Core Viewpoint - The company has reported a continuous decline in revenue and profit, indicating deeper operational challenges and a weakening brand influence [1][2][4]. Financial Performance - In Q3 2025, the company achieved revenue of 1.319 billion yuan, a year-on-year decrease of 5.54%, with a net loss attributable to shareholders of 49.45 million yuan [1][5]. - For the first three quarters of 2025, total revenue was 4.217 billion yuan, down 7.15%, and net profit fell by 73.79% to 28.26 million yuan [5][6]. - The company plans to provision for impairment losses totaling 115 million yuan, further impacting profitability [2]. Brand and Product Line Performance - All four major brand lines experienced revenue declines compared to the previous year: PEACEBIRD women's wear down 8.42%, men's wear down 7.17%, LEDIN girls' wear down 9.38%, and MINI PEACE children's wear down 3.07% [4]. - Smaller brands like Material Girl and PETiTAVril saw revenue drops exceeding 40% [4]. Channel Performance - Online and offline revenues were 1.004 billion yuan and 3.151 billion yuan, respectively, with declines of 16.08% and 4.48% year-on-year [7][9]. - The gross margin for online sales was 48.21%, while offline sales achieved a gross margin of 62.28%, highlighting a significant 14.07 percentage point gap [8][9]. Store Strategy and Challenges - The company closed 146 direct stores and 358 franchise stores, while opening 92 direct and 148 franchise stores, resulting in a net decrease of over 2,100 stores since 2021 [18]. - The strategy of opening large flagship stores has shown initial success but is now facing declining sales per store, with average revenue per store down 8.32% in 2024 [16][17]. Brand Upgrade Strategy - The company is attempting to transition from "fast fashion" to "quality fashion," targeting the 25-35 age demographic, but faces challenges in establishing a competitive advantage in both high-end and mass markets [23][24]. - High inventory levels reached 1.764 billion yuan, accounting for over 23% of total assets, indicating pressure from declining sales and high stock [24][26]. Market Position and Future Outlook - The company's market value has decreased by approximately 70% from its peak, reflecting broader challenges faced by Chinese apparel brands [32]. - Analysts suggest that the company needs to reassess its strategies regarding large stores and brand upgrades to find a more coherent path forward [33].

Core Viewpoint - The company is experiencing a turning point in its main business operations, with preliminary verification of mid-year performance, and is expected to see continued improvement in domestic and international performance driven by the optimization of the large store model and proprietary IP strategy [1][2]. Group 1: Financial Performance - In Q2, the company achieved revenue of 4.966 billion, a year-on-year increase of 23.1%, exceeding the previous guidance of 18%-21% [2]. - Adjusted net profit for Q2 was 0.692 billion, a year-on-year increase of 10.6%, with an adjusted net profit margin of 13.9%, down 1.6 percentage points year-on-year [2]. - The company has raised its full-year guidance, expecting Q3 overall revenue growth of 25%-28% and adjusted operating profit to be between 3.65 billion and 3.85 billion [2]. Group 2: Domestic Brand Performance - Domestic revenue for the MINISO brand in Q2 was 2.62 billion, a year-on-year increase of 13.6%, with same-store sales turning positive [3]. - The company opened 30 new stores in Q2, reversing the trend of net store closures from the first quarter [3]. - Key drivers for same-store growth include improved organizational structure, enhanced product supply, and optimized store operations during holidays [3]. Group 3: International Brand Performance - Overseas revenue for the MINISO brand reached 1.94 billion, a year-on-year increase of 28.6%, with a net addition of 94 stores in Q2 [4][5]. - The North American market strategy focuses on large stores and cluster openings, with new stores achieving 1.5 times the sales efficiency of older stores [5]. - The company plans to continue expanding its overseas presence, with a target of adding over 500 new stores this year [4]. Group 4: TOPTOY Brand Performance - TOPTOY achieved revenue of 0.4 billion in Q2, a year-on-year increase of 87%, with a net addition of 13 stores [6]. - The brand's gross margin has significantly improved, and same-store sales have shown single-digit growth [6]. - Future plans include enhancing sales contributions from proprietary brands and IP, focusing on markets with high potential for toy consumption [6]. Group 5: Strategic Initiatives - The company is implementing a dual strategy of opening large stores and developing proprietary IP, with significant progress in both domestic and international markets [7]. - The MINISO LAND and flagship stores are designed to enhance customer experience and increase sales per square meter [7]. - The proprietary IP strategy includes collaborations with artists and the launch of new products, aiming for a total GMV of 1 billion from proprietary IP products this year [7].

