Discover Masterpiece: The world's leading trendy lifestyle retailer
Mingchuang Premium is the world's leading global retailer of trendy lifestyle furniture, featuring IP design. The main brand MINISO and the sub-brand TOP TOY specialize in affordable lifestyle products and trendy toys, respectively. The company is deeply involved in the cost-effective product supply chain to enter the market, rapidly expand stores with a direct management and asset-light creative partner model, and achieve two business leaps in business under the two impetus of globalization strategy and IP strategy. By the end of 2023, the total number of Mingchuang stores reached 6413, of which the number of Mingchuang Premium stores in China was 3,926, and the number of Mingchuang Premium stores overseas was 2,487. According to the company's latest adjusted fiscal year, the company's revenue in 2023 reached 13.8 billion yuan, a two-year compound growth rate of 17%. The full year of 2023 recorded a 39% revenue increase. Net profit to mother was 2,253 billion yuan, and the net profit margin to mother rose sharply to a high level of 16%.
Core competency: “heavy back end, light front end” moat building
Supply chain advantages are the foundation of Mingchuang Premium's cost-effective flywheel. It is also the key for the company to reduce the difficulty of front-end operations and ensure asset-light expansion. The establishment of the company's product cost performance advantage is based on an efficient and powerful supply chain system, which can continuously attract customers to enter stores and form repurchases through cost-effective products and high-frequency updates, providing new impetus for the flywheel, and the channel is also guaranteed by a strong supply chain and product iteration speed to attract more and more creative partners to join, thus achieving rapid and standardized channel expansion, rapidly forming scale, and concentrating product procurement to feed back supplier profits and form a positive cycle. The company's strong product-side and store-side first-mover advantage enabled the company to continuously establish and consolidate the above core competitiveness, and the operation of the flywheel effect enabled the company to continue to consolidate and consolidate its competitive advantage at a lower cost.
Growth space: endogenous and epitaxial resonance to become a superbrand
On the one hand, from an endogenous perspective, from highlighting the resilience of the cost-effective business format to the trend of interested consumption, the value proposition of Mingchuang Premium also advanced from affordability and practicality to spiritual satisfaction. In 2023, the company officially announced its new brand positioning as a “lifestyle collection store featuring IP design”, strengthening the IP attributes in its own brand genes, and striving to achieve the three transformations of upgrading from channel brands to product brands, from retail companies to content companies, and upgrading customers to users. We believe that the upgrading of the company's value proposition from cost-effective consumption to interested consumption means that the company's value evolves from satisfying and practical Level is thus able to maintain the store's long-term customer acquisition vitality; on the other hand, from an external perspective, Mingchuang has accumulated many years of overseas experience since launching a global strategy in 2015. Localization of supply chains, products, operations, and marketing is becoming mature, and key overseas markets are expected to enter the encryption and partial harvesting stage.
Investment logic: Sail with interest in spending, and set sail overseas for expansion
We believe that the company's future growth highlights: 1) endogenesis: the company is gradually moving from cost-effective to high-margin interest consumption, targeting “big beauty”, “big toys” and “big IP” to create super categories and continue to explore super store strategies; 2) Outreach: the overseas logic of a high-quality supply chain is expected to continue to deepen. Overseas exhibition stores are expected to continue to deepen. Overseas exhibition stores are currently growing faster, represented by North America, which is expected to contribute to better flexibility on the revenue and profit side. It is estimated that corresponding to the latest fiscal year (natural year), the company's net profit for 2024-2026 will be 28.4 billion yuan, 3.56 billion yuan, and 4.4 billion yuan, respectively, corresponding to the current market value (45.7 billion yuan). PE valuations will be 16, 13, and 10 times, respectively, covering the first time to give a “buy” rating.
Risk warning
1. The brand upgrade and transformation effect falls short of expectations;
2. Increased industry competition;
3. The progress of store expansion fell short of expectations;
4. There is uncertainty about overseas operations.