Investment Rating - The report maintains a "Buy" rating for the company [4][6]. Core Views - The company is undergoing a strategic transformation, with store adjustments nearing completion and improvements in supply chain efficiency expected to enhance operational metrics in the future [4]. - The company reported a significant decline in revenue and net profit for Q3 2025, with revenue at 12.486 billion yuan, down 25.55% year-on-year, and a net loss of 469 million yuan [2][3]. - The company has opened 2 new stores and closed 104 stores in Q3 2025, resulting in a closure loss of 612 million yuan [2][3]. Financial Performance Summary - Q3 2025 revenue was 12.486 billion yuan, a 25.55% decrease year-on-year, with a cumulative revenue of 42.434 billion yuan for the first three quarters, down 22.21% [2]. - The gross profit margin for Q3 2025 was 19.84%, an increase of 0.65 percentage points year-on-year, while the cumulative gross profit margin for the first three quarters was 20.52%, a decrease of 0.32 percentage points [2]. - The company reported a net profit attributable to shareholders of -469 million yuan for Q3 2025, with a net profit of -700 million yuan after excluding non-recurring items [3]. - The operating cash flow for the first three quarters was 1.14 billion yuan, down 69.82% year-on-year [1]. Strategic Initiatives Summary - As of September 30, 2025, the company had 450 stores, with 222 undergoing adjustments, and same-store sales have turned positive for the first three quarters [3]. - The company is actively upgrading its supply chain and simplifying its supplier system, achieving a supplier elimination rate of 40.4% [3]. - The company aims to launch 100 billion-yuan-level products within three years, having already introduced over 20 quality products, with 15 products achieving over 100 million yuan in sales [3].

Core Viewpoint - Yonghui Supermarket is closing two stores in Shenzhen's core business districts due to poor management and operational issues, with a focus on restructuring and improving service quality in the future [1][5][7]. Store Closure Details - Yonghui Supermarket's stores at Luohu Sun Plaza and Nanshan Raffles City will officially cease operations on November 16, 2025, with clearance sales starting from November 7 to 15, 2025 [1][3][5]. - The stores have already begun clearance sales with discounts up to 50% prior to the official announcement [3]. Management Acknowledgment - The company acknowledged its previous management shortcomings, stating it failed to provide satisfactory products and services, and expressed a commitment to improve [3][7]. - The management has recognized the need for a comprehensive overhaul of its operational strategies, including store layout, product structure, and employee welfare [7][8]. Financial Performance - Yonghui Supermarket reported a revenue of 42.434 billion yuan for the first three quarters of 2025, a year-on-year decline of 22.21%, and a net loss of 710 million yuan, down over 80% compared to the previous year [10][12]. - The company has closed a total of 325 stores as of the end of Q3 2025, with 102 closures occurring in Q3 alone, indicating a continued strategy of "closing old stores to renovate new ones" [13]. Future Plans - Starting in 2024, Yonghui Supermarket plans to implement a nationwide restructuring initiative aimed at regaining customer trust and improving operational efficiency over the next 2 to 3 years [12]. - The company has adopted a new retail strategy inspired by the "胖东来" model, with 222 stores already undergoing transformation as of September 30, 2025 [12].

Core Viewpoint - Yonghui Supermarket is closing two stores in Shenzhen's core business districts due to poor management and operational issues, acknowledging past failures in providing satisfactory service and products to customers and employees [2][3][5]. Store Closures - Yonghui Supermarket's stores at Luohu Sun Plaza and Nanshan Raffles City will officially cease operations on November 16, 2025, with a clearance sale running from November 7 to November 15, 2025 [2][5]. - The company has already initiated discount activities prior to the official clearance period, indicating a proactive approach to liquidate remaining inventory [2]. Management Acknowledgment - The company admitted to its shortcomings in management and service quality, expressing regret for not meeting customer expectations and damaging public trust [5][6]. - Yonghui Supermarket plans to implement comprehensive reforms across its operations starting in 2024, focusing on improving product quality, store environment, and employee welfare [5][10]. Financial Performance - For the first three quarters of 2025, Yonghui Supermarket reported a revenue of 42.434 billion yuan, a year-on-year decline of 22.21%, and a net loss of 710 million yuan, down over 80% compared to the previous year [8][10]. - The decline in performance is attributed to intense competition in the retail sector, reduced customer traffic, and a drop in gross margins due to store optimization efforts [10]. Store Optimization Strategy - As of the end of Q3 2025, the company has closed a total of 325 stores, with 102 closures occurring in Q3 alone, while only opening 2 new stores, indicating a continued focus on the "close old, reform new" strategy [11]. - The closures include stores in core business areas, marking a significant shift in the company's operational strategy [11]. Future Plans - Yonghui Supermarket aims to recover customer trust over the next 3 to 5 years, with a commitment to enhancing its retail quality by learning from successful models like "Pang Donglai" [10]. - The company has already opened 222 reformed stores as part of its ongoing transformation efforts [10].

