KOKOWA
2021-05-03
😃😃😄
Jumia: Why We Remain Long The Stock And What To Look For In Q1 2021 Results
免责声明：上述内容仅代表发帖人个人观点，不构成本平台的任何投资建议。
分享至
微信
复制链接
精彩评论
我们需要你的真知灼见来填补这片空白
打开APP，发表看法
APP内打开
发表看法
3
3
{"i18n":{"language":"zh_CN"},"detailType":1,"isChannel":false,"data":{"magic":2,"id":108888271,"tweetId":"108888271","gmtCreate":1620010716193,"gmtModify":1634208543702,"author":{"id":3557704604168397,"idStr":"3557704604168397","authorId":3557704604168397,"authorIdStr":"3557704604168397","name":"KOKOWA","avatar":"https://static.tigerbbs.com/eeff56eeb7ebce5a55608cef0cd0bfae","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":9,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":187,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"extraTitle":"","html":"<html><head></head><body><p>😃😃😄</p></body></html>","htmlText":"<html><head></head><body><p>😃😃😄</p></body></html>","text":"😃😃😄","highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":3,"repostSize":0,"favoriteSize":0,"link":"https://laohu8.com/post/108888271","repostId":1129951066,"repostType":4,"repost":{"id":"1129951066","kind":"news","pubTimestamp":1620010240,"share":"https://www.laohu8.com/m/news/1129951066?lang=&edition=full","pubTime":"2021-05-03 10:50","market":"us","language":"en","title":"Jumia: Why We Remain Long The Stock And What To Look For In Q1 2021 Results","url":"https://stock-news.laohu8.com/highlight/detail?id=1129951066","media":"seekingalpha","summary":"Summary\n\nIn a recent article, we have provided a detailed overview on Jumia‘s business model and its","content":"<p><b>Summary</b></p>\n<ul>\n <li>In a recent article, we have provided a detailed overview on Jumia‘s business model and its financial results in the midst of the COVID pandemic.</li>\n <li>The stock has been very volatile, rising 15-fold from the pandemic lows, but shares are now off nearly 50% from those highs, reflecting mixed financials and general pressure on tech.</li>\n <li>For Q1 2021, it will be key to watch continued impact from the business mix shift and efficiency measures with a focus on marketplace revenue, profitability, and JumiaPay platform penetration.</li>\n <li>With a full year of business mix shift and efficiency measures being implemented, we may see fairer comparisons vs. 2020.</li>\n <li>We believe Jumia can reach a market cap of at least $10bn within the next 2-3 years.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/545e2c2f7b0bd637a8869f73f02365cd\" tg-width=\"1536\" tg-height=\"733\"><span>Photo by ipopba/iStock via Getty Images</span></p>\n<p><b>Investment thesis</b></p>\n<p>In our first article about Jumia (NYSE:JMIA) we argued that its high valuation warranted significant improvements in business metrics. Now, a few months down the road, we'll provide a view on whether we think the company was able to deliver or not and what investors should expect for Q1 2021 results and beyond. Interested readers can go to our previous article to read about why we are long Jumia stock since it was trading around $3-4 back in the first half of 2020.</p>\n<p>All in all, 2020 was a wild ride for Jumia Technologies. The stock rose by >1,500% from the pandemic lows in March 2020 but saw significant declines from those highs in the past weeks. The stock is now off by around 50% from its highs as of this writing.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/5c3e67f75a768fe1255686bc0703a250\" tg-width=\"635\" tg-height=\"403\"><span>Data by YCharts</span></p>\n<p>The reasons for this volatility are manyfold. Jumia entered 2020 with a significant shift in its business model away from first-party revenues towards its third-party marketplace revenues which impacted overall revenue growth significantly. And within its marketplace segment, Jumia is pivoting towards higher-frequency, every-day product categories like food, cosmetics, clothing, a.o., away from its reliance on phones and electronics. The company also implemented cost-cutting measures and exited several markets like Cameroon.</p>\n<p>The financial results for 2020 were reflecting just that and were far from impressive. Every single quarter in 2020 showed declines in GMV (except for Q4), which reflects the total value of orders for products and services on its platform. Remember that other e-commerce operators around the globe like Amazon (AMZN), Shopify (SHOP), or MercadoLibre (MELI) showed strong growth in their GMV and other metrics for the past year and grew their businesses from much larger bases. So why does Jumia fall short of matching up to its larger peers?