Incident: On March 12, the company released the FY2024H1 report. During the reporting period, it achieved operating income of 7.632 billion yuan/year on year +44.9%, gross margin of 42.5% /year on year +4.8pct, net profit to mother of 1,248 billion yuan/year on year +63.4%, adjusted net profit of 1.03 billion yuan/year on year +64.8%, which slightly exceeded expectations.
Domestic MINISO exhibition stores are stable. Single stores are superior to the industry, and TOPTOY exhibition stores are speeding up month-on-month. 1) Domestic MINISO stores added 124 new stores in the fourth quarter, and steadily achieved the FY2024Q1 reporting guidelines. By the end of 2023, the total number of domestic MINISO stores was 3,926, +601; in the fourth quarter, single store revenue was +32.7%, and the performance was still excellent. Together, the above two points drove the company's domestic MINISO to achieve revenue of 2.55 billion yuan/55.5% year over year; 2) TOPTOY stores accelerated, and individual store performance continued to optimize. TOPTOY stores increased by 26 month-on-month to 148, or +31 year-on-year in the fourth quarter; during the period, individual stores showed +59.0% year-on-year, and continued optimization, driving the revenue side of this segment +89.9% year-on-year to 188 million yuan.
Overseas growth rates are impressive, and the single-store model remains optimized. 1) In the fourth quarter, 174 overseas stores were added, and by the end of 2023, the total number of overseas stores was 2487, +372 (number of stores +17.6% year over year), of which direct-managed/three-party stores added 36/138 to 238/2249 respectively; 2) The single store model continued to be optimized, and the single store revenue was +30.6% year over year, of which 2023Q4 North America/Europe GMV showed strong performance. Latin America/Asia (outside of China) GMV was +37%, respectively. 21% Overall, the GMV of the company's FY2024Q2 overseas business increased to 3,573 billion yuan/year over year, achieving revenue of 1,494 billion yuan/year over year +51%. Among them, the direct/agency market was +86%/26% year over year, revenue accounted for 52%/48%, and direct management continued to increase month-on-month (FY2024Q1 was 46%).
Gross margin reached a new high in a single quarter, and adjusted net interest rates remained high. 1) The gross margin reached a new high in a single quarter: the company's overseas market products continued to be optimized, and the direct market revenue share further increased; China continued to implement the Mingchuang Premium brand strategy, and newly launched products contributed to a higher gross profit margin while taking cost reduction measures; in addition, Toptoy increased its own brand sales share and optimized the product structure, 2023Q4's gross margin reached 43.15%/+3.18 pct year over month, and reached a new high. 2) There has been an increase in the sales expense ratio. The sales expense ratio for the fourth quarter was 18.8% /year on year +2.09 pct, mainly due to increased marketing expenses due to labor expenses, logistics expenses, IP licensing fees, and brand upgrades; the fourth quarter management expense ratio was 4.9% /year over year - 0.99 pct; 3) The adjusted net interest rate remained high. The adjusted net interest rate for the fourth quarter reached 17.2%/+2.24pct year over year, and +0.26pct month-on-month, and remained high.
Investment advice: As a global leader in miscellaneous retail, the company is rapidly expanding globally using an asset-light model with advantages such as channels and supply chains, and has also incubated the trendy brand TOPTOY, which is expected to contribute to the second growth curve. Currently, various business formats, products, and supply chains are continuously being optimized, overseas business is growing rapidly, and profitability has improved markedly, and performance continues to exceed expectations. We have raised the company's profit forecast to: FY2024-FY2026 operating income is expected to be 153.7/192.5/23.46 billion yuan, and net profit to mother is 25.0/34.2/4.45 billion yuan, corresponding to the current valuation of 17.0/12.4/9.6 times PE, maintaining the “buy” rating.
Risk warning: Market competition has seriously intensified; business format expansion and product iteration have fallen short of expectations.