Financial Highlights [Annual Performance Summary](index=4&type=section&id=%E5%B9%B4%E5%BA%A6%E6%A5%AD%E7%B8%BE%E6%91%98%E8%A6%81) The company achieved a significant turnaround this fiscal year, with operating profit shifting from a loss to a gain and profit attributable to owners reaching a positive figure, despite a slight revenue decrease, driven by effective cost control - Annual Performance Summary (For the Year Ended March 31) | Metric | For the Year Ended March 31, 2025 (RMB million) | For the Year Ended March 31, 2024 (RMB million) | Percentage Change | | :--- | :--- | :--- | :--- | | Revenue | 71,552 | 72,567 | (1.4)% | | Gross Profit | 17,236 | 17,958 | (4.0)% | | Operating Profit / (Loss) | 1,425 | (1,009) | N/A | | Profit / (Loss) Attributable to Owners of the Company | 405 | (1,605) | N/A | | Basic Earnings / (Loss) Per Share | RMB 0.04 | RMB (0.17) | N/A | - Financial Position Summary (As of March 31) | Metric | 2025 (RMB million) | 2024 (RMB million) | Percentage Change | | :--- | :--- | :--- | :--- | | Total Assets | 55,973 | 60,715 | (7.8)% | | Total Liabilities | 35,545 | 38,921 | (8.7)% | | Net Assets | 20,428 | 21,794 | (6.3)% | | Net Cash | 12,529 | 16,504 | (24.1)% | - Financial charts show that despite slight declines in revenue and gross profit over the past two years, operating profit and net profit achieved a **V-shaped reversal** this fiscal year, indicating a significant recovery in the company's profitability after last year's low point[12](index=12&type=chunk)[14](index=14&type=chunk)[15](index=15&type=chunk) Chairman's Statement [Chairman's Statement](index=6&type=section&id=%E4%B8%BB%E5%B8%AD%E8%87%B4%E8%A9%9E) The Chairman positions 2025 as a pivotal year for strategic transformation, emphasizing a return to retail fundamentals with a mission to be the preferred fresh food basket, focusing on product, price, experience, and service to reconstruct retail value - The strategic core focuses on the "vegetable basket project," prioritizing high-frequency, essential categories like fresh produce and cooked food, while ensuring the **lowest regional prices** and **zero tolerance for safety issues**[18](index=18&type=chunk) - The company will enhance customer memory points by redesigning store layouts and creating "peak-end experiences," and promote digital transformation across the marketing and procurement value chain to optimize inventory turnover and out-of-stock rates[18](index=18&type=chunk) - Facing the impact of new retail formats, the company adheres to a long-term development path, differentiating its formats: hypermarkets strengthen one-stop shopping, community supermarkets deepen community essential needs, and membership stores focus on "selection + experience"[19](index=19&type=chunk) CEO's Statement [CEO's Statement](index=7&type=section&id=%E9%A6%96%E5%B8%AD%E5%9F%B7%E8%A1%8C%E5%AE%98%E8%87%B4%E8%A9%9E) The CEO emphasizes returning to business fundamentals and long-term value, focusing on differentiated formats, upholding quality, price competitiveness, and service, while optimizing talent development to create value for all stakeholders - The company has clearly differentiated its three major formats: - **Hypermarkets**: Transforming into community living centers integrating shopping, experience, and services - **Mid-sized Supermarkets**: Focusing on efficiency improvements with a streamlined and efficient model for fast-paced needs - **Membership Stores**: Dedicated to enhancing customers' quality of life and shopping experience[24](index=24&type=chunk) - The company views employees as its most valuable asset, and will enable employees to realize personal value, achieve a sense of accomplishment and belonging by optimizing talent development mechanisms, providing scientific incentives, and clear career paths[22](index=22&type=chunk) Management Discussion and Analysis [Financial Review](index=8&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) This fiscal year, the company achieved a significant profitability turnaround, with operating profit shifting from loss to gain, primarily due to substantial reductions in selling and marketing and administrative expenses, offsetting revenue and gross profit declines - Revenue Composition and Change | Revenue Category | FY2025 (RMB billion) | FY2024 (RMB billion) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Sales of Goods | 68.482 | 69.431 | -1.4% | | Membership Fees | 0.036 | 0.016 | +125.0% | | Rental Income | 3.034 | 3.120 | -2.8% | - Same-store sales growth (excluding supply chain business) was **0.6%**, primarily driven by a steady increase in average transaction value due to enhanced price competitiveness[26](index=26&type=chunk) - Online sales revenue achieved **mid-single-digit growth**[26](index=26&type=chunk) - Profitability Indicators | Metric | FY2025 | FY2024 | Change | | :--- | :--- | :--- | :--- | | Gross Profit | RMB 17.236 billion | RMB 17.958 billion | -4.0% | | Gross Profit Margin | 24.1% | 24.7% | -0.6pp | | Operating Profit / (Loss) | RMB 1.425 billion | RMB (1.009) billion | Turnaround to Profit | | Operating Profit Margin | 2.0% | -1.4% | +3.4pp | | Profit / (Loss) for the Year | RMB 0.386 billion | RMB (1.668) billion | Turnaround to Profit | | Net Profit Margin | 0.5% | -2.3% | +2.8pp | - Significant achievements in cost control: - **Sales and Marketing Expenses**: Decreased by **16.2%** to **RMB 15.232 billion**, mainly due to reduced personnel expenses and impairment losses[30](index=30&type=chunk) - **Administrative Expenses**: Decreased by **24.1%** to **RMB 1.709 billion**, mainly due to reduced goodwill impairment and headquarters organizational optimization[33](index=33&type=chunk) [Liquidity, Financial Resources and Gearing Ratio](index=12&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E3%80%81%E8%B2%A1%E5%8B%99%E8%B3%87%E6%BA%90%E5%8F%8A%E6%AC%8A%E7%9B%8A%E8%B2%A0%E5%82%B5%E6%AF%94%E7%8E%87) The Group's net cash position decreased, while net cash inflow from operating activities significantly increased due to an accounting reclassification of restricted deposits, with improved inventory and trade payables turnover days indicating enhanced operational efficiency - Key Liquidity and Efficiency Indicators | Metric | March 31, 2025 | March 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Net Cash Inflow from Operating Activities | RMB 3.549 billion | RMB 0.926 billion | +283.3% | | Net Cash | RMB 12.529 billion | RMB 16.504 billion | -24.1% | | Gearing Ratio | 0.61 | 0.76 | Decrease | | Inventory Turnover Days | 50 days | 53 days | Improvement | | Trade Payables Turnover Days | 67 days | 72 days | Improvement | - The significant increase in net cash inflow from operating activities is misleading, primarily stemming from a **RMB 3.144 billion** change in restricted deposits[40](index=40&type=chunk) - To earn higher interest, the company reclassified some short-term restricted deposits to long-term, which appears as cash inflow from operating activities and cash outflow from investing activities on the books[40](index=40&type=chunk) [Investing and Financing Activities](index=13&type=section&id=%E6%8A%95%E8%B3%87%E8%88%87%E8%9E%8D%E8%B3%87%E6%B4%BB%E5%8B%95) This fiscal year, net cash outflow from investing activities sharply increased, primarily for restricted fixed deposits, while net cash outflow from financing activities also significantly rose due to higher bank loan repayments and increased dividend payments - Net cash outflow from investing activities was **RMB 4.913 billion**, a significant year-on-year increase, primarily reflecting: - Net investment of **RMB 3.459 billion** in restricted fixed deposits with maturities exceeding three months - Capital expenditure of **RMB 0.985 billion** for new store development and existing store renovation[42](index=42&type=chunk) - Net cash outflow from financing activities was **RMB 3.750 billion**, a **176.1%** year-on-year increase, mainly due to: - Repayment of bank borrowings exceeding proceeds from new borrowings - Increased dividends paid[43](index=43&type=chunk) [Business Review and Outlook](index=14&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7%E8%88%87%E5%B1%95%E6%9C%9B) Amidst moderate economic growth and low consumer prices, the company executed a "low price, good quality" strategy, focusing on fresh produce standardization, optimizing supply chain efficiency through digitalization, and adjusting its store network by opening new M Member Stores while closing hypermarkets, aiming for a "daily low price + community living center" model - The core business strategy is "low price, good quality," reshaping price perception, vigorously developing the "standardization" of fresh produce categories, and accelerating the development of its private label "Super Save" series, emphasizing value for money[49](index=49&type=chunk) - Store Network Status (As of March 31, 2025) | Store Type | Number | Total GFA (million sq.m.) | | :--- | :--- | :--- | | Hypermarkets | 465 | 1,300.8 | | Mid-sized Supermarkets | 33 | 23.4 | | M Member Stores | 7 | 25.2 | | **Total** | **505** | **1,349.4** | - This fiscal year, new store openings included **1 hypermarket**, **4 mid-sized supermarkets**, and **4 M Member Stores**; concurrently, **8 hypermarkets** and **1 mid-sized supermarket** were closed, indicating the company is actively adjusting its format mix and increasing investment in the membership store model[52](index=52&type=chunk) - The future outlook is to build a "daily low price + community living center" model, combining enhanced product strength and optimized store layouts to improve customer experience and achieve a balance of cost, efficiency, and service[56](index=56&type=chunk) Directors' Report [Dividends](index=22&type=section&id=%E8%82%A1%E6%81%AF) The