</p>\n<p>The reason is fairly simple: Jumia is still shifting its business to focus on the highest growing product categories and geographies and therefore implemented a business mix shift towards exactly these higher life-time value, every-day product categories which are intended to:</p>\n<ul>\n <li>Drive up frequency of orders at better unit economics, and</li>\n <li>diversify the business away from relying mostly on one-time purchase items like phones and electronics.</li>\n</ul>\n<p>Higher order frequency order items can also positively impact JumiaPay on-platform penetration, which is its fintech offering. So in general, this business transition makes complete sense.</p>\n<p>However, the ongoing shift did not impress investors when it comes to the financial metrics that came along with it. This, together with the recent pressure on tech stocks in general put significant pressure on Jumia stock.</p>\n<p>Before we dig into our outlook for Q1 2021 and the reasons why we think the stock might soon tick up again, let's just quickly recap what the company actually does.</p>\n<p><b>Company overview</b></p>\n<p>In short, Jumia is an e-commerce operator with a Pan-African presence. At the end of 2020, the company had over 57 million product listings on its marketplace ranging from fashion and apparel, to smartphones, home and living, fast-moving consumer goods, beauty and perfumes and other electronics. Jumia operates across 11 countries that together have a population of 600 million people, which accounts for >70% of Africa's GDP of €2 trillion and almost 70% of Africa's internet users. Besides its e-commerce platform that connects buyers and sellers, the company also offers payment solutions via its JumiaPay platform, as well as logistics and marketing services.</p>\n<p>As of Dec 2020, the company had 6.8 million Annual Active Consumers,up 12% compared to the end of 2019, and around 110k of active sellers on its platform. Obviously, there is a large market for Jumia to go after and its penetration sits at around 1% from a total addressable population perspective.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/1a047878ff951ba3531a58c53cfede01\" tg-width=\"640\" tg-height=\"328\"><span>Source: company presentation</span></p>\n<p><b>Financial performance for 2020</b></p>\n<p>It is fair to say that Jumia's financials were not very impressive so far. For the full year, Jumia reported:</p>\n<ul>\n <li>A decline in overall revenue of 12.9%, while marketplace revenue grew by 19.6%. Growth in marketplace revenue (which excludes revenue from 1st party sales), however, slowed down to only 6.5% growth in Q4 2020.</li>\n <li>GMV was down 21% for the full year based on GMV declines for the first three quarters of 2020. On the positive side GMV ticked up by 23% in Q4 2020 vs. the comparable 2019 quarter supported by the company's Black Friday event in November 2020.</li>\n <li>Gross profit increased by 22.3% vs. full year 2019 and reached positive territory after fulfillment expense.</li>\n <li>Jumia is still burning through cash with an adjusted EBITDA of negative €119.5 million and an operating loss of negative €149.2 million for 2020.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/5cc15bb9adf3553403004e3a59f0f396\" tg-width=\"640\" tg-height=\"434\"><span>Source: press release</span></p>\n<p>On the positive side, 2020<i>marketplace revenue</i>growth has been positive in every single quarter, albeit with declining growth rates in Q4 at only 6.5% compared to above 20% YoY growth rates for the earlier quarters in 2020. However, it needs to be noted that the growth rate is impacted by the ongoing business mix rebalancing initiatives. Also worth to note is that marketplace revenue was growing in every quarter in 2020 despite the fact that fulfillment, sales and marketing, as well as G&A expenses were significantly reduced on a YoY basis, which drove some noteworthy improvements on a gross profit level.</p>\n<p><i>Gross profit</i>has been growing steadily over the past quarters with 22.3% growth for the full year of 2020 and 12.5% growth for the most recent quarter. In fact, Jumia's management has frequently reiterated that their business should be measured primarily on gross profit level. In its efforts to drive down cost and increase profitability, gross profit after fulfillment expense in Q4 2020 was positive at €1.0 compared to negative €2.9 per order in Q4 2019.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/7a18c7836211e449946ac4e9d553c522\" tg-width=\"640\" tg-height=\"404\"><span>Source: Investor presentation</span></p>\n<p>In addition to improvements on gross profit level, also the<i>number of annual active consumers</i>continued to grow and reached 6.8 million at the end of 2020, reflecting 12% growth vs. the end of 2019.