Advancing towards a global "super brand", MNSO opens up its growth ceiling

In recent years, facing a challenging business environment, the market is looking for targets that can lead the way into recovery, have the potential to cross the cycle, and achieve stable growth in the future. The recently released financial reports have become important reference points.

On March 12th, MNSO (09896) delivered an outstanding quarterly report, with impressive performance in revenue, profit, expansion, core business breakthrough, and significant growth in profit indicators. By anchoring global consumption trends and empowering brand upgrades, the company firmly grasps the development trend of consumer industry transformation.

For the market, MNSO's excellent performance undoubtedly becomes the core driving factor to boost the company's valuation, with its strong fundamentals providing solid support for the stock price. Therefore, on the day of the financial report release, its Hong Kong stock price rose by 15.58%, fully reflecting the capital market's high recognition of the company.

Furthermore, MNSO's promising growth prospects and long-term profit release have gained unanimous favor from domestic and foreign securities firms, who have issued updated research reports after the results announcement, demonstrating the analysts' recognition of the company's value.

Image: Compiled by Zhitong Finance and Economics APP

Revenue Reaches New Heights, Significant Optimization in Profit Indicators

In the secondary market, performance has always been the best touchstone for listed companies. The financial report shows that in the fourth quarter of 2023, MNSO achieved operating income of 3.841 billion yuan, a year-on-year increase of 54%, setting a new historical high for quarterly operating income; during the same period, the gross profit margin also rose to 43.1%, an increase of 3.1% year-on-year, also setting a new historical record.

Among them, MNSO's domestic revenue was 2.35 billion yuan, a year-on-year increase of 56%, overseas revenue was 1.49 billion yuan, a year-on-year increase of 51%, and TOP TOY brand revenue was 190 million yuan, a significant increase of 90%. The adjusted net profit for the period was 660 million yuan, a 77% year-on-year increase, with an adjusted net profit margin of 17.2%, up by 2.2 percentage points.

In the six months ending on December 31, 2023, the company's revenue was 7.632 billion yuan, an increase of approximately 45% year-on-year; the adjusted net profit was 1.303 billion yuan, an increase of approximately 65% year-on-year. At the same time, the board of directors announced a special cash dividend of $0.0725 per ordinary share, equivalent to about 650 million yuan, accounting for 50% of the adjusted net profit for the six months ending on December 31, 2023, as a tangible gesture to reward shareholders In addition to financial data, the outstanding performance of its operational data is also remarkable. During the period, the number of MNSO stores continued to grow. By the end of 2023, its total global store count reached 6413, including 3926 domestic stores and 2487 overseas stores, with a net increase of 372 overseas stores year-on-year, highlighting the scale effect.

From various dimensions such as revenue, net profit, and store size, this financial report is commendable. It is not difficult to see that the reason why MNSO can achieve such outstanding performance is closely related to the steady advancement of its globalization strategy and comprehensive upgrade of its brand strategy. The imaginative overseas markets are also providing MNSO with a continuous long-term driving force.

At the same time, the company's growth boundaries are constantly expanding: whether it is in domestic store expansion, benchmark overseas store construction, digital marketing, etc., MNSO can provide a rich variety of product matrices, diverse and localized consumer scenarios, and rapid innovation in consumer touchpoints, continuously bringing more immersive and personalized consumer experiences to global customers, with the flywheel effect becoming more apparent.

Super brand strategy is beginning to show results, continuously breaking through growth ceilings

"The best time to plant a tree was 10 years ago, the second best time is now." MNSO's development has proven this saying very well.

Since its establishment in 2013, MNSO has formed an IP joint collection store through efficient integration of the supply chain, strong internal design and selection capabilities, and offline IP scene creation, establishing industry chain barriers with channel and brand value as the core, continuously breaking through growth ceilings while forming scale effects. This unique internal and external commercialization capability has also been applied by the company to global market development.

