By midafternoon, shares had added 6.8% to $153.51. Trading volume of 3.3 million was more than double its three-month daily average.
The online discount retailer said it had priced its public offering of $550 million worth of its convertible senior notes. The offering had been upwardly revised from a previous amount of $400 million. The senior notes offer an interest rate of 1.5% and will mature on March 15, 2019.
The company plans to use a portion of funds raised in the repayment of existing debt and the remainder for general operational purposes.
Guangzhou, China-based Vipshop also announced select stockholders in the company would sell a total 1.14 million American Depositary Shares (ADSs) at $143.74 per share.
Underwriters will also have a 30-day option to purchase an additional $82.5 million worth of senior notes and 171,000 ADSs.
Vipshop expects the notes and ASS offering to close on March 17, subject to regulatory conditions.
Goldman Sachs and Deutsche Bank are acting as joint book-running managers, while Bank of America and China Renaissance Securities will act as co-managers.
TheStreet Ratings team rates VIPSHOP HOLDINGS LTD -ADR as a Hold with a ratings score of C. The team has this to say about their recommendation:
"We rate VIPSHOP HOLDINGS LTD -ADR (VIPS) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- VIPS's very impressive revenue growth greatly exceeded the industry average of 8.3%. Since the same quarter one year prior, revenues leaped by 117.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 258.33% and other important driving factors, this stock has surged by 646.35% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- VIPS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.87 is somewhat weak and could be cause for future problems.
- The gross profit margin for VIPSHOP HOLDINGS LTD -ADR is rather low; currently it is at 24.49%. Regardless of VIPS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, VIPS's net profit margin of 3.90% compares favorably to the industry average.
- You can view the full analysis from the report here: VIPS Ratings Report