Board recommends a final dividend of HKD 0.17 per share, bringing the total annual distribution to HKD 0.34 per share, significantly higher than the previous year, with shareholders having currency options - Annual Dividend Distribution | Dividend Type | Amount Per Share (HKD) | Total Amount (approx. HKD million) | | :--- | :--- | :--- | | Interim Dividend (Paid) | 0.17 | 1,622 | | Proposed Final Dividend | 0.17 | 1,622 | | **Total Annual Dividend** | **0.34** | **3,244** | [Share Schemes](index=32&type=section&id=%E8%82%A1%E4%BB%BD%E8%A8%88%E5%8A%83) The Group utilizes share option and employee trust benefit schemes for talent retention, with no new options granted this fiscal year but some vesting, and plans to repurchase subsidiary equity held by employee trusts to achieve 100% control - As of March 31, 2025, **35,000,000 share options** remained unexercised under the share option scheme, of which **6,250,000** had vested and were exercisable[136](index=136&type=chunk) - No new options were granted during the reporting period, but **10,000,000 options** lapsed[136](index=136&type=chunk) - The employee trust benefit schemes (RT-Mart Scheme and Auchan Scheme) allow employees to hold equity in operating subsidiaries (Sun Art Retail Group Limited and Auchan Investment)[138](index=138&type=chunk)[140](index=140&type=chunk) - As of March 31, 2025, the trusts held approximately **2.015%** and **1.3834%** equity in Sun Art Retail Group Limited and Auchan Investment, respectively[138](index=138&type=chunk)[140](index=140&type=chunk) - On May 20, 2025, the Group entered into equity transfer agreements with the trustee, proposing to acquire the **2.015%** and **1.3834%** shares held by the trusts in Sun Art Retail (China) and Auchan (China) Investment, respectively, for a total consideration not exceeding **RMB 599 million** and **RMB 34 million**[165](index=165&type=chunk)[166](index=166&type=chunk) - Upon completion, the Group will achieve **100% control** over these two core operating subsidiaries[165](index=165&type=chunk)[166](index=166&type=chunk) [Continuing Connected Transactions](index=46&type=section&id=%E6%8C%81%E7%BA%8C%E9%97%9C%E9%80%A3%E4%BA%A4%E6%98%93) The Group maintains multiple continuing connected transaction agreements with Alibaba Group affiliates for services like delivery, platform, and merchandise, with all transactions within annual caps and reviewed for fairness and shareholder interest - Major Continuing Connected Transactions with Alibaba Affiliates (For the Year Ended March 31, 2025) | Transaction Type | Annual Cap (RMB million) | Actual Transaction Amount (RMB million) | | :--- | :--- | :--- | | **Procurement** | | | | Procurement of Delivery Services | 2,400 | 1,269.7 | | Procurement of Platform Services | 525 | 246.5 | | Procurement of Merchandise | 320 | 73.9 | | Procurement of Payment Services | 100 | 48.3 | | **Provision** | | | | Provision of Joint Business Promotion Services | 595 | 292.9 | | Provision of Merchandise | 320 | 72.2 | | Provision of Delivery Services | 60 | 54.7 | - Independent non-executive directors have reviewed these continuing connected transactions and confirmed that they were conducted in the ordinary course of the Group's business, on normal commercial terms, fair and reasonable, and in the overall interests of the shareholders[210](index=210&type=chunk)[211](index=211&type=chunk) - The auditor also issued an unqualified opinion letter[210](index=210&type=chunk)[211](index=211&type=chunk) Risk Factors [Risks Related to the Group's Business](index=62&type=section&id=%E8%88%87%E6%9C%AC%E9%9B%86%E5%9C%98%E6%A5%AD%E5%8B%99%E6%9C%89%E9%97%9C%E7%9A%84%E9%A2%A8%E9%9A%AA) The company faces key business risks including challenges in expansion strategy execution, new store profitability, accurately meeting evolving consumer demands, and potential adverse impacts from product quality or health issues - Expansion capability is constrained by multiple factors, including the ability to find suitable locations, secure sufficient funding, attract and retain management talent, and effectively manage the costs of an expanded network[226](index=226&type=chunk)[227](index=227&type=chunk) - The profitability of new hypermarkets is uncertain, influenced by market positioning, supplier negotiations, marketing effectiveness, and competitive environment, and may not reach profitability within the expected timeframe[231](index=231&type=chunk)[232](index=232&type=chunk) - Business success depends on the ability to predict and timely respond to rapidly changing customer needs and preferences[233](index=233&type=chunk) - Failure to accurately select products that meet consumer demands could significantly and adversely affect the business[233](index=233&type=chunk) [Risks Related to the Industry in China](index=65&type=section&id=%E8%88%87%E4%B8%AD%E5%9C%8B%E8%A1%8C%E6%A5%AD%E6%9C%89%E9%97%9C%E7%9A%84%E9%A2%A8%E9%9A%AA) The