Core Viewpoint - Yonghui Supermarket will close two stores in Shenzhen on November 16, 2025, due to poor management and operational challenges [2][5][6] Financial Performance - In the third quarter of 2025, Yonghui Supermarket reported a revenue of 42.434 billion yuan, a year-on-year decline of 22.21% [7] - The company incurred a net loss of 710 million yuan, representing a decline of over 80% compared to the same period last year [7] Reasons for Decline - The decline in performance is attributed to intense competition in the retail sector, resulting in decreased customer traffic and average transaction value [8] - The company is undergoing store optimization and adjustments, which have led to a decrease in gross profit margin [8] Strategic Changes - Yonghui Supermarket plans to implement a transformation strategy starting May 6, 2024, aiming to regain customer trust over the next 3 to 5 years [8] - As of the end of the third quarter, the company had 450 operational stores, with 222 stores undergoing transformation by September 30, 2025 [8] Market Reaction - As of November 4, 2025, Yonghui Supermarket's stock price decreased by 0.85%, closing at 4.64 yuan per share, with a market capitalization of 42.11 billion yuan [8]

Core Viewpoint - Yonghui Supermarket will close two stores in Shenzhen on November 16, 2025, due to poor management and operational challenges [2][4][5]. Group 1: Store Closures - Yonghui Supermarket's Luohu Sun Plaza and Nanshan Raffles Plaza stores have posted closure notices [2]. - The Luohu store will cease operations on November 16, 2025, but customers can still use their shopping cards and membership points at other Yonghui locations [2]. - The closure is attributed to unsatisfactory business performance and management practices [4][5]. Group 2: Financial Performance - For the first three quarters of 2025, Yonghui Supermarket reported a revenue of 42.434 billion yuan, a year-on-year decline of 22.21% [6]. - The company incurred a net loss of 710 million yuan, representing a decline of over 80% compared to the same period last year [6]. - The decline in performance is primarily due to intense competition in the retail sector, resulting in decreased customer traffic and average transaction values [7]. Group 3: Strategic Changes - Yonghui Supermarket plans to implement store optimizations and adjustments starting May 6, 2024, with a goal to regain customer trust over the next 3 to 5 years [7]. - As of the end of Q3 2025, the company had 450 operational stores, with 222 stores undergoing adjustments by September 30, 2025 [7]. - The company aims to adopt a quality retail strategy inspired by the successful model of "Pang Donglai" [7].

Core Viewpoint - Yonghui Supermarket is closing two stores in Shenzhen due to poor management and operational challenges, reflecting broader issues in the retail sector [2][4][6]. Financial Performance - In Q3 2025, Yonghui Supermarket reported a revenue of 42.434 billion yuan, a year-on-year decline of 22.21% [8]. - The company incurred a net loss of 710 million yuan, down over 80% compared to the same period last year [8]. Store Closures and Strategy - The stores in Luohu and Nanshan will cease operations on November 16, 2025, with ongoing promotions to clear inventory [2][4]. - The closures are part of a broader strategy to optimize store performance, as the company has faced declining customer traffic and average transaction values [9]. Management's Response - The new CEO, Wang Shoucheng, emphasized a commitment to revamping the business model, aiming to regain customer trust over the next 3 to 5 years [9]. - As of Q3 2025, Yonghui has 450 operational stores, with 222 undergoing transformation as part of its new retail strategy inspired by the "Pang Donglai" model [9]. Market Performance - As of November 4, 2025, Yonghui Supermarket's stock price was 4.64 yuan per share, with a market capitalization of 42.11 billion yuan [10].

