Shares of Secoo (NASDAQ: SECO), China’s largest luxury ecommerce platform, closed at USD 14.14 on Jan. 24th, beating its IPO price of USD 13.00 for the first time and hitting a record high since its listing last September.
Secoo’s share price rebound shows that investors’ confidence in the company is growing, especially after Swiss luxury group Richemont bid to take full control of Yoox Net-a-Porter (YNAP), Secoo’s largest global rival, and delist it from the Milan Stock Exchange. This should leave Secoo as the only publicly traded luxury ecommerce firm globally.
In addition, a comparison between YNAP and Secoo reflects that the latter is heavily undervalued. Richemont’s acquisition offer values YNAP at EUR 5.1 billion (USD 6.3 billion), which is about 2.6 times its 2017 total sales of EUR 2 billion.
According to Secoo’s financial reports, the company has achieved USD 494 million in gross merchandise volume (GMV) during the first three quarters of 2017. Assuming its fourth quarter GMV will be the same as that of the third quarter, which was USD 210 million, then its total GMV in 2017 would reach USD 704 million. However, Secoo’s market capitalization is only USD 725 million, which is just a little higher than its potential GMV in 2017.
In comparison, Secoo’s valuation seems to be significantly underestimated. Its latest share value increase justifies its potential valuation.
Secoo’s recent business plans have also contributed to its shares rally.
On January 23, Secoo signed a strategic collaboration contract with Parkson Retail Group to expand its offline channels and deepen its reach in customer-experience-infrastructure. Last November, Secoo announced the opening of five new offline experience centers, two high-end customized hotels, and that it had started supply chain synchronization with a batch of local and international brands.
Secoo hopes its ever-expanding offline presence, together with massive online sales, will serve more Chinese middle-class customers who will, in turn, drive the company’s future growth.
(Top photo from Secoo)