Profit grew steadily, and the company strengthened shareholder returns. The “dividend+repurchase” showed confidence that the company released the 24H1 semi-annual report. 24Q2 revenue increased 24.1% year on year to 4.04 billion yuan, slightly exceeding Bloomberg's agreed expectations of 3.96 billion yuan; adjusted net profit increased 9.4% year on year to 0.63 billion yuan, which is basically in line with Bloomberg's agreed expectations of 0.64 billion yuan (mainly due to exchange profit and loss disturbance). Excluding exchange gains and losses, net profit increased 24.6% after 24Q2 adjustments under the same caliber. Growth is steady. In order to strengthen shareholder returns, the company announced a cash dividend of 0.62 billion yuan (accounting for about 50% of the adjusted net profit for the first half of the year), corresponding to the closing market value dividend rate of 1.6% of Hong Kong stocks on August 30; and launched a new round of equity repurchase plans to repurchase up to 2 billion HKD shares within 12 months starting August 30. The company's “dividend+buyback” shows confidence in long-term development. We maintain our 24-26 adjusted net profit forecast of 2.88, 3.68, and 4.6 billion yuan. Referring to comparable company Bloomberg's consistent forecast of 21xPE in 2024, considering that the direct market still has a slight drag on the company's OPM in the short term, maintained the company's 24xPE, maintained a target price of HK$51.21, and maintained a purchase rating.