Investment Rating - The report maintains an "Accumulate" rating for the company with a target price of 5.10 RMB [6]. Core Views - The company is undergoing a transformation with the "Fat Donglai" model, and the effects of operational adjustments are gradually becoming evident. In Q3, the company achieved a revenue of 12.49 billion RMB, a year-on-year decrease of 25.5%, and a net loss attributable to shareholders of 470 million RMB, compared to a net loss of 350 million RMB in the same period last year [1][6]. - The company has accelerated the restructuring of its tail-end stores, with 450 stores opened as of Q3, resulting in a net closure of 102 stores. The proportion of restructured stores has reached 49%, up 26.9 percentage points from the previous quarter, leading to a significant increase in average single-store revenue, which exceeded 24 million RMB, a year-on-year increase of over 30% [2][6]. - The gross profit margin has stopped declining and has begun to recover, with a Q3 gross profit margin of 19.8%, an increase of 0.6 percentage points year-on-year. The company is still in the process of implementing strategies for direct procurement and cost control [3][4]. Summary by Sections Revenue and Profitability - For Q1-Q3, the company reported a total revenue of 42.434 billion RMB, a year-on-year decrease of 22.21%, with a net loss attributable to shareholders of 710 million RMB, compared to a net loss of 80 million RMB in the same period last year [1]. - The company expects profitability to improve as the restructuring of tail-end stores progresses and as more restructured stores reach maturity [1][4]. Cost Management - The report indicates an increase in the expense ratio, with the sales expense ratio rising by 2.7 percentage points to 21.8% and the management expense ratio increasing by 0.3 percentage points to 3.2% [3]. - The company is focusing on enhancing consumer experience and employee incentives, which has led to an increase in related costs [3]. Future Outlook - The company plans to issue no more than 3.114 billion RMB in new shares, with 2.4 billion RMB allocated for the restructuring of 216 stores, 300 million RMB for logistics upgrades, and 400 million RMB for working capital [4]. - The report projects a net profit attributable to shareholders of -1.481 billion RMB for 2025 and 591 million RMB for 2026, with an expected net profit of 1.403 billion RMB in 2027 [5][11].

Industry Overview - Community supermarkets serve as a modern retail format, typically ranging from several hundred to one thousand square meters, focusing on fresh produce and daily necessities for residents within a 500-meter to 1.5-kilometer radius [1] Market Characteristics - Community supermarkets fill the gap between large supermarkets and convenience stores, addressing consumer needs for shopping convenience and product variety [1] Current Industry Analysis Market Size and Structure - The community supermarket market in China is substantial, remaining robust despite e-commerce challenges, due to its advantage in immediacy [7] - The competitive landscape features three main players: national giants like Yonghui Supermarket and Wumart leveraging supply chain advantages, regional leaders like Jianfu and Xiangjiang Department Store with localized expertise, and internet entrants like Hema and Qixian reshaping industry standards through digital innovation [7] Operational Model Evolution - Key competitive factors include: - High frequency and strong customer loyalty driven by fresh produce and daily necessities [6] - Dependence on geographic location, with success tied to community density and consumer spending power [6] - Limited service radius, primarily catering to residents within walking distance, leading to a fragmented market [6] - High integration of digital platforms, with increasing online order proportions through partnerships with platforms like Meituan and JD Daojia [6] Future Trends - The industry is expected to evolve towards: - Refined and differentiated operations targeting specific consumer groups [10] - Deep integration of supply chains and the rise of private label brands [10] - Enhanced offline experiences combined with online efficiencies [10] - Development of private traffic channels through mini-programs and community operations [10] - Emphasis on green and sustainable practices [10] Challenges and Opportunities Challenges - Profit margin pressures due to high perishability of fresh goods, rising rent and labor costs, and commission fees from online platforms [10] - Intense competition leading to price wars due to minimal differentiation in basic products and services [10] - Shortage of talent skilled in both traditional retail and digital operations [10] Opportunities - Supportive policies promoting community supermarket development [10] - Technological advancements enabling better inventory management and reduced waste [10] - Growing demand for products catering to the elderly and children due to demographic shifts [10] - Potential for expansion in lower-tier cities as consumer spending continues to rise [10] Investment Recommendations - Focus on companies with strong supply chain capabilities, particularly in fresh produce [10] - Identify firms successfully undergoing digital transformation and integrating online and offline operations [10] - Look for market leaders in specific regions or niches [10] - Consider startups specializing in retail technology solutions [10]