</p>\n<p>One negative aspect to mention is that the<i>average number of orders</i>has declined in Q4 2020 vs. the prior year quarter. This is worrisome since it stands in contrast to management's strategy of pivoting towards higher-frequency purchase product categories (e.g. food, cosmetics, clothing, a.o.) and away from its reliance on phones and electronics. However, it must be mentioned here, too, that total orders are impacted mostly by decreases in airtime recharge transactions on the JumiaPay platform accompanied (albeit to a lesser extent) by the exit from countries like Cameroon, Rwanda and Tanzania that the company executed in 2019/2020 and which are not accounted for in the total orders metric.</p>\n<p><img src=\"https://static.tigerbbs.com/d7cc7094a826cc28c50d388c4ba04094\" tg-width=\"640\" tg-height=\"154\"></p>\n<p></p>\n<p>Management explained the decline in total orders as follows:</p>\n<blockquote>\n Orders reached 8.1 million, down 3% year-over-year on the back of a 14% decrease in digital services transactions on the JumiaPay app, while Orders on the rest of the platform were stable. (...) JumiaPay app is concentrated in airtime recharge transactions as a result of reduced consumer incentives within this category which has historically been promotionally intensive.\n</blockquote>\n<p>Worth to mention is that compared to Q3 2020, the total number of orders was up 21%. So at least we are seeing a sequential increase in total order volume.</p>\n<p>Importantly, Jumia made<i>progress in reducing the overall rate of Cancellations, Failed Deliveries and Returns</i>(CFDR):</p>\n<ul>\n <li>CFDR rate as a percentage of GMV improved from 30.3% in 2019 to 24.7% in 2020, while the CFDR rate as a percentage of Orders improved from 22.5% in 2019 to 16.1% in 2020.</li>\n <li>Factoring in CFDR, full-year total orders after CFDR for all items excluding Phones and Electronics actually showed an increase by 19% YoY and 14% after CFDR for all product categories.</li>\n <li>Also GMV after adjusting for CFDR showed growth of 15% YoY, especially driven by Jumia's digital services, food delivery and non-phone electronic, with 41%, 32% and 10% growth respectively.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/b90cfa964fffdbe597e01ad312e6ad77\" tg-width=\"640\" tg-height=\"378\"><span>Source: Investor presentation</span></p>\n<p>For Q1 2021 we expect to see continued impacts from the business mix shift as evidenced by the most recent quarter, during which the share of GMV from Phones & Electronics declined significantly and now sits at 43% as of Dec 2020. Investors should closely watch the ongoing impact from the transition towards higher-frequency purchase, every-day product categories and the corresponding interplay between GMV, Total Orders and CFDR moving forward.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/6ad57a678143756c07bf189e934e732d\" tg-width=\"640\" tg-height=\"170\"><span>Source: Investor presentation</span></p>\n<p><i><b>JumiaPay shows solid growth</b></i></p>\n<p>While Jumia's e-commerce platform is the one part of the business, its payments platform JumiaPay is said to be the actual raw diamond in the making. Q4 results for JumiaPay showed:</p>\n<ul>\n <li>TPV growth of 30% to €59.3 million, with on-platform TPV penetration reaching 25.7% of GMV in Q4 2020 compared to 15.6% of GMV in Q4 2019.</li>\n <li>In total, 33.1% of Orders placed on the Jumia platform were being transacted with JumiaPay compared to 29.5% in Q4 2019.</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/8eea7dec2ff85cc13ffddcc5edcafa7a\" tg-width=\"640\" tg-height=\"382\"></p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/d0638890e9c2174b976f5e69b82d7c15\" tg-width=\"640\" tg-height=\"111\"><span>Source: Investor presentation / PR</span></p>\n<p>Despite the robust growth, we see a slight decline in overall growth rates for Q4 compared to prior quarters also for JumiaPay. Some of that decline can be explained by the before-mentioned decline in airtime recharge transactions. But it also seems that there are some underlying issues with adoption, and maybe lack of marketing activities and investments from management. Investors should closely watch JumiaPay metrics moving forward.</p>\n<p><b>First Quarter 2021 outlook</b></p>\n<p>Now, with Q1 results on the horizon we expect that this quarter could be one of the first quarters where YoY comparisons for Jumia's key business metrics start to shift into a more positive direction, accompanied by continued improvements on a gross profit level as efficiency measures continue. The move away from higher cost items like Phones & Electronics towards higher-frequency purchase items from the fashion, beauty, FMCG, and food delivery categories has now been going on for more than a year and should make for easier YoY comparisons in the quarters ahead. Furthermore, the impact from the exit of countries like Cameroon now being visible in full-year 2020 metrics should also play out favourably.