Hong Kong Stock Market Review: Miniso Continues to Expand Overseas

Following the success of Pop Mart, another consumer brand expanding overseas, Miniso, also delivered impressive results. In the first half of the year, revenue increased by 25% year-on-year to 7.76 billion RMB, with a gross profit margin of 43.7%, up 4.1 percentage points from the same period last year, reaching a historical high.

Adjusted net profit was 1.24 billion RMB, an 18% year-on-year increase, with an adjusted net profit margin of 16%. The company also announced a mid-term cash dividend of 620 million RMB. In Q2, revenue grew by 24.1%, adjusted net profit by 9.4%, and excluding the impact of exchange rates, profit increased by 24.6%.

Overall, while domestic single-store revenue declined, continuous store openings drove GMV growth, while overseas markets maintained strong growth.

The number of domestic stores increased from 3,926 at the end of 2023 to the current 4,115, but same-store GMV in the first half of the year decreased by 1.7%, with overall GMV growing by 15.6%. The decline, coupled with macroeconomic factors and increased store density, was within expectations. As previously guided, the company plans to open around 200 more stores in the second half of the year, with a total target of 400 for the year.

On the international front, the number of stores increased from 2,487 to 2,753, with 266 new openings in the first half of the year, including 151 in Asia, 62 in North America, and 32 in Latin America. Overall GMV increased by 41% year-on-year, with same-store growth of 16.3%. The previous guidance was to add 600 stores for the full year.

Miniso's products have price and quality advantages in overseas markets, with significant room for growth. However, one of the risks that the market is concerned about is tariffs. The company has been working to strengthen local supply chains overseas, especially in the U.S. market where 70% of costs are imported from China. For products that cannot be sourced in the U.S., the company is looking for alternative factories in Mexico, Vietnam, Indonesia, and other countries.

Moreover, some U.S. counterparts, such as Mattel and Fisher-Price, also import a large proportion of their products from China. As for other countries like India and Indonesia that require a certain percentage of local procurement, the company has shifted to local factories, theoretically managing overall risks.

Furthermore, Miniso does not heavily rely on its own IP. While losing a competitive advantage, the IP collaboration model also reduces risks. Products co-branded with Chiikawa this year performed well, contributing an estimated 5-8% of revenue in Q2 domestically. The company's strength lies in collaborating with global IPs, such as the flagship store opened in Paris in June, featuring dedicated sections for popular IPs like Sanrio, Disney, Barbie, and Snoopy.

With a combination of affordable quality and diverse products on one hand, and global IP collaborations on the other, Miniso has paved a successful path for global expansion.

Importantly, the company has just announced a 2 billion HKD share buyback plan, with a 12-month limit, utilizing half this year, along with a 50% dividend payout ratio, offering a potential annual return of over 6%. The rare combination of overseas growth opportunities and substantial returns makes this a valuable opportunity