1Q26 results beat; solid revenue growth momentum to sustain

1Q26 results beat; solid revenue growthmomentum to sustain Target PriceUS$3.98Up/Downside56.7%Current PriceUS$2.54 Baozun reported its 1Q26 results, with revenue reaching RMB2.4bn, up 15% YoY(4Q25: +6% YoY),3.0%/3.5%ahead of our forecast/Bloomberg consensus,driven by beats in both the Baozun E-commerce (BEC) and Baozun BrandManagement(BBM)businesses.Non-GAAP NP attributable to ordinaryshareholders was RMB1mn, compared with a loss of RMB57mn in 1Q25,supported by improved operating profitability across both BEC and BBM. This wasalso better than our forecast/Bloomberg consensus of losses of RMB7mn/RMB13mn. We expect solid revenue growth momentum to continue in 2Q26E,and look for 10% YoY revenue growth. Baozun is prioritizing higher-qualityrevenue streams, improving service satisfaction, and ultimately enhancing overallprofitability. We believe the company remains on track to achieve its 2028Eprofitability target of at least RMB550mn in non-GAAP OP. We maintain ourSOTP-based TP unchanged at US$3.98 and maintain our BUY rating. China Internet Saiyi HE, CFA(852) 39161739hesaiyi@cmbi.com.hk Ye TAO, CFA(852) 3850 5226franktao@cmbi.com.hk Wentao LU, CFAluwentao@cmbi.com.hk 1Q26 results came in better than our expectations.In 1Q26, BECrecorded revenue of RMB1.9bn, up 10% YoY (1Q25: +1%; 4Q25: +2%),while non-GAAP operating profit (OP) improved to RMB13.0mn, comparedwith a loss of RMB46mn in 1Q25, and was 1% ahead of our forecast.Meanwhile, BBM delivered revenue of RMB538mn, up 39% YoY and 5%ahead of ourestimate.BBM’s non-GAAP operating loss narrowed toRMB5mn, compared with a loss of RMB21mn in1Q25, and was also betterthan our expected loss of RMB7mn. Shuyin GUO(852) 3916 3716guoshuyin@cmbi.com.hk Stock Data 2Q26E outlook: solid revenue growth momentum to continue.For2Q26E, we estimate YoY revenue growth of 7.5%/22.5% for the BEC/BBMbusinesses. We expect BEC to continue focusing on operating efficiencyimprovement,with non-GAAP OP reaching RMB102mn in 2Q26E,compared with RMB41mn in 2Q25. For BBM, we anticipate a non-GAAPoperating loss of RMB33mn, narrowing from a loss of RMB35mn in 2Q25,driven by operating efficiency improvement in the GAP business, partlyoffset by incremental investments to support the growth of Hunter andSweaty Betty. Our 2Q26E revenue forecast is 5% ahead of consensus,while our GAAP OP forecast of RMB56mn is also ahead of consensus ofRMB17mn. Maintain BUY and SOTP-based TPunchanged at US$3.98.Our SOTP-based target price remains unchanged at US$3.98, based on a valuation ofRMB1.6bn/US$233mn, consisting of: 1) RMB1.3bn for BEC, based on 5.0x2026E EV/EBIT; 2) RMB769mn for BBM, based on an unchanged 0.4x2026E EV/sales; and3) RMB2.0bn in net cash. We apply a 60% holding-company discount to the group-level valuation, consistent with our priorframework. Source: FactSet Disclosures& Disclaimers Analyst CertificationThe research analyst who is primary responsible for the content of this research report, in whole or in part, certifies thatwith respect to the securities or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related tothe specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in ortraded in the stock(s) covered in this research report within 30 calendar days prior to the date of issue of this report; (2)willdeal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3)serve as an officer of any of the HongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies coveredin this report. CMBIGM RatingsBUY : Stock with potential return of over 15%over next 12 monthsHOLD: Stock with potential return of +15% to-10% over next 12 monthsSELL: Stock with potential loss of over 10% over next 12 monthsNOT RATED: Stock is not rated byCMBIGM :Industry expected tooutperform the relevant broad market benchmark over next 12 months:Industry expected to perform in-line with the relevant broad market benchmark over next 12 months:Industry expected to underperformthe relevant broad market benchmark over next 12 months CMB InternationalGlobal MarketsLimited Address: 45/F, Champion Tower, 3 Garden Road, Hong Kong, Tel: (852) 3900 0888 Fax: (852) 3900 0800CMB InternationalGlobal MarketsLimited (“CMBIGM”)is a wholly owned subsidiary of CMB International Capital Corporation Limited (a wholly ownedsubsidiary of China Merchants Bank) Important DisclosuresThere are risks involved in transacting in any securities. The information contained in this report may not be suitable for the purposes of all inve