</p>\n<p>We strongly believe that the business mix rebalancing helps to diversify the business towards more frequent purchases which drive improved unit economics and positive gross profit developments. We will be closely watching those metrics for Q1 2021 and beyond, including platform penetration and growth for JumiaPay. While JumiaPay platform penetration is growing very robustly, we would like to see transaction volume growth getting back to levels we saw in the earlier quarters in 2020. This is where we see that management may need to step up its marketing spending to drive awareness and penetration.</p>\n<p>Valuation remains stretched, but that's nothing long-term investors should be concerned about</p>\n<p>Following the almost 50% decline in Jumia's stock price the company's market capitalization currently sits around $3bn. Since first-party revenue is volatile and not a key focus for the company, we value Jumia on the basis of marketplace revenue, which came in at around €94 million for 2020. Hence, the current price to marketplace revenue multiple is 30x - not cheap at all.</p>\n<p>However, valuing Jumia right now based on general revenue multiples falls short of the potential that the company has in front of it. The<i>market opportunity</i>remains significant: around 17 million SMEs and merchants and $4.0tn in household and B2B spending underpin the large untapped opportunity for digitization of commerce and payments in Africa (seehere). McKinsey estimates that African e-commerce could account for 10% of the continent's overall retail sales by 2025, which would be $75 billion in annual revenue potential (seehere). Irrespective of the actual market size, it is clear that Jumia has only penetrated a very small portion of that market for now. We are not saying that Jumia will ever grow into a comparable valuation like Amazon, Shopify or MercadoLibre, but it doesn't need to do that to become a winning investment. By at least capturing a fraction of the $75 billion e-commerce opportunity, Jumia may be well-positioned to become a technology leader and expand its market capitalization to at least $10 billion within the next 2-3 years.</p>\n<p><b>Risks</b></p>\n<p>Clearly, execution is the biggest risk. While we generally applaud management's efficiency efforts, we fear that the focus may be too strongly on cost-cutting at the expense of growing its active customer base, which could result in lackluster growth rates. We have seen this become reality in Q4 2020 numbers with declines in marketplace revenue and JumiaPay growth rates vs. prior quarters. The recent cost-cutting and efficiency measures have shown to positively impact the company's gross profits. However, Jumia cannot operate forever at a low flame and ultimately needs to ramp-up its marketing and other investments to accelerate customer penetration and growth overall. Remember that GMV growth was negative for 3 out of 4 quarters in 2020 and only in Q4 showed positive YoY growth rates supported by the company's Black Friday event in November 2020. This shows that increases in marketing spend are inevitable in order to remain in the front seat and stay ahead of competitors.</p>\n<p>Another risk is not so much a company-specific risk but a matter of whether investors have the required patience. The shift to digital commerce in Africa won't happen overnight. Remember that it took Amazon, MercadoLibre or Alibaba(NYSE:BABA)more than 20 years to become the e-commerce giants that they are today. With the complex infrastructure in Africa and often still nascent internet penetration, especially in rural areas, it may take decades for Jumia to drive online penetration in commerce to a large enough level and to then capture a significant share. Investors need to be patient, and that means at least 10 years + down the road.</p>\n<p><b>Conclusion</b></p>\n<p>We recently wrote thatJumia's high valuation warrants significant improvements in business metrics. So what is the verdict a few months later? We see improvements on its path to continued growth while reducing its operating expenses along the way. While we have not seen the level of business metric improvements that we hoped for, Jumia remains on track to make step-by-step improvements across its business. We are particularly happy to see marketplace revenue growth in parallel to improving profitability measures. Order volume growth and GMV should be carefully looked at going forward and we can only reiterate that management should not solely focus on cost-cutting at the detriment of its growth opportunities. JumiaPay developments will be watched closely in the Q1 2021 report. The potential for monetization of its payment platform is huge and may drive significant value in the future when it reaches a certain scale, and there may even be the possibility that JumiaPay may be carved out as a standalone entity.