Key points of investment
Performance summary: The company's FY2024Q2 (as of 2023Q4 of the natural year) achieved revenue of 3.841 billion yuan (RMB, same below), +54.0% year over year; net profit to mother of 636 million yuan, +80% year over year; non-IFRS net profit of 660 million yuan, +77% year over year.
The company's overall profit margin maintained a year-on-year upward trend. FY2024Q2, the company's gross margin/non-IFRS net margin was 43.2%/17.2%, +3.2pct/ +2.2pct year over year, and non-IFRS net margin +0.26pct month-on-month. The increase in profit margins benefits from: ① Q4 is the peak overseas season, and the share of revenue in high-margin overseas direct sales markets increased; ② TOP TOY adjusts its product structure to achieve an increase in gross margin; ③ the company adheres to strategies such as product upgrading, supply chain optimization, and increasing the share of IP products. The sales/management expense ratio for the quarter was 18.8%/4.9%, +2.1/ -0.9pct year-on-year. The increase in the sales expense ratio is mainly due to an increase in staff wages and an increase in depreciation and amortization expenses associated with directly-managed stores.
The domestic trend of rapid store opening continues, and single-store revenue continues to be high: FY2024Q2's domestic MINISO business revenue was 2,347 billion yuan, +55.7% year over year, mainly benefiting from the 63% year-on-year increase in revenue of Mingchuang's offline stores. Among them, the average number of stores was +17% year over year, and the average single store revenue was +39% year over year. MINISO's net increase of 124 stores in China this quarter reached 3,926, and 69% of the new stores were located in Tier 1 and 2 cities.
Accelerated overseas store opening helped GMV grow: FY2024Q2's overseas revenue was 1,494 billion yuan, +51.4% year-on-year. It mainly benefited from a 16% increase in the average number of stores and +31% year-on-year average revenue per store.
The company's overseas stores increased net by 174 to 2,487, including a net increase of 36/ 138 direct-operated/franchised stores.
TOPTOY's business profit margins remain at a high level. FY2024Q2's TOPTOY business revenue reached 188 million yuan, +90.5% year over year, mainly benefiting from a 19.5% increase in the number of stores and an average single store revenue of +59.4% year over year. TOP TOY's gross margin has increased, mainly benefiting from the continuous optimization of the product structure, which favors products with higher gross margins. TOP TOY has restarted the store opening process, with a net increase of 26 to 148 stores this quarter.
Profit forecast and investment rating: The company is a leading offline brand chain retail chain, and there is still plenty of room for growth in future overseas expansion+domestic decline. Considering the good performance of the company's overseas revenue and profit margin, we adjusted the company's FY2024-26 non-IFRS net profit forecast from 26.8/30.7/3.46 billion yuan to 25.8/32.4/3.79 billion yuan, +41%/26%/+17% year-on-year, corresponding to the closing price of Hong Kong stocks at 17/14/ 12 times P/E on March 13, maintaining a “buy” rating.
Risk warning: Store expansion falls short of expectations, consumer demand falls short of expectations, risks associated with overseas operations, etc.