In 2023, MNSO's overseas business once again became a new engine driving performance growth. In terms of "on-paper data" alone, its overseas business revenue in the fourth quarter was nearly 1.5 billion yuan, a year-on-year increase of 51%, exceeding the company's expectations, fully verifying the success and necessity of its globalization strategy. From the perspective of growth rate, the overseas business did not slow down due to its scale expansion. In the full year of 2023, overseas market revenue grew by nearly 47%, accounting for 34% of the company's total revenue, and there is still no apparent growth ceiling.

In fact, this seems to be just a part of the epitome and explicit effect of MNSO's advancement towards becoming a global "super brand": at the beginning of 2023, MNSO announced a global brand strategy upgrade, moving towards a global super brand and advancing towards a world-class technology-driven new consumer enterprise. In the past year, with its solid fundamentals and orderly store expansion process, MNSO has sent a strong value signal to the market.

Since setting the goal of becoming a "super brand," MNSO has been building the perception of super brand store types according to three levels: global flagship stores, national flagship stores, and city flagship stores, successively landing innovative samples of "super stores," and is now gradually welcoming the harvest period In terms of the domestic market, in the fourth quarter, MNSO's domestic revenue reached 2.35 billion RMB, a year-on-year increase of 56%. City flagship stores and city concept stores, as important parts of MNSO's "super stores," have laid a solid foundation for MNSO's performance growth and brand upgrade. Data shows that MNSO's domestic offline sales GMV increased by approximately 66% year-on-year.

During the same period, several super stores of MNSO were successively established. From the Hangzhou flagship store centered around the "Zanmang Loopy" to the Shanghai flagship store featuring the classic Disney IP "Strawberry Bear," MNSO continuously uses "super stores" as a key driving factor to create an immersive shopping experience for consumers. Statistics show that the Shanghai flagship store achieved a performance of 225,000 RMB on the first day of opening and 270,000 RMB on the second day, setting a new record for single-store opening performance in China. It is evident that super stores have become an undisputed benchmark in the retail industry.

In terms of the overseas market, the number of overseas stores is steadily expanding, and MNSO continues to build localized and differentiated operations, firmly occupying core momentum business districts at home and abroad. Since November 2023, MNSO's first Sanrio limited theme store in Indonesia opened at the popular shopping center Margo City; the world's first blind box store opened on Shaftesbury Avenue in central London, UK; the 100th store in the United States opened at the famous Florida shopping center in Orlando... This has already verified the correct way of empowering consumption growth with new scenarios and experiences on a global scale.

During this quarter, MNSO's flagship store in the UK officially opened in the world's top business district, Oxford Street in London. The store covers nearly 3,000 square feet, with pink as the main theme, incorporating elements of British cities in its design. It is the largest store MNSO has opened in the UK to date. The store contains over a thousand trendy lifestyle products, with multiple well-known IP series products on the shelves. The opening day performance broke the record for European stores, marking another milestone in the brand's "going global" process and further unleashing the potential of "interest consumption."

MNSO expects to add a net of 550-650 stores in its overseas market in 2024, with the majority of new stores coming from Asia and Latin America, while rapid store openings are also planned for the European and North American markets. In the future, it will deepen cooperation with commercial real estate, optimize store efficiency, scientifically plan store expansion, and continuously improve the global store network layout A global super brand that starts with new consumption and new retail, advances towards trend values and brand identity, accompanies young people, and leads the fashion trend is accelerating its formation.

IP Empowers Innovative Product Strength, Tapping into the Potential Market of Interest Consumption

Allowing MNSO to boldly attempt the "mega store" strategy is undoubtedly supported by the company's strong product innovation capabilities and diverse IP accumulation over the years, enabling its stores to quickly achieve high conversion rates. With replicable super store experiences, it aggressively seizes the global consumer market.

Based on its vast global store network, MNSO is not content with being just a channel retailer, but instead, while maintaining high cost performance, it is the first to see the deep exploration of consumer value, the huge growth space contained in its own brand renewal, and IP product design, content incubation development, and efficient product launches are the most important aspects of its layout and transformation.

As the most popular marketing method today, IP linkage and interest consumption are profoundly changing the consumer field, continuously building irreplaceable competitiveness for retail brands.

