YesAsia Holdings: A Deep Dive into Growth and Strategic Shifts

YesAsia Holdings (Ticker: 2209 HK), a key player in the online retail sector, specializes in procuring and selling Asian fashion, lifestyle, beauty, and entertainment products worldwide. The company has been a strong contender in the consumer discretionary sector, leveraging its YesStyle and AsianBeautyWholesale (ABW) platforms to drive growth.

2024 Financial Performance and Profit Alert

The company issued a positive profit alert for 2024, projecting a net profit of not less than US\$19 million, marking a 150% year-on-year (yoy) surge compared to US\$7.6 million in 2023. Revenue is expected to jump by 71.7% yoy to US\$345.7 million, driven by its beauty-focused strategy and robust cross-border operations. Gross profit is forecasted to grow 68.1% yoy to US\$105.4 million, with a net margin expansion by 1.7 percentage points (ppt) to 5.5%.

Key Developments and Challenges

• Resilient Revenue Growth: The second half of 2024 (2H24) witnessed a robust revenue increase of 64.8% yoy to US\$182.4 million, fueled by the Black Friday sales and the 11.11 shopping festival. These gains stemmed from enhanced marketing efforts on the YesStyle platform and the expansion of ABW to cater to global B2B clients.
• Margin Erosion Concerns: Despite gross profit rising 60% yoy to US\$55.2 million in 2H24, the gross margin dipped by 0.9 ppt to 30.3%, attributed to the growing revenue share of ABW, which operates with lower mark-ups due to its B2B nature.
• Strategic B2B Expansion: YesAsia is ramping up its B2B operations, focusing on small- and medium-sized international buyers. The company established three overseas warehouses in the US, UK, and Germany to bolster its fulfillment capabilities. This move is expected to support its beauty-focused strategy but may further pressure margins in the near term.

Financial Projections

YesAsia is expected to maintain its growth trajectory with revenue anticipated to reach US\$475 million in 2025 and US\$585 million in 2026. Net profit is projected to grow to US\$32 million in 2025 and US\$45 million in 2026. The company is currently trading at an attractive valuation of 5x 2025F PE.

Recommendation

The report maintains a BUY recommendation for YesAsia Holdings with a revised target price of HK\$5.00, reflecting a 51.5% upside potential. This is based on 8x 2025F PE, implying a 3x 2025F ex-cash PE.

Peer Comparison: Insights into Competitors

Silicon2 Co Ltd

Silicon2 Co Ltd, a Korean B2B cosmetics company, boasts a higher gross margin of 34.6% and an operating margin of 21.3%, outperforming YesAsia’s 30.3% gross margin and 6% operating margin. Trading at a PE of 7.5x for 2025, Silicon2 remains a competitive benchmark in the beauty sector.

Sa Sa International

Sa Sa International, a Hong Kong-based cosmetics retailer, trades at a higher PE of 15.0x for 2025. However, its ROE of 12.7% and net margin of 11.4% lag behind YesAsia’s performance metrics. The company faces challenges in maintaining competitive EV/EBITDA ratios.

Alibaba Group

Alibaba Group, a heavyweight in the e-commerce sector, trades at a 2025F PE of 8.1x with a robust ROE of 12.0%. Its diversified business model and economies of scale position it as a dominant player, although its growth rates are relatively moderate compared to YesAsia.

JD.com Inc

JD.com, another e-commerce giant, trades at a 2025F PE of 8.4x and offers a stable ROE of 16.5%. Its focus on logistics and infrastructure gives it a strategic advantage, although its net margin of 14.0% is slightly below YesAsia’s forecasted 2026 net margin of 7.7%.

PDD Holdings Inc

PDD Holdings, known for its social commerce platform, trades at a 2025F PE of 6.7x with a high ROE of 29.8%. Its competitive pricing strategy and innovative business model make it a strong competitor in the e-commerce landscape.

ZOZO Inc

ZOZO Inc, a Japanese online fashion retailer, trades at a significantly higher 2025F PE of 26.7x. Its ROE of 48.3% and focus on personalized fashion solutions set it apart, but its valuation appears steep compared to YesAsia.

Istyle Inc

Istyle Inc, another Japanese company specializing in beauty e-commerce, trades at a 2025F PE of 15.6x. While it offers a respectable ROE of 14.6%, its growth metrics are not as compelling as YesAsia’s projections.

Conclusion

YesAsia Holdings stands out in the competitive e-commerce and beauty product space with its aggressive B2B expansion and robust growth strategy. While competitors like Silicon2 and PDD Holdings offer unique advantages, YesAsia’s focus on beauty products and its strategic investments in overseas warehouses position it for sustained growth. With a compelling valuation and strong financial performance, the company’s BUY recommendation remains well-justified.