Investment Rating - The investment rating for the company is "Outperform the Market" (maintained) [1][6][23] Core Views - The company is showing signs of a turning point in its main business operations, with mid-year performance beginning to validate this trend. The ongoing implementation of the large store model and proprietary IP strategy is expected to drive continuous improvement in both domestic and international performance [2][3][23] - The domestic large store strategy is optimizing store structure and improving operational efficiency, leading to gradual improvements in same-store sales. The IP strategy is enhancing global competitiveness and significantly driving overseas business and the TOP TOY brand development [2][3][23] Summary by Sections Financial Performance - In Q2, the company achieved revenue of 4.966 billion, a year-on-year increase of 23.1%, exceeding the previous guidance of 18%-21%. Operating profit reached 836 million, up 11.3% year-on-year, while adjusted net profit was 692 million, reflecting a 10.6% increase year-on-year [3][23] - The management has raised the full-year guidance, expecting Q3 overall revenue growth of 25-28%, with domestic MINISO brand revenue growth in the mid to high double digits and overseas revenue accelerating to 30%-35% [3][23] Domestic Business - The domestic revenue for the MINISO brand in Q2 was 2.62 billion, a year-on-year increase of 13.6%. Same-store sales have turned positive, with a net increase of 30 stores in Q2, reversing the previous trend of store closures [9][10] - Same-store growth is driven by improved customer spending and enhanced store conversion rates, despite a slight decline in foot traffic [9][10] Overseas Business - Overseas revenue for the MINISO brand reached 1.94 billion, a year-on-year increase of 28.6%. The company plans to add over 500 new stores globally this year, with significant growth in the North American market [13][14] - The North American strategy focuses on large stores and cluster openings, enhancing brand presence and operational efficiency [14][16] TOP TOY Brand - TOP TOY achieved revenue of 400 million in Q2, a year-on-year increase of 87%. The brand is focusing on enhancing its own brand and IP sales contributions, with plans for global expansion [17][19] Strategic Initiatives - The company is advancing its large store strategy both domestically and internationally, with significant investments in MINISO LAND and flagship stores, which have shown higher sales efficiency compared to smaller stores [18][19] - The proprietary IP strategy has evolved into a dual-driven model, focusing on both artist IP and top international licensed IP, with plans to launch self-owned IP products in overseas markets [19][23]

Group 1 - The first global flagship store of Cotton Era, a subsidiary of Weijian Medical, has opened in Wuhan, Hubei Province, as part of the "big store strategy" aimed at enhancing brand image and sales through optimized service and digital management [1] - The flagship store features a unique spatial design and immersive experience to deepen consumer brand recognition and expand brand influence, according to Lin Xianping, Executive Deputy Secretary-General of the Chinese Urban Expert Think Tank Committee [1] - As of June 2025, Cotton Era plans to have 484 stores nationwide, with the flagship store marking a significant step in the company's brand development strategy [1] Group 2 - Miniso is also accelerating its "big store strategy," with its first city park store in South China opening in August, attracting over 10,000 visitors on the opening day [1] - Miniso's Chief Marketing Officer Liu Xiaobin stated that the total number of city park stores is expected to reach 25 to 30 by the end of the year, with simultaneous overseas expansion [1] - Pop Mart's flagship store upgrade is progressing well, with its first city flagship store in Anhui opening in July, becoming a new landmark in the trendy toy sector [1] Group 3 - International brands like Apple and Nike have long adopted the strategy of opening flagship stores in core urban areas and cultural tourism spots, which helps in brand building and consumer recognition [2] - The essence of the "big store strategy" is to shift from merely selling products to providing immersive experiences and lifestyle solutions, thereby seizing competitive advantages in the market [2] - This strategy requires companies to possess stronger product and operational capabilities, potentially marking a new starting point for the high-end positioning of Chinese brands [2]