company faces industry and macroeconomic risks in China, including the impact of infectious diseases on consumption, macroeconomic conditions affecting consumer spending, and RMB exchange rate fluctuations and foreign exchange controls impacting dividend payments - Any outbreak of severe infectious diseases in China (such as COVID-19) could lead to a contraction in consumption and may require temporary suspension of store operations due to employee or customer infections, significantly and adversely affecting performance[235](index=235&type=chunk) - The company's performance is closely linked to China's economic conditions[237](index=237&type=chunk) - An economic slowdown or recession could lead to reduced consumer spending, thereby significantly and adversely affecting the company's business, financial condition, and prospects[237](index=237&type=chunk) - Most of the company's revenue and expenses are denominated in RMB, which is not freely convertible[238](index=238&type=chunk) - Exchange rate fluctuations and foreign exchange controls could significantly and adversely affect the company's ability to pay foreign currency dividends to shareholders[238](index=238&type=chunk) Corporate Governance Report [Corporate Governance Report](index=66&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%A0%B1%E5%91%8A) The company maintains high corporate governance standards, complying with all code provisions, detailing its governance structure, board and committee functions, board diversity policy, and practices in risk management, internal control, and shareholder communication - The Board of Directors comprises **seven directors**, including one executive director, three non-executive directors, and three independent non-executive directors, meeting the Listing Rules' requirements for the number and professional qualifications of independent non-executive directors[249](index=249&type=chunk)[256](index=256&type=chunk) - The company has adopted a Board Diversity Policy, and as of the reporting date, there are **three female members** on the Board, with at least one female member on each of the three Board committees, achieving gender diversity targets[273](index=273&type=chunk)[276](index=276&type=chunk) - The Board has established an Audit Committee, a Remuneration Committee, and a Nomination Committee, each with clear written terms of reference and chaired by an independent non-executive director[264](index=264&type=chunk) - The company has established a **three-tier ESG governance structure**, with the Board bearing ultimate responsibility, supported by an ESG Committee and an ESG Working Group, to effectively manage ESG risks[283](index=283&type=chunk) Independent Auditor's Report [Audit Opinion](index=84&type=section&id=%E5%AF%A9%E8%A8%88%E6%84%8F%E8%A6%8B) The auditor, PricewaterhouseCoopers, issued an unqualified opinion on the consolidated financial statements for the year ended March 31, 2025, confirming they fairly reflect the Group's financial position, performance, and cash flows in accordance with Hong Kong Financial Reporting Standards - The auditor issued a standard **unqualified audit opinion**, indicating that the financial statements fairly present the company's financial position in all material respects[314](index=314&type=chunk) [Key Audit Matters](index=85&type=section&id=%E9%97%9C%E9%8D%B5%E5%AF%A9%E8%A8%88%E4%BA%8B%E9%A0%85) The auditor identified three key audit matters involving significant management judgment and estimates: recognition of purchase rebates and discounts, valuation of non-returnable inventories, and impairment assessment of store assets, for which detailed audit procedures were performed - Key audit matters primarily focus on areas requiring significant management estimates and judgments: - **Recognition of purchase rebates and discounts**: Due to their large volume, complex arrangements, and volume-based rebates involving estimates of future purchases - **Valuation of non-returnable inventories**: Assessing the net realizable value of inventories involves significant estimates of future sales, selling prices, and costs - **Asset impairment assessment**: Determining the recoverable amount of store assets (property, plant, and equipment) involves significant judgments regarding future cash flows and discount rates[322](index=322&type=chunk) Consolidated Financial Statements [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=94&type=section&id=%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) This statement presents the Group's financial performance, including profit or loss and other comprehensive income, for the reporting period [Consolidated Statement of Financial Position](index=95&type=section&id=%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) This statement details the Group's assets, liabilities, and equity as of the