented. Nevertheless, the buyback plan's efforts are insufficient, leading to stock price fluctuations following macroeconomic changes.
Currently, the performance of various e-commerce platforms is not satisfactory to the market, with the only hope resting on Pinduoduo. However, historical trends suggest that without resolving geopolitical risks, even outperforming expectations may not provide sustained support to stock prices. The catalyst may only come when companies start rewarding shareholders, and Tencent, as a major shareholder, should rightfully exert pressure in this regard