MNSO(MNSO)2024-03-12 20:23Financial Data and Key Metrics - Total revenue for Q2 2024 reached RMB 3.84 billion, a 54% YoY increase, setting a new record [3] - Gross margin improved to 43.1%, up 3.1 percentage points compared to the same period in 2022 [3] - Adjusted net profit exceeded RMB 660 million, with an adjusted net profit margin of 17.2% (17.4% excluding FX impacts) [3] - For the full year 2023, total revenue was RMB 13.8 billion, a 40% YoY increase, with a gross margin of 41.2% and adjusted net profit of RMB 2.36 billion, up 110% YoY [4] Business Line Performance - MINISO China offline sales increased by 66% YoY, with same-store sales up 32% YoY [6] - TOP TOY revenue grew 90% YoY, driven by a 19% increase in store count and nearly 60% growth in per-store revenue [19] - Overseas revenue reached RMB 1.49 billion, a 51% YoY increase, with directly operated markets contributing over 50% of overseas revenue for the first time [9][20] Market Performance - Overseas GMV increased 38% YoY, with North America leading at a 110% increase, followed by Europe (70%), Latin America (14%), and Asia excluding China (21%) [10] - Same-store sales in overseas markets increased by 90% YoY in Q2 2024, with North America up 49%, Latin America up 23%, and Asia excluding China up 12% [11] - In China, GMV for offline stores increased by 40% YoY in 2023, with same-store sales up 25% [7] Strategic Direction and Industry Competition - The company aims to become the world's number one IP design retail group, focusing on product innovation, affordability, and globalization [12] - MINISO plans to open 350-450 new stores in China and 550-650 new stores overseas in 2024, focusing on high-quality growth and lean operations [8][12] - The company is strengthening its global supply chain, with 24% of suppliers located overseas, including Korea, Vietnam, India, Europe, and North America [14] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to maintain competitive advantages through IP product development, supply chain integration, and globalization [23] - The company is optimistic about the growth potential in key markets like Europe and North America, with plans to expand store networks and improve per-store performance [33][34] - MINISO is committed to improving same-store sales in China through product innovation, channel upgrades, and brand awareness initiatives [27][28] Other Important Information - The company has a strong cash position of RMB 6.9 billion as of December 31, 2023, with free cash flow of RMB 1.97 billion, up 115% YoY [23] - MINISO returned RMB 650 million in cash dividends to shareholders in Q2 2024, representing 50% of adjusted net profit for the second half of 2023 [23] Q&A Session Summary Question: Domestic GMV and same-store sales trends for 2024 - GMV in China increased by 30% in the first two months of 2024, with same-store sales recovering to 95% of last year's levels [26] - The company aims to improve same-store sales through product innovation, channel upgrades, and brand awareness [27][28] Question: Global supply chain diversification - MINISO has 24% of its suppliers located overseas, with plans to increase local sourcing in the US market to 30% in 2024 [31] Question: Strategies to improve per-store performance in lagging markets like Asia - The company plans to focus on key markets like Europe and North America while diversifying operations in Asia and Latin America [34][35] Question: European market strategy and profitability - MINISO is exploring flexible cooperation models with distributors in Europe, including JVs and same-store operations [37] - The company aims to open thousands of stores in Europe over the next five years [52] Question: SG&A ratio and store expansion in China - The SG&A ratio increased to 23% in Q2 2024 due to investments in direct stores, but the company expects margin improvements as DTC sales scale up [45] - MINISO plans to upgrade smaller stores in China to improve per-store sales, with a focus on stores between 100-200 square meters [46] Question: Margin breakdown between domestic and overseas markets - MINISO China has a higher OP margin (around 30%) due to its asset-light model, while overseas DTC markets are still in the early stages with fluctuating margins [50] Question: US market franchise strategy - The US market is currently dominated by directly operated stores, but the company remains open to exploring franchise models in the future [54]