reporting date, providing a snapshot of its financial position [Consolidated Statement of Changes in Equity](index=97&type=section&id=%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) This statement illustrates the changes in the Group's equity during the reporting period, reflecting transactions with owners and other comprehensive income [Consolidated Statement of Cash Flows](index=99&type=section&id=%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) This statement provides information on the Group's cash inflows and outflows from operating, investing, and financing activities during the reporting period Five-Year Summary [Five-Year Financial Summary](index=209&type=section&id=%E4%BA%94%E5%B9%B4%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) Five-year financial data indicates a downward trend in Group revenue since its FY2021 peak, though FY2025 saw the first positive growth in operating and net profit since FY2023, reversing prior losses, while total assets and equity continued to contract - Five-Year Financial Data Summary (RMB million) | Fiscal Year | 2025 | 2024 | 2023 | 2022 | 2021 (15 months) | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 71,552 | 72,567 | 83,662 | 88,134 | 124,612 | | Operating Profit / (Loss) | 1,425 | (1,009) | 1,177 | 18 | 5,757 | | Profit / (Loss) for the Year | 386 | (1,668) | 78 | (826) | 3,771 | | Total Assets | 55,973 | 60,715 | 64,118 | 65,746 | 69,227 | | Total Liabilities | 35,545 | 38,921 | 39,921 | 40,680 | 41,373 |

Investment Rating - The report maintains an optimistic outlook for the Hong Kong stock market, particularly for new IPOs and sectors like new consumption and innovative pharmaceuticals [8]. Core Insights - The report highlights that the recent subsidies from food delivery e-commerce platforms directly benefit coffee, tea, and advertising channels [8]. - The education sector remains robust, with leading institutions expanding market share and developing AI products for international education [3][19]. - The luxury goods sector is experiencing slight pressure from macroeconomic factors, but brands with strong innovation capabilities are still seeing growth [20]. - The coffee and tea industry is in a growth cycle, with coffee demand remaining strong, while tea faces short-term challenges due to increased competition [27]. - E-commerce is under pressure with slowing growth rates, but instant retail is emerging as a new battleground [31]. - The travel and OTA sectors are seeing limited impact from recent subsidies, with a focus on undervalued leading players [8]. - Music streaming platforms are identified as quality internet assets driven by domestic demand, with ongoing developments in subscription services [36]. - The virtual asset market is on an upward trend, supported by traditional financial institutions entering the space [40]. - The real estate market is under pressure, particularly in major cities, with a focus on opportunities in companies like Beike [8]. - The automotive service market is experiencing a decline, with a continued focus on ecosystem changes [8]. Summary by Sections 1. Education - The K12 education sector remains highly prosperous, with leading institutions reporting good summer enrollment progress and a focus on AI product development [3][19]. - The education index saw a decline of 1.78% during the reporting period, outperforming the Hang Seng Technology Index but underperforming other major indices [10]. 2. Luxury Goods - The luxury goods sector is slightly pressured by macroeconomic factors, with notable growth in brands with strong innovation [20]. - Key luxury stocks showed positive performance, with Samsonite and Prada increasing by 5.61% and 6.09% respectively [20]. 3. Coffee and Tea - The coffee sector remains in a growth cycle, with strong demand and a high frequency of consumption [27]. - The tea sector faces short-term challenges due to increased competition and supply growth [27]. 4. E-commerce - The e-commerce sector is experiencing a slowdown, with significant competition impacting profitability [31]. - Instant retail is becoming a new focus, with major platforms launching aggressive subsidy plans [31]. 5. Travel and OTA - The travel sector is seeing limited impact from subsidies, with a focus on undervalued leading players [8]. 6. Music Streaming - Music streaming platforms are identified as high-quality assets driven by domestic demand, with ongoing developments in subscription services [36]. 7. Virtual Assets - The virtual asset market is on an upward trend, with traditional financial institutions increasingly entering the space [40]. 8. Real Estate - The real estate market is under pressure, particularly in major cities, with a focus on opportunities in companies like Beike [8]. 9. Automotive Services - The automotive service market is experiencing a decline, with a continued focus on ecosystem changes [8].