</p>\n<p>While in the short-term Jumia stock will likely remain very volatile, the long-term opportunity for the company is huge and we continue to believe that Jumia is well positioned to become the next big e-commerce player. But this will not happen in a year or two. It is a long-term play of 10 years +. Investors need to stay very patient with this stock and need to accept setbacks along the way. Our conviction and patience is unchanged and we therefore continue to stay long the stock as we believe the company can at least grow to a market cap of >$10 billion within the next 2-3 years.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Jumia: Why We Remain Long The Stock And What To Look For In Q1 2021 Results</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nJumia: Why We Remain Long The Stock And What To Look For In Q1 2021 Results\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-05-03 10:50 GMT+8 <a href=https://seekingalpha.com/article/4423644-jumia-remain-long-stock-q1-2021-results><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nIn a recent article, we have provided a detailed overview on Jumia‘s business model and its financial results in the midst of the COVID pandemic.\nThe stock has been very volatile, rising 15-...</p>\n\n<a href=\"https://seekingalpha.com/article/4423644-jumia-remain-long-stock-q1-2021-results\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"JMIA":"Jumia Technologies AG"},"source_url":"https://seekingalpha.com/article/4423644-jumia-remain-long-stock-q1-2021-results","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1129951066","content_text":"Summary\n\nIn a recent article, we have provided a detailed overview on Jumia‘s business model and its financial results in the midst of the COVID pandemic.\nThe stock has been very volatile, rising 15-fold from the pandemic lows, but shares are now off nearly 50% from those highs, reflecting mixed financials and general pressure on tech.\nFor Q1 2021, it will be key to watch continued impact from the business mix shift and efficiency measures with a focus on marketplace revenue, profitability, and JumiaPay platform penetration.\nWith a full year of business mix shift and efficiency measures being implemented, we may see fairer comparisons vs. 2020.\nWe believe Jumia can reach a market cap of at least $10bn within the next 2-3 years.\n\nPhoto by ipopba/iStock via Getty Images\nInvestment thesis\nIn our first article about Jumia (NYSE:JMIA) we argued that its high valuation warranted significant improvements in business metrics. Now, a few months down the road, we'll provide a view on whether we think the company was able to deliver or not and what investors should expect for Q1 2021 results and beyond. Interested readers can go to our previous article to read about why we are long Jumia stock since it was trading around $3-4 back in the first half of 2020.\nAll in all, 2020 was a wild ride for Jumia Technologies. The stock rose by >1,500% from the pandemic lows in March 2020 but saw significant declines from those highs in the past weeks. The stock is now off by around 50% from its highs as of this writing.\nData by YCharts\nThe reasons for this volatility are manyfold. Jumia entered 2020 with a significant shift in its business model away from first-party revenues towards its third-party marketplace revenues which impacted overall revenue growth significantly. And within its marketplace segment, Jumia is pivoting towards higher-frequency, every-day product categories like food, cosmetics, clothing, a.o., away from its reliance on phones and electronics. The company also implemented cost-cutting measures and exited several markets like Cameroon.\nThe financial results for 2020 were reflecting just that and were far from impressive. Every single quarter in 2020 showed declines in GMV (except for Q4), which reflects the total value of orders for products and services on its platform. Remember that other e-commerce operators around the globe like Amazon (AMZN), Shopify (SHOP), or MercadoLibre (MELI) showed strong growth in their GMV and other metrics for the past year and grew their businesses from much larger bases. So why does Jumia fall short of matching up to its larger peers?