| MNSO | 12m Price Target: $25.30 | Price: $20.84 | Upside: 21.4% | | --- | --- | --- | --- | | 9896.HK | 12m Price Target: HK$49.00 | Price: HK$39.06 | Upside: 25.4% | Miniso reported a solid 2Q25 beat, where both revenue growth at 23% yoy (vs. guidance of 18-21%) and adj. OP growth of 8.5% yoy (vs. guidance of flat/slight yoy decline) were both above guidance and GSe. The key positive surprises came from 1) Miniso China, where sales growth of 14% yoy beat expectations and SSSG turned positive, despite flu ...

Summary of Miniso (MNSO) Earnings Call Company Overview - **Company**: Miniso (MNSO) - **Market Cap**: $6.4 billion - **Enterprise Value**: $7.0 billion - **Current Price**: $20.84 - **12-Month Price Target**: $25.30 (Upside: 21.4%) [1][21] Key Financial Performance - **2Q25 Revenue Growth**: 23% YoY, exceeding guidance of 18-21% [1][33] - **Adjusted Operating Profit Growth**: 8.5% YoY, against guidance of flat/slight decline [1][36] - **Miniso China Sales Growth**: 14% YoY, beating expectations [1][29] - **Top Toy Revenue Growth**: 87% YoY, surpassing guidance [1][33] - **Gross Margin**: 44.3%, slightly below expectations [1][35] - **Operating Profit Margin (OPM)**: 17.2%, improved from 16.6% in 1Q25 [1][36] Future Outlook - **2025 Full Year Sales Guidance**: Revised to >25% YoY increase from >22.8% [2][22] - **Adjusted Operating Profit Expectation**: Rmb3.65bn-3.85bn, compared to Rmb3.4bn in 2024 [2][22] - **3Q25 Topline Growth Guidance**: 25-28% YoY with low-single-digit same-store sales growth (SSSG) [2][23] Strategic Initiatives - **Store Expansion Plans**: - 100-150 net openings in Miniso China - Over 500 store additions overseas, with a focus on quality [22] - **Large Store Strategy**: - Miniso Land stores achieving average monthly sales of Rmb4 million [25] - New stores in the US showing 50% higher productivity compared to existing ones [25][27] - **In-house IP Cultivation**: - Development of a dual-track IP strategy with both third-party and in-house IPs [28] - Exclusive IPs like Yoyo expected to generate significant sales [28] Market Performance - **US Market Growth**: Over 80% YoY sales growth in 2Q25, driven by improved store quality and localized management [30] - **Tariff Impact**: Manageable impact from tariff hikes due to effective inventory and supply chain management [31] Shareholder Returns - **Dividend Payout Ratio**: 50% in 1H25, indicating strong commitment to shareholder returns [39] - **Share Buyback**: Approximately 1% of total shares in 1H25 [41] Additional Insights - **Operational Efficiency**: Improved collaboration across departments leading to better product preparation and execution [29] - **Sales Performance by Segment**: - Miniso China: Mid-high teens sales growth expected - Miniso Overseas: 30-35% YoY sales growth anticipated [24] This summary encapsulates the key points from Miniso's earnings call, highlighting the company's strong performance, strategic initiatives, and positive outlook for the future.

Investment Rating - The report maintains a "Buy" rating for Miniso (MNSO) with a 12-month price target of $23.40, indicating an upside potential of 5.5% from the current price of $22.19 [1]. Core Insights - Miniso reported a 19% year-over-year revenue growth in 1Q25, slightly above guidance, but adjusted operating profit declined by 5% year-over-year, missing expectations due to higher contributions from lower-margin direct-to-consumer (DTC) sales and new store openings [1][2]. - Management remains optimistic about top-line growth for 2025, but has tempered expectations regarding margins due to the ongoing transition to a DTC model [1][2]. - The company aims for a positive same-store sales growth (SSSG) recovery, with management targeting double-digit growth in China and a 40% year-over-year increase in overseas markets [19][20]. Summary by Sections Earnings Review - In 1Q25, total sales reached Rmb 4.4 billion, reflecting a 19% year-over-year increase, with overseas sales growing by 30% year-over-year [29]. - The adjusted net profit was Rmb 587 million, which was 6% lower than expectations, primarily due to lower-than-expected operating profit [32][34]. Financial Forecasts - Revenue forecasts for 2025-2027 have been adjusted slightly downward, with total sales projected at Rmb 20.55 billion for 2025, reflecting a 20.9% growth [37]. - The adjusted net profit for 2025 is now estimated at Rmb 2.22 billion, a 14.7% decrease from previous estimates [37]. Operational Insights - The company closed 111 stores in Mainland China during 1Q25, which was below expectations, while opening 95 stores overseas [31]. - Management highlighted that the DTC model will continue to exert pressure on margins in the near term, but expects improvements in operational efficiency to mitigate this impact [19][20]. Market Strategy - Miniso's strategy includes a focus on increasing the number of larger format stores and enhancing same-store sales productivity, with plans to open fewer stores than previously targeted [25]. - The company is also investing in its IP strategy, which has shown positive market feedback, particularly in the toy category, which accounted for 30% of sales in 1Q25 [27][28].

Group 1: Partnership Overview - Target is launching a series of "shop-in-shops" in collaboration with Warby Parker, with five locations set to open in various states [1][3] - The partnership aims to enhance consumer experience by combining Warby Parker's eyewear expertise with Target's retail environment [3] Group 2: Market Context - The collaboration comes at a challenging time for retailers, facing issues such as tariffs, inflation, and weak consumer demand [4][5] - Retailers are experiencing increased caution, as evidenced by Amazon's revenue projections falling short and Walmart's sales growth expectations not meeting analyst forecasts [6] Group 3: Consumer Behavior - Consumers are increasingly focused on essentials, leading to reduced spending on discretionary items, which impacts overall retail performance [5] - Research indicates that two-thirds of consumers rely on their next paycheck to meet their financial obligations, highlighting the strain on consumer spending [5]