Asia Pacific Equity Research 22 August 2025 Miniso - H / ADR 2Q SSSG and margin improving QoQ; fundamental turnround to continue in 2H25 and 2026, driving valuation re-rating Miniso's 2Q25 sales/adjusted OP were up 23%/8.5% yoy (vs 19%/-5% in 1Q25), ahead of guidance and consensus estimates. The better-than-expected 2Q turnaround came from: 1) China SSSG turned positive and the overseas SSSG decline narrowed; 2) China net openings turned positive; and 3) the group OP margin contraction narrowed on overseas ...

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the polarization between New and Old Consumption in China, highlighting three key trends: 1. A stagnant economy limits overall growth, creating selective opportunities [1] 2. Supply-demand mismatches and corporate competency gaps challenge companies amid commoditized supply and demanding consumers [1] 3. A new generation of consumers seeks instant, experiential, and affordable "dopamine" experiences, reflecting a global trend [1] Analytical Framework - The "365" framework is reiterated, consisting of: 1. **Three macro themes**: structural imbalance of supply, demand, and intermediary channels [2] 2. **Six behavior patterns**: emotional value quest, instant gratification, focus on IP/contents, she-economy, brand demystification, and upgrade vs. downgrade [2] 3. **Five baskets**: emotional value, health & wellness, addictiveness, value for money, and new channels [2] New vs. Old Consumption - Definitions of New and Old Consumption are often ambiguous; adaptation to trends is crucial [3] - Strategies for Old Consumption include product innovation, brand rejuvenation, and channel recalibration [3] - Risks for New Consumption include scalability, lifecycle sustainability, and regulatory challenges [3] Market Dynamics - New Consumption was a significant trade in 1H25 due to macro weakness and liquidity, but recent market rotations have negatively impacted it [4] - Earnings sustainability and visibility are emphasized as key factors for investment decisions [4] Stock Picks - Preferred companies based on fundamentals and valuation include: - **New Consumption**: Pop Mart and Laopu Gold - **Old Consumption incorporating New Consumption**: Mao Geping, Eastroc, and Nongfu Spring - Mixue is rated as Underperform due to unfavorable risk-reward dynamics [5] Performance Metrics - New Consumption stocks have shown a 70% increase in share price since March 2025, while Old Consumption remains largely flat [14] - New Consumption trades at a 71% premium to Old Consumption on average since 2024 [17] Consumer Behavior Insights - The report identifies a quest for emotional value driven by stress and a fragmented society, leading to a rise in "dopamine consumption" [45] - Instant gratification and granular "dopamine" are becoming prevalent due to shorter attention spans and digital media immersion [56] - The she-economy is reshaping consumption narratives, with female consumers becoming more vocal and influential [82] Brand Dynamics - Brand demystification is occurring as traditional branding foundations are challenged, leading to a new storytelling journey for brands [94] - The rise of emotional value and community sharing is significant in the she-economy, with consumers focusing on quality-for-money rather than brand prestige [93] Conclusion - The report emphasizes the importance of understanding the evolving landscape of consumer behavior in China, particularly the distinctions between New and Old Consumption, and the implications for investment strategies in the consumer sector [1][2][3][4][5]