\nThe reason is fairly simple: Jumia is still shifting its business to focus on the highest growing product categories and geographies and therefore implemented a business mix shift towards exactly these higher life-time value, every-day product categories which are intended to:\n\nDrive up frequency of orders at better unit economics, and\ndiversify the business away from relying mostly on one-time purchase items like phones and electronics.\n\nHigher order frequency order items can also positively impact JumiaPay on-platform penetration, which is its fintech offering. So in general, this business transition makes complete sense.\nHowever, the ongoing shift did not impress investors when it comes to the financial metrics that came along with it. This, together with the recent pressure on tech stocks in general put significant pressure on Jumia stock.\nBefore we dig into our outlook for Q1 2021 and the reasons why we think the stock might soon tick up again, let's just quickly recap what the company actually does.\nCompany overview\nIn short, Jumia is an e-commerce operator with a Pan-African presence. At the end of 2020, the company had over 57 million product listings on its marketplace ranging from fashion and apparel, to smartphones, home and living, fast-moving consumer goods, beauty and perfumes and other electronics. Jumia operates across 11 countries that together have a population of 600 million people, which accounts for >70% of Africa's GDP of €2 trillion and almost 70% of Africa's internet users. Besides its e-commerce platform that connects buyers and sellers, the company also offers payment solutions via its JumiaPay platform, as well as logistics and marketing services.\nAs of Dec 2020, the company had 6.8 million Annual Active Consumers,up 12% compared to the end of 2019, and around 110k of active sellers on its platform. Obviously, there is a large market for Jumia to go after and its penetration sits at around 1% from a total addressable population perspective.\nSource: company presentation\nFinancial performance for 2020\nIt is fair to say that Jumia's financials were not very impressive so far. For the full year, Jumia reported:\n\nA decline in overall revenue of 12.9%, while marketplace revenue grew by 19.6%. Growth in marketplace revenue (which excludes revenue from 1st party sales), however, slowed down to only 6.5% growth in Q4 2020.\nGMV was down 21% for the full year based on GMV declines for the first three quarters of 2020. On the positive side GMV ticked up by 23% in Q4 2020 vs. the comparable 2019 quarter supported by the company's Black Friday event in November 2020.\nGross profit increased by 22.3% vs. full year 2019 and reached positive territory after fulfillment expense.\nJumia is still burning through cash with an adjusted EBITDA of negative €119.5 million and an operating loss of negative €149.2 million for 2020.\n\nSource: press release\nOn the positive side, 2020marketplace revenuegrowth has been positive in every single quarter, albeit with declining growth rates in Q4 at only 6.5% compared to above 20% YoY growth rates for the earlier quarters in 2020. However, it needs to be noted that the growth rate is impacted by the ongoing business mix rebalancing initiatives. Also worth to note is that marketplace revenue was growing in every quarter in 2020 despite the fact that fulfillment, sales and marketing, as well as G&A expenses were significantly reduced on a YoY basis, which drove some noteworthy improvements on a gross profit level.\nGross profithas been growing steadily over the past quarters with 22.3% growth for the full year of 2020 and 12.5% growth for the most recent quarter. In fact, Jumia's management has frequently reiterated that their business should be measured primarily on gross profit level. In its efforts to drive down cost and increase profitability, gross profit after fulfillment expense in Q4 2020 was positive at €1.0 compared to negative €2.9 per order in Q4 2019.\nSource: Investor presentation\nIn addition to improvements on gross profit level, also thenumber of annual active consumerscontinued to grow and reached 6.8 million at the end of 2020, reflecting 12% growth vs. the end of 2019.\nOne negative aspect to mention is that theaverage number of ordershas declined in Q4 2020 vs. the prior year quarter. This is worrisome since it stands in contrast to management's strategy of pivoting towards higher-frequency purchase product categories (e.g. food, cosmetics, clothing, a.o.) and away from its reliance on phones and electronics. However, it must be mentioned here, too, that total orders are impacted mostly by decreases in airtime recharge transactions on the JumiaPay platform accompanied (albeit to a lesser extent) by the exit from countries like Cameroon, Rwanda and Tanzania that the company executed in 2019/2020 and which are not accounted for in the total orders metric.