Core Insights - The supermarket industry is experiencing revenue growth pressure and a divergence in profitability among listed companies, with a need for refined operations and differentiated competition to find breakthroughs [1][3] Revenue Performance - Supermarkets are entering a "stock competition" phase, facing stagnant or declining revenue growth, with significant divergence in net profit performance among companies [3] - Yonghui Supermarket reported a cumulative revenue of 42.434 billion yuan for the first three quarters, a year-on-year decline of 22.21%, with Q3 revenue at 12.486 billion yuan, down 25.55%, and a net loss of 469 million yuan [3] - Zhongbai Group also saw revenue decline, with 6.552 billion yuan for the first three quarters, down 19.41%, and a net loss of 580 million yuan [3] - Hongqi Lianchained reported revenue of 7.108 billion yuan, down 8.48%, but achieved a net profit of 383 million yuan, with a net profit margin increase of 7.21% [3] - Bubu Gao's revenue was 3.194 billion yuan, ranking fifth in the industry with a net profit of 238 million yuan [3] - Sanjiang Shopping reported revenue of 2.988 billion yuan and a net profit of 114 million yuan [3] Industry Transformation - The industry is undergoing a collective transformation with various new models emerging, such as "Fat Donglai model adjustment" and "24-hour cloud service" by Hongqi Lianchained, indicating a shift towards differentiated products and innovative business formats [4][5] - Yonghui Supermarket has completed adjustments in 222 stores, resulting in an average customer flow increase of 80% and over 60% of stores surpassing their highest profitability in the past five years [4] - Bubu Gao's store adjustments have led to increased sales and improved employee benefits, achieving a 90% alignment with the Fat Donglai model [4] E-commerce and Digitalization - Walmart China reported a significant 96% increase in e-commerce net sales in Q3, with Sam's Club membership exceeding 4 million [5] - The transformation in the supermarket industry is systemic, with major players like Wumart also advancing deep transformations [5] - The focus on self-owned brand development, fresh direct sourcing, and regional specialty products is emphasized as a strategy for profit growth [6] Market Demand Response - The core of the transformation lies in enhancing product strength and optimizing supply chains, with companies increasingly relying on operational efficiency and innovative business models [6] - The emergence of membership stores, hard discount stores, and community stores reflects a response to market demand for segmentation [6] - Digital channels such as e-commerce, live streaming, and instant delivery are becoming standard configurations for supermarket operations, with examples from Walmart China and Hongqi Lianchained [6]

Group 1 - The core point of the news is that Yonghui Supermarket is closing two stores in Shenzhen's core business districts, indicating a shift in its operational strategy amid significant financial losses [2][3]. - Yonghui Supermarket's third-quarter report revealed a revenue of 42.434 billion yuan, a year-on-year decline of 22.21%, and a net profit attributable to shareholders of -710 million yuan, marking a substantial increase in losses [2][4]. - The company has closed a total of 325 stores this year, with 102 closures in the third quarter alone, while only opening 2 new stores, reflecting its ongoing strategy of "closing old stores to renovate" [3]. Group 2 - As of September 30, Yonghui Supermarket had 450 operating stores, a significant reduction from 775 at the end of 2024, primarily due to the closure of underperforming stores [3]. - The closures now include stores in core business areas, such as the Luo Hu Sun Plaza store, which was previously recognized as a "national quality store" under Yonghui's "original intention plan" [3]. - The company aims to close between 300 and 350 stores by the end of 2025, with a focus on refining store operations and restoring the pace of new store openings [3]. Group 3 - Yonghui Supermarket's stock price has declined by 26% this year, resulting in a market capitalization of 42.5 billion yuan [4]. - The company's total assets decreased from 42.749 billion yuan at the end of the previous year to 31.620 billion yuan, a drop of 26.03% [4]. - Yonghui has announced a new positioning strategy called "National Supermarket Quality Yonghui," initiating a "product centralization" strategy aimed at developing billion-level flagship products over the next three years [4].