Core Insights - The market share of RT-Mart in Beijing is gradually shrinking, with the recent closure of its Xihongmen store, leaving only one store remaining in the city [1][4] - RT-Mart's parent company, Gao Xin Retail, reported a revenue of 71.552 billion yuan and a net profit of 386 million yuan for the fiscal year 2025, indicating a turnaround from previous losses [1][8] - The company is undergoing significant operational restructuring, including the closure of several stores and a reduction in operational zones from five to four [6][7] Store Closures - The Xihongmen store has officially ceased operations, with its space being replaced by a 7FRESH supermarket, and the remaining RT-Mart store in Beijing is located in Fengtai District [4] - Consumers expressed mixed reactions to the closure, with some noting the outdated environment and average product value [4] - RT-Mart has proactively closed several stores across various regions, including Wuhan and Jiangsu, to adapt to market challenges [4][5] Financial Performance - Gao Xin Retail has closed eight large stores and one medium-sized supermarket, with one large store being converted into a membership store [5] - The company has faced significant losses over the past three fiscal years, totaling 3.45 billion yuan, prompting a need for cost-cutting measures [6][8] - The reported profit turnaround was largely achieved through a reduction in sales and marketing expenses by 2.95 billion yuan, alongside a decrease in personnel costs [8] Management Changes - Following a significant share sale to Dehong Capital, Gao Xin Retail has undergone management changes, including the resignation of its founder from the board [6][7] - The new management is focused on restructuring operational zones and improving efficiency to better adapt to market demands [7] Strategic Shift - RT-Mart is shifting its focus towards the more popular medium-sized supermarket format, RT-Mart Super, which has shown promising sales growth of 5.9% [8][9] - The medium-sized supermarkets are designed to be more flexible and better suited to current consumer preferences, with a smaller footprint and a curated selection of products [9] - The transition to this new format may involve challenges in supply chain management and operational adjustments [9]

Investment Rating - The report maintains a positive outlook on the Hong Kong stock market, indicating a strong risk appetite and suggesting investment opportunities in various sectors, particularly in virtual assets and Web 3.0 [3][10]. Core Insights - The Hong Kong stock market is experiencing a significant increase in risk appetite, with improved asset quality and trading volume, highlighting the value of asset trading platforms [3][10]. - There is a notable uptrend in multiple sectors such as AI, new consumption, and innovative pharmaceuticals, with a particular focus on small and mid-cap stocks in media and consumer sectors [3][10]. - The report emphasizes the ongoing development of virtual assets and the Web 3.0 market, driven by stablecoin policies and recent IPOs, suggesting that more regulatory frameworks will emerge [3][10]. - The trend of Chinese companies returning to Hong Kong for IPOs is gaining momentum, with increased trading of companies like NetEase and Ctrip in the Hong Kong market [3][10]. - The valuation of overseas Chinese assets remains influenced by US-China trade relations and the broader economic environment, necessitating close monitoring of trade policies and domestic economic changes [3][10]. Summary by Sections Education - The K12 education sector maintains high growth, with leading institutions reporting over 20% revenue growth during the winter training period, and an increase in non-academic course retention rates [5][11]. Luxury Goods - The luxury goods market shows slight pressure due to macroeconomic factors, but brands that align with demand trends are performing well, with cautious price increases observed [5][20]. Coffee and Tea Drinks & OTA - Coffee and tea remain key categories for delivery platforms, with strong performance from major brands like Luckin Coffee, which continues to expand its store presence [5][25]. E-commerce - The e-commerce sector faces slight pressure, but major platforms like Alibaba and JD.com are expected to benefit from ongoing promotional activities [5][26]. Streaming Platforms - Music streaming platforms are viewed as high-quality internet assets, with sustained profitability driven by scale effects [5][34]. Virtual Assets & Internet Brokers - The stablecoin leader Circle's IPO saw a 168% increase on its first day, marking a significant event in the virtual asset space [5][38]. Real Estate Transactions - Recent data shows a slight decline in second-hand housing transactions in major cities, suggesting a need for caution in the real estate market [5][50]. Automotive Services - The automotive aftermarket is under pressure, with traditional fuel vehicle service visits declining, while new energy vehicle service visits are increasing [5][45].

Core Viewpoint - Traditional supermarkets in China, once thriving, are now struggling to adapt to changing consumer preferences and competition from new retail formats, leading to a significant decline in their market position [5][12][13]. Group 1: Traditional Supermarkets' Decline - Traditional supermarkets like RT-Mart have faced unprecedented operational pressures, leading to a sale at a significant loss to Dehong Capital [7]. - RT-Mart's parent company, Gaoxin Retail, reported a slight revenue decline of 1.4% year-on-year for the fiscal year 2025, despite achieving a net profit of 386 million yuan, indicating ongoing challenges in its transformation journey [9]. - Other traditional supermarkets such as Wumart, Carrefour, and Yonghui are also experiencing downturns and are attempting to regain growth through store upgrades and operational adjustments [10]. Group 2: Shift in Consumer Preferences - New retail formats like Pinduoduo, Hema, Sam's Club, and Costco are attracting younger consumers by offering not just products but also lifestyle experiences [11][12]. - The rise of "instant retail" and membership warehouse models has created a stark contrast to traditional supermarkets, which are losing relevance as consumer preferences shift towards convenience and unique shopping experiences [30][31]. - The market for instant retail in China has surpassed 650 billion yuan in 2023, with a compound annual growth rate of 56%, while traditional supermarkets face declining revenues and store closures [32]. Group 3: Evolution of Retail Formats - The traditional supermarket model is being challenged by a trend towards smaller, more efficient retail formats that cater to urban consumers' fast-paced lifestyles [35][36]. - New retail models focus on a limited selection of high-quality products, enhancing shopping efficiency and brand loyalty, contrasting with the overwhelming variety offered by traditional supermarkets [37][38]. - The emergence of private label brands and exclusive products in new retail formats has shifted consumer expectations, making traditional supermarkets' offerings seem less appealing [39][40]. Group 4: Future Directions for Traditional Supermarkets - Traditional supermarkets are beginning to recognize the need for transformation, inspired by successful models like Pinduoduo, which emphasize customer experience and emotional engagement [54][55]. - RT-Mart is exploring partnerships and pilot projects to enhance its fresh food processing capabilities and reposition stores as community commercial centers [59]. - The evolution of consumer preferences necessitates a fundamental rethinking of how traditional supermarkets operate, focusing on understanding and meeting modern consumer needs [61].