\n\n\nManagement explained the decline in total orders as follows:\n\n Orders reached 8.1 million, down 3% year-over-year on the back of a 14% decrease in digital services transactions on the JumiaPay app, while Orders on the rest of the platform were stable. (...) JumiaPay app is concentrated in airtime recharge transactions as a result of reduced consumer incentives within this category which has historically been promotionally intensive.\n\nWorth to mention is that compared to Q3 2020, the total number of orders was up 21%. So at least we are seeing a sequential increase in total order volume.\nImportantly, Jumia madeprogress in reducing the overall rate of Cancellations, Failed Deliveries and Returns(CFDR):\n\nCFDR rate as a percentage of GMV improved from 30.3% in 2019 to 24.7% in 2020, while the CFDR rate as a percentage of Orders improved from 22.5% in 2019 to 16.1% in 2020.\nFactoring in CFDR, full-year total orders after CFDR for all items excluding Phones and Electronics actually showed an increase by 19% YoY and 14% after CFDR for all product categories.\nAlso GMV after adjusting for CFDR showed growth of 15% YoY, especially driven by Jumia's digital services, food delivery and non-phone electronic, with 41%, 32% and 10% growth respectively.\n\nSource: Investor presentation\nFor Q1 2021 we expect to see continued impacts from the business mix shift as evidenced by the most recent quarter, during which the share of GMV from Phones & Electronics declined significantly and now sits at 43% as of Dec 2020. Investors should closely watch the ongoing impact from the transition towards higher-frequency purchase, every-day product categories and the corresponding interplay between GMV, Total Orders and CFDR moving forward.\nSource: Investor presentation\nJumiaPay shows solid growth\nWhile Jumia's e-commerce platform is the one part of the business, its payments platform JumiaPay is said to be the actual raw diamond in the making. Q4 results for JumiaPay showed:\n\nTPV growth of 30% to €59.3 million, with on-platform TPV penetration reaching 25.7% of GMV in Q4 2020 compared to 15.6% of GMV in Q4 2019.\nIn total, 33.1% of Orders placed on the Jumia platform were being transacted with JumiaPay compared to 29.5% in Q4 2019.\n\n\nSource: Investor presentation / PR\nDespite the robust growth, we see a slight decline in overall growth rates for Q4 compared to prior quarters also for JumiaPay. Some of that decline can be explained by the before-mentioned decline in airtime recharge transactions. But it also seems that there are some underlying issues with adoption, and maybe lack of marketing activities and investments from management. Investors should closely watch JumiaPay metrics moving forward.\nFirst Quarter 2021 outlook\nNow, with Q1 results on the horizon we expect that this quarter could be one of the first quarters where YoY comparisons for Jumia's key business metrics start to shift into a more positive direction, accompanied by continued improvements on a gross profit level as efficiency measures continue. The move away from higher cost items like Phones & Electronics towards higher-frequency purchase items from the fashion, beauty, FMCG, and food delivery categories has now been going on for more than a year and should make for easier YoY comparisons in the quarters ahead. Furthermore, the impact from the exit of countries like Cameroon now being visible in full-year 2020 metrics should also play out favourably.\nWe strongly believe that the business mix rebalancing helps to diversify the business towards more frequent purchases which drive improved unit economics and positive gross profit developments. We will be closely watching those metrics for Q1 2021 and beyond, including platform penetration and growth for JumiaPay. While JumiaPay platform penetration is growing very robustly, we would like to see transaction volume growth getting back to levels we saw in the earlier quarters in 2020. This is where we see that management may need to step up its marketing spending to drive awareness and penetration.\nValuation remains stretched, but that's nothing long-term investors should be concerned about\nFollowing the almost 50% decline in Jumia's stock price the company's market capitalization currently sits around $3bn. Since first-party revenue is volatile and not a key focus for the company, we value Jumia on the basis of marketplace revenue, which came in at around €94 million for 2020. Hence, the current price to marketplace revenue multiple is 30x - not cheap at all.