Despite a high domestic sales base, the company released its 24Q1 quarterly report with adjusted net profit of 28%. On May 14, 24Q1 revenue increased 26.0% year over year to 3.72 billion yuan. Its revenue in China and Miniso/Overseas Miniso/Top Toy increased 15.6%, 52.6%, and 55.1% year on year respectively. Overseas growth was due to faster sales growth of nearly 21% year on year. 24Q1's adjusted net profit increased 27.7% year over year to 620 million yuan, slightly lower than Bloomberg's agreed estimate of 660 million yuan. We believe that the core reason for the low forecast is mainly due to increased operating expenses due to the rapid development of overseas direct management models. With rapid channel expansion, Mingchuang Premium can further strengthen consumer sentiment. We expect the company to achieve net profit of 28.8, 36.8, and 4.60 billion yuan in 2024-2026 (previous value, mainly due to changes in the company's financial year). Referring to Comparable's Bloomberg consensus forecast of 24xPE in 2024, considering that the company is still growing at an accelerated pace overseas, the target price of HK$65.85 (previous value: HK$63.61; HKD is 0.92 against RMB).
Store openings at home and abroad have accelerated. In 2024, a net increase of 900-1000 Miniso stores is expected to be maintained in 24Q1, Miniso's net increase of 3 domestic direct-run stores, 105 partner stores, and a net increase of 43 overseas direct-run stores and 66 franchisees. In total, there is a net increase of 217 stores, which is nearly four times the net increase in 23Q1. Rapid domestic and overseas exhibition stores further confirm the effectiveness of the company's “IP+” approach in the retail market and the overall competitiveness of “supply chain+IP operations” under increased competition. The company stated in its quarterly report “the goal of maintaining a net opening of 900-1,000 Miniso stores in 2024.”
Top Toy improved significantly after store type optimization. GPM increased by 8pcTTop Toy in just three years. As of 24Q1, it had 160 stores. Top Toy maintains a good exhibition speed and continuously optimizes the UE model (adjust store area, product structure, etc.). 24Q1Top Toy's gross margin increased 8 pct year over year, and operating profit margin increased by medium to low double digits year over year. On the basis of achieving break-even in 23Q4, 24Q1 contributed better profits.
Mingchuang Premium is a representative brand of scarce offline retail channels in China that relies on strong control of the upstream supply chain and rich IP operations. Mingchuang Premium has grown into one of the most representative offline retail brands in China, and is highly scarce in the overseas field. Short-term cost disturbances will not affect the value of its long-term growth. We continue to be optimistic about its accelerated expansion overseas and the increase in the share of domestic offline retail. We expect the company to achieve net profit of 28.8 billion yuan, 36.8 billion yuan, and 4.60 billion yuan in 2024-2026. Referring to the comparable Bloomberg consensus forecast of 24xPE in 2024, considering that the company is still in the growth stage of accelerating overseas store expansion, the company will be given 26 xPE for 24 years, with a target price of HK$65.85, maintaining the purchase rating.
Risk warning: Store opening progress falls short of expectations, overseas market recovery falls short of expectations, brand upgrades fall short of expectations.