Group 1 - Traditional supermarkets are increasingly adopting an "online + offline" model to enhance revenue and improve customer engagement through instant retail and social e-commerce [1][2] - High Xin Retail reported a significant turnaround in profitability for the fiscal year ending March 31, 2025, with a profit of 386 million and a revenue of 71.552 billion, despite a slight revenue decline of 1.4% [2] - The same-store sales for High Xin Retail grew from 0.3% in the first half of the fiscal year to 0.6% for the full year, driven by improved pricing competitiveness and product optimization [2] Group 2 - The online business of Da Run Fa covers over 20,000 SKUs, offering delivery services within 5 kilometers, with innovations like satellite warehouses to meet consumer demand [3] - Yonghui Supermarket reported online revenue of 14.6 billion, accounting for 21.7% of total revenue, with a gross margin improvement attributed to better product structure [4] - Red Flag Chain has increased collaboration with social e-commerce platforms, achieving over 1 billion in sales through frequent operations on platforms like Douyin [5] Group 3 - The supermarket industry is undergoing a transformation, with 48.9% of supermarkets reporting online sales growth, particularly in second and third-tier markets [5] - Experts suggest that instant retail is a key area for supermarkets to focus on, emphasizing the importance of product and brand integration [5][8] - The trend of closing underperforming stores is prevalent, with High Xin Retail closing 8 large stores and Yonghui closing 232 stores in 2024 [7][8] Group 4 - The restructuring of store formats is gaining momentum, with 86% of categories seeing positive growth post-restructuring, and fresh produce playing a crucial role in driving sales [9] - Yonghui plans to expand its restructuring efforts, targeting 150 stores by the end of July 2025, while other companies like Wumart are also focusing on store upgrades [10] - The industry is seeing a diversification of store formats, with companies like High Xin Retail and Wumart exploring new community store models to cater to local needs [11][12]

Core Viewpoint - Recent news regarding the restructuring of Gao Xin Retail's (HK06808) operations, particularly the adjustment of its Da Run Fa stores, has sparked significant discussion in the market. The company has clarified that it is not closing its Northeast region but rather reorganizing its operational zones to enhance efficiency and customer service [1][2]. Financial Performance - Gao Xin Retail reported a revenue of RMB 71.55 billion and a net profit of RMB 386 million for the fiscal year ending March 31, 2025, marking a turnaround from previous losses [3][4]. - The company achieved a gross profit of RMB 17.24 billion, although this represented a 4% decrease compared to the previous year [4]. - The total assets decreased by 7.8% to RMB 55.97 billion, while total liabilities fell by 8.7% to RMB 35.55 billion [4]. Strategic Changes - The company has transitioned ownership from Alibaba to DeHeng Capital, which has led to a renewed focus on a "low-price" strategy and a commitment to restructuring its market approach [5][6]. - Gao Xin Retail aims to enhance its competitive edge by emphasizing price competitiveness and customer experience through its "everyday low price + community life center" model [8][14]. Operational Adjustments - The restructuring of operational zones from five to four is intended to streamline management and improve service delivery [1][10]. - The company has closed a total of 9 stores, including 8 large hypermarkets and 1 medium-sized supermarket, as part of its cost-cutting measures [10]. Market Position and Competition - Gao Xin Retail continues to face intense competition, particularly in non-first-tier cities, where new entrants like Sam's Club and ALDI are expanding their presence [15][16]. - The company has acknowledged the need to attract more customers to its stores, emphasizing the importance of foot traffic for its growth [14]. Future Outlook - The company plans to focus on various aspects such as product offerings, pricing strategies, operational efficiency, store planning, talent development, and membership operations to strengthen its market position [14].

