MINISO GROUP(9896.HK)：EXPECT CORE BUSINESS ON TRACK TO IMPROVE FURTHER IN 4Q25

Core Viewpoint - Miniso's 3Q25 results are mixed, with a 28% YoY revenue growth meeting the upper bound of guidance, but reported operating profit (OP) and net profit (NP) declined due to expenses related to Top Toy IPO and losses from Yonghui Superstore [1][2][4] Financial Performance - 3Q25 revenue grew 28% YoY to RMB 5,797 million, reaching the upper bound of guidance (+25-28% YoY), while adjusted OP increased 15% YoY to RMB 1,022 million, slightly beating expectations [2] - Reported OP decreased 1% YoY due to share option expenses of RMB 175 million (+364% YoY) related to Top Toy IPO, and reported NP fell 31% YoY to RMB 441 million due to losses from Yonghui Superstore [2][4] Store Performance - Same-store sales growth (SSSG) in China improved sequentially to high single digits (HSD), with expectations for double-digit (DD) growth in 4Q25 [2][4] - Overseas SSSG reached low single digits (LSD), but US SSSG improved to DD, expected to maintain DD in 4Q25, supported by value-for-money positioning and rapid store expansion [3][4] Guidance and Strategy - Miniso's 4Q25 guidance indicates revenue growth of 25-30% YoY and double-digit growth in adjusted OP, focusing on "quality growth" to improve margins in 2026 [4] - Management clarified that store renovations will be gradual, easing investor concerns about the need for extensive revamps [2][4] Valuation and Investment Outlook - Target price lowered to US$ 23.6 and HK$ 46.41, based on 15x 2026E adjusted EPS, reflecting a shift to adjusted EPS valuation due to non-operating losses from Yonghui [6] - Despite challenges from Yonghui, Miniso is expected to deliver stronger organic growth, with share buybacks supporting share price [7]