MNSO(MNSO) - 2021 Q3 - Quarterly Report

Report Overview Financial Highlights MINISO achieved RMB 2,229.4 million revenue in Q3 FY2021, a 36.5% YoY increase, with operating profit surging 304.4% YoY and adjusted net profit growing 9.5% YoY Q3 FY2021 Key Financial Metrics (RMB in millions) | Metric | Q3 FY2021 | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | | Revenue | 2,229.4 | +36.5% | -3.0% | | Gross Profit | 626.5 | +18.5% | -2.5% | | Operating Profit | 161.1 | +304.4% | +196.6% | | Profit from Continuing Operations | 115.0 | -32.4% | +452.9% | | Adjusted Net Profit | 149.0 | +9.5% | +77.4% | Operational Highlights The company expanded its global footprint to 4,587 stores by Q3 FY2021, a net increase of 364 stores YoY, entering Portugal as its 94th overseas market Number of MINISO Stores Breakdown | Region | Mar 31, 2020 | Dec 31, 2020 | Mar 31, 2021 | | :--- | :--- | :--- | :--- | | Total Stores | 4,223 | 4,514 | 4,587 | | China | 2,535 | 2,768 | 2,812 | | Overseas | 1,688 | 1,746 | 1,775 | - The company entered its 94th overseas market by opening its first store in Portugal in January 2021[3] Management Commentary Management emphasized accelerating domestic recovery and profitability, driven by product innovation and strong offline and eCommerce performance, with plans for lower-tier city penetration and overseas market monitoring - Strategic focus for 2021 includes further penetration into China's lower-tier cities to capture greater market share in high ROI regions[6] - Domestic operations showed strong recovery, with offline store revenue increasing 69.4% YoY and eCommerce revenue growing 86.4% YoY[6] - The company is developing its new business model, TOP TOY, focusing on its business model, products, sales channels, and proprietary IPs[6] Financial Performance Analysis Revenue Analysis Total revenue for Q3 FY2021 was RMB 2,229.4 million, up 36.5% YoY, driven by a 74.8% YoY increase in domestic revenue, offsetting a 27.7% YoY decline in international revenue due to COVID-19 impacts Revenue Breakdown by Region (Q3 FY2021) | Region | Revenue (RMB million) | YoY Change | | :--- | :--- | :--- | | Domestic | 1,788.3 | +74.8% | | International | 441.2 | -27.7% | | Total | 2,229.4 | +36.5% | - Revenue per MINISO store was RMB 473.9 thousand in Q3 FY2021, compared to RMB 382.6 thousand in the same period of the prior fiscal year[9] Profitability Analysis Gross profit increased 18.5% YoY to RMB 626.5 million, with gross margin declining to 28.1%; operating profit surged 304.4% YoY to RMB 161.1 million, and adjusted net profit rose 9.5% YoY to RMB 149.0 million - Gross margin was 28.1%, down from 32.4% YoY, primarily because international operations (which have higher margins) contributed only 19.8% of revenue, compared to 37.3% in the prior year[12] - Operating profit increased significantly to RMB 161.1 million, a 304.4% YoY increase and a 196.6% QoQ increase[16] - Profit from continuing operations was RMB 115.0 million The YoY decrease from RMB 170.2 million was mainly due to a gain of RMB 153.1 million from fair value changes of redeemable shares in the prior-year period, which was nil in the current quarter[17] - Adjusted net profit, excluding items like share-based compensation and fair value changes, was RMB 149.0 million, an increase of 9.5% YoY and 77.4% QoQ[19] Expense Analysis Selling and distribution expenses rose 9.0% YoY to RMB 296.5 million due to increased logistics and marketing, while general and administrative expenses decreased 5.5% YoY to RMB 169.5 million, though adjusted for share-based compensation, they increased - Selling and distribution expenses increased 9.0% YoY to RMB 296.5 million, mainly due to higher logistics expenses from sales recovery and increased marketing for MINISO and Top Toy brands[14] - General and administrative expenses decreased 5.5% YoY to RMB 169.5 million However, on an adjusted basis (excluding share-based compensation), they increased from RMB 121.7 million to RMB 157.0 million YoY due to higher personnel and IT expenses[15] Earnings Per Share (EPS) Basic and diluted EPS from continuing operations were RMB 0.40 for Q3 FY2021, while adjusted basic and diluted EPS were RMB 0.52, up from RMB 0.44 in the prior year Earnings Per ADS (Q3 FY2021 vs. Q3 FY2020) | Metric | Q3 FY2021 | Q3 FY2020 | | :--- | :--- | :--- | | Basic & Diluted EPS (Continuing Operations) | RMB 0.40 | RMB 0.76 | | Adjusted Basic & Diluted EPS | RMB 0.52 | RMB 0.44 | Financial Position As of March 31, 2021, the company maintained a strong liquidity position with combined cash, cash equivalents, restricted cash, and other investments totaling RMB 7,027.1 million - The combined balance of cash, cash equivalents, restricted cash, and other investments was RMB 7,027.1 million (US**$1,072.5 million**) as of March 31, 2021[20] Business Outlook Q4 FY2021 Guidance The company projects Q4 FY2021 revenue between RMB 2,300 million and RMB 2,500 million, representing an anticipated 48.1% to 61.0% year-over-year growth - For Q4 FY2021, revenue is estimated to be between RMB 2,300 million and RMB 2,500 million, representing a 48.1% to 61.0% YoY increase[21] Appendix: Financial Statements Consolidated Statements of Financial Position (Balance Sheet) The unaudited condensed consolidated statements of financial position detail the company's assets, liabilities, and equity as of March 31, 2021, compared to audited figures as of June 30, 2020 Consolidated Statements of Profit or Loss (Income Statement) This statement presents the company's revenues, costs, and expenses, resulting in profit or loss for the three and nine months ended March 31, 2021, with comparative figures for the same periods in 2020 Consolidated Statements of Comprehensive Income This statement extends the profit or loss statement to include other comprehensive income items, such as foreign currency translation differences, to present the total comprehensive income for the period Reconciliation of Non-IFRS Financial Measure This section provides a detailed reconciliation of the IFRS measure (Profit/loss for the period) to the non-IFRS measure (Adjusted net profit) by adding back specific items such as share-based payment expenses and fair value changes