Therefore, on the path to becoming a global "super brand," MNSO focuses on "super IP" and "strategic categories," using IP inclusiveness to meet the interest consumption needs of global consumers. On one hand, the company continues to expand global IP collaborations, while on the other hand, it focuses on incubating original IPs to form an irreplicable brand advantage.

Along the way, with precise insights and exploration of potential interests of young people worldwide, MNSO has launched a series of "good-looking, fun, and practical" new products with interest consumption characteristics. These self-owned products generally have higher profit margins and commercial value, aligning with the company's strategic positioning of "using IP strategy as the lever and strategic categories as the foundation."

For example, the "Zanmang Loopy," "Goodnight Maracabaca Garden Baby," "Super Mario Brothers," and other series of IP products launched by MNSO this season. Currently, MNSO has collaborated with nearly 100 globally renowned IPs such as Disney, Sanrio, Pokémon, Jurassic Park, and Barbie. By breaking the ceiling of product innovation and market expansion through IP collaborations and incubating self-owned IP hot sellers, MNSO ensures both cost performance and sufficient premium space, continuously improving gross profit margins.

Based on MNSO's vast user ecosystem, when IP content or products are launched, consumer spontaneous participation and dissemination are formed, creating a "self-propagating content ecosystem," enhancing activity, and cleverly using various touchpoints of external social media to create external visibility, opening up new interactive drainage methods, and forming a resonance between brand and product advantages In addition to focusing on "super IP", strategic categories are also an important point of innovation for MNSO, with blind boxes, disposable travel supplies, plush products, and fragrances as representative strategic categories, enabling them to continuously meet new market demands and trend trends under the blessing of creativity and trends.

Furthermore, as a new force in the trendy play industry, the trendy play brand TOP TOY incubated by MNSO continues to expand aggressively, exploring incremental markets for trendy play, continuously releasing strong growth potential. According to the financial report, as of December 31st, the cumulative number of TOP TOY stores has reached 148, covering over 60 cities. In terms of performance, this quarter, TOP TOY's revenue reached 190 million yuan, a year-on-year increase of 90%, setting a new quarterly high, demonstrating a more tangible embodiment of interest consumption potential.

Moreover, MNSO has integrated over 1400 high-quality supply chain companies globally, with approximately 24% of them being overseas suppliers. Relying on a strong and stable Chinese supply chain, its supply efficiency, high-frequency new product capabilities, and economies of scale form cost advantages, fully enhancing its core competitiveness.

It can be expected that in the future, the company will not only adhere to high cost-effectiveness but also enhance brand positioning, strengthen IP collaborations, and product research and development, seize the opportunity of "interest consumption" to broaden the revenue ceiling, fully enhance its core competitiveness, and drive MNSO towards evolving into the world's leading IP design retail group.

Conclusion

Objectively speaking, while the recovery momentum in the consumer industry has slowed down, MNSO's performance has surged against the trend, standing out from numerous consumer companies, undoubtedly closely related to its insight into global consumer demand and trend directions: in terms of products, MNSO absorbs interest elements from around the world, refines innovative products, and improves its product matrix; in operations, MNSO conducts in-depth insights into local markets, highlighting local characteristics in store operations; in marketing, MNSO empowers overseas social media marketing through a content platform, stimulates user-generated content, expands cooperation with local KOLs, increases exposure of MNSO-related topics, and attracts overseas users' attention to the brand.

Looking ahead, as understanding of consumers deepens, MNSO will continue to use "IP strategy" as a lever, leverage diverse and popular IPs to achieve a breakthrough in the new consumer industry, adopt rich linkage and innovation strategies, hit the core of user consumption, continuously tap into interest consumption potential, deepen its competitive advantage. Today, MNSO has the growth potential to become a "super brand" and will bring more long-term driving force for its future development.

In the capital market, investors are most concerned about the growth prospects of a company. For MNSO, breaking conventions to explore new development paths, achieving breakthroughs in global user accumulation and content product innovation, will inevitably lead to excess returns in the face of first-mover innovation and differentiated competition