\nHowever, valuing Jumia right now based on general revenue multiples falls short of the potential that the company has in front of it. Themarket opportunityremains significant: around 17 million SMEs and merchants and $4.0tn in household and B2B spending underpin the large untapped opportunity for digitization of commerce and payments in Africa (seehere). McKinsey estimates that African e-commerce could account for 10% of the continent's overall retail sales by 2025, which would be $75 billion in annual revenue potential (seehere). Irrespective of the actual market size, it is clear that Jumia has only penetrated a very small portion of that market for now. We are not saying that Jumia will ever grow into a comparable valuation like Amazon, Shopify or MercadoLibre, but it doesn't need to do that to become a winning investment. By at least capturing a fraction of the $75 billion e-commerce opportunity, Jumia may be well-positioned to become a technology leader and expand its market capitalization to at least $10 billion within the next 2-3 years.\nRisks\nClearly, execution is the biggest risk. While we generally applaud management's efficiency efforts, we fear that the focus may be too strongly on cost-cutting at the expense of growing its active customer base, which could result in lackluster growth rates. We have seen this become reality in Q4 2020 numbers with declines in marketplace revenue and JumiaPay growth rates vs. prior quarters. The recent cost-cutting and efficiency measures have shown to positively impact the company's gross profits. However, Jumia cannot operate forever at a low flame and ultimately needs to ramp-up its marketing and other investments to accelerate customer penetration and growth overall. Remember that GMV growth was negative for 3 out of 4 quarters in 2020 and only in Q4 showed positive YoY growth rates supported by the company's Black Friday event in November 2020. This shows that increases in marketing spend are inevitable in order to remain in the front seat and stay ahead of competitors.\nAnother risk is not so much a company-specific risk but a matter of whether investors have the required patience. The shift to digital commerce in Africa won't happen overnight. Remember that it took Amazon, MercadoLibre or Alibaba(NYSE:BABA)more than 20 years to become the e-commerce giants that they are today. With the complex infrastructure in Africa and often still nascent internet penetration, especially in rural areas, it may take decades for Jumia to drive online penetration in commerce to a large enough level and to then capture a significant share. Investors need to be patient, and that means at least 10 years + down the road.\nConclusion\nWe recently wrote thatJumia's high valuation warrants significant improvements in business metrics. So what is the verdict a few months later? We see improvements on its path to continued growth while reducing its operating expenses along the way. While we have not seen the level of business metric improvements that we hoped for, Jumia remains on track to make step-by-step improvements across its business. We are particularly happy to see marketplace revenue growth in parallel to improving profitability measures. Order volume growth and GMV should be carefully looked at going forward and we can only reiterate that management should not solely focus on cost-cutting at the detriment of its growth opportunities. JumiaPay developments will be watched closely in the Q1 2021 report. The potential for monetization of its payment platform is huge and may drive significant value in the future when it reaches a certain scale, and there may even be the possibility that JumiaPay may be carved out as a standalone entity.\nWhile in the short-term Jumia stock will likely remain very volatile, the long-term opportunity for the company is huge and we continue to believe that Jumia is well positioned to become the next big e-commerce player. But this will not happen in a year or two. It is a long-term play of 10 years +. Investors need to stay very patient with this stock and need to accept setbacks along the way. Our conviction and patience is unchanged and we therefore continue to stay long the stock as we believe the company can at least grow to a market cap of >$10 billion within the next 2-3 years.","news_type":1},"isVote":1,"tweetType":1,"viewCount":76,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":6,"xxTargetLangEnum":"ORIG"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/108888271"}
精彩评论