Group 1 - Dazhonghua has adjusted its operational regions from five to four, consolidating the Central China region into the East China region and reallocating stores accordingly [2] - The restructuring aims to enhance efficiency and better serve customers, with a focus on cost reduction [2][3] - Senior retail analyst Wang Guoping noted that the previous organizational structure was less compatible with the current defensive market stance, indicating a need for cost-cutting measures [2] Group 2 - Gao Xin Retail, Dazhonghua's parent company, reported a turnaround in its fiscal year 2025, achieving a net profit of 386 million yuan after a loss of 1.605 billion yuan in the previous fiscal year [3] - Despite a 1.4% decline in revenue to 71.552 billion yuan, significant reductions in sales and administrative expenses contributed to the profitability [3] - The company optimized its employee structure, leading to a decrease in personnel costs and other operational expenses [3] Group 3 - This fiscal report is Gao Xin Retail's first since its separation from Alibaba, which sold its 78.7% stake in the company [4] - Gao Xin Retail operates three store formats, including hypermarkets, and has closed several locations while opening new ones, resulting in a total of 465 hypermarkets as of March 31, 2025 [4][5] - The company has experienced a gradual decline in the number of hypermarkets over the past few fiscal years, indicating a strategic shift in its business model [5] Group 4 - The proportion of Gao Xin Retail's stores in first-tier cities has been decreasing, with only 6.4% of its total stores located in these areas as of March 31, 2025 [6] - The company aims to maintain its competitive edge through a "low price and good quality" strategy, while also adapting to market changes [6] - There is uncertainty regarding Dazhonghua's future direction, as it has not yet established a clear reform strategy [6]

Group 1 - The core viewpoint of the articles is that after the acquisition by Dihon Capital, Gao Xin Retail has restructured its operational regions from five to four, aiming for organizational efficiency and effectiveness [1][2] - Gao Xin Retail's adjustment includes merging the original Central China region into other operational areas, resulting in a total store count reduction from 117 to 97 in Central China over three years [1] - The company has experienced significant revenue fluctuations, with a peak revenue of 102.3 billion in 2017, followed by a net loss of 8.26 billion in 2022 and an expanded loss of 16.68 billion in 2024, before returning to profitability with a net profit of 386 million in 2025 [1][2] Group 2 - A key factor in Gao Xin Retail's return to profitability in the 2025 fiscal year was a reduction in store and labor costs, with sales and marketing expenses decreasing by 16.2% compared to 2024 [2] - The company attributed the decrease in sales and marketing expenses to three main reasons: optimization of employee structure, reduction in impairment losses from cash flow negative stores, and management's focus on cost reduction [2] - The restructuring of operational regions is part of a broader trend in the industry, as evidenced by Yonghui Supermarket's recent shift to a flatter management structure, reducing layers from four to three [3]

Core Viewpoint - Gao Xin Retail is undergoing significant strategic adjustments following Alibaba's exit and a major management overhaul, focusing on operational efficiency and shifting its business model towards medium-sized supermarkets amidst a challenging retail environment [2][3][4]. Group 1: Strategic Adjustments - Gao Xin Retail has restructured its operational regions from five to four, integrating the Huazhong region into other areas to enhance efficiency and customer service [4]. - The company has experienced a leadership change, with Alibaba officially exiting and Dehong Capital taking control, leading to a reshuffle in the board of directors [4][5]. - The CEO, Shen Hui, remains in position, having been with the company since 1999 and previously managing the Auchan brand in China [5]. Group 2: Financial Performance - In the fiscal year 2024, Gao Xin Retail reported a revenue decline of 13.3% to 72.567 billion yuan, with a net loss of 1.605 billion yuan, compared to a profit of 109 million yuan in the previous year [6]. - The company has implemented a "store closure" strategy, closing 20 hypermarkets in fiscal year 2024, with a net reduction of 14 stores, and further reducing the number by 7 in fiscal year 2025 [6][7]. - Despite revenue decreases, Gao Xin Retail achieved profitability in fiscal year 2025, reporting a net profit of 405 million yuan, although total revenue fell to 71.552 billion yuan [7]. Group 3: Industry Trends - The traditional supermarket sector is facing significant challenges, prompting companies like Gao Xin Retail to explore new business models, including membership and discount stores [8][9]. - The shift towards medium-sized supermarkets is seen as a necessary adjustment, as the retail market structure in China evolves, with larger hypermarkets becoming less relevant [9]. - Gao Xin Retail is focusing on expanding its medium-sized supermarket format, which has shown growth, with 33 stores and an average area of 7,084 square meters per store [8][9].