Daiwa has upgraded Vipshop (VIPS) to buy from hold following the news that social media firm Tencent (700.HK) and e-commerce giant JD.com (JD) will team up to invest a combined $863 million Chinese discount online retailer.
Under the agreement announced on Monday, Tencent will acquire a 7% stake via the acquisition of new issued shares for USD604 million, while JD.com will acquire a 5.5% stake for $259 million. The deal will give Vipshop access to Tencent's Weixin Wallet and JD.com's mobile application and the main page of its Weixin Discovery shopping entry.
Daiwa analyst John Choi says deal eases concerns he had on Vipshop, including:
The analyst says the traffic support from Tencent and JD.com will benefit Vipshop's top and bottom lines:
Choi also raises his target price on the company to USD17 a share, (from USD10) due to the likelihood an earning rebound.
Shares in the company surged 39% in Monday trading on the news.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
