Shein eyes a valuation rivalling H&M. Will the market buy it?
Online fast-fashion platform Shein believes it deserves a premium valuation comparable to that of industry peers like H&M, citing its business model and global customer base as major competitive advantages, according to internal documents seen by the South China Morning Post. Shein cited analysts who said the market should view the company as a global fashion giant similar to Zara’s parent…
Shein, the online fast-fashion platform, believes it warrants a valuation comparable to industry giants like H&M and Zara's parent company Inditex, according to internal documents obtained by the South China Morning Post. Investors cite Shein's global customer base and business model as significant competitive advantages. Analysts suggest the market should view Shein as a global fashion giant, not just a regional Chinese brand.
A US investment bank projects Shein's net profit to grow at a 12% compound annual rate from 2025 to 2028, surpassing Inditex's 9% and H&M's 4%. The company's "LATR" model, which involves testing products in small batches before scaling production via its smart supply chain, provides a major advantage. This approach yields inventory turnover cycles of just 36 days, outperforming Inditex's 71 days and Fast Retailing's 114.
Shein seeks to match or exceed the valuation multiples of Inditex and H&M, which typically have price-to-earnings ratios of 25 and 20, respectively. The company plans to take investor orders for its Hong Kong IPO next week, aiming for a valuation exceeding $30 billion – surpassing H&M's $26 billion but still far below Inditex's $208 billion.
However, market sentiment leans more cautious, with the market valuing Shein at 13 to 15 times its estimated 2027 net profit, putting its value at $22 billion to $25 billion. Legal and regulatory risks loom large, with Shein currently involved in over 40 lawsuits over alleged intellectual property rights violations. The company has set aside $80 million to cover these legal costs.
Additionally, Shein recently lost a copyright case against Temu in London. US and EU lawmakers are tightening regulations on the "de minimis" customs rule, which allowed low-value shipments to enter countries duty-free, posing a threat to Shein's low-cost cross-border shipping model. Rising logistics and supply chain costs are also denting its profit margins.
Written by urgent.news from South China Morning Post's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
