Jumei Will Beautify Your Portfolio While Giving You Exposure to China
NEW YORK (TheStreet) -- With all the hype surrounding the initial public offering of Alibaba, a little-known, four-year old Chinese company called Jumei International (JMEI), the biggest player in the online beauty products niche, quietly debuted at the New York Stock Exchange.
Jumei, whose shares recently traded around $27, up over 15%, has been growing its revenue, income and customer base at triple-digit rates. The company has a healthy balance sheet, with increasing cash reserves and zero debt.
The Beijing company, valued at $3.2 billion, sells beauty products such as cosmetics, skin care products and fragrances, primarily from its Web site and mobile applications. The company opened its first physical store in Beijing in late 2013. The company is currently eyeing expansion by investing in mobile and growing its exclusive products portfolio.
Jumei's American depository receipts recently traded around $27, up over 15% compared with its IPO price of $22. This makes Jumei a bargain -- on average, shares of Jumei's peers trade at over 50 times their annual sales, according to data compiled by Thomson Reuters.Jumei gets its revenue from two sources: selling merchandise and generating fees by offering marketplace services to other vendors. Last year, Jumei earned 85.5% of its revenue by selling merchandise and 14.5% by offering marketplace services. Data from Alexa, which provides commercial Web traffic data, show the popularity of Jumei's Web site in China by visitors and pageviews. According to Frost and Sullivan, Jumei.com was the most visited beauty products Web site in China in 2013. In short, Jumei is the biggest online player in China's cosmetic industry, with a market share of 22%. That is an excellent position to be in since China is home to one of the world's largest beauty products industry, which is expected to grow at an average rate of 14.3% through 2018. Jumei's net revenue have grown from just $22 million and in 2011 to $483 million in 2013. The company's bottom line has also improved significantly, from a loss of $4 million in 2011 to a profit of $25 million in 2013. Meanwhile, Jumei cash reserves climbed from just $9.1 million in 2011 to $111.4 million by the end of last year. During this period, the company's customer base has grown to 10.5 million individuals by the end of 2013, from just 1.3 million in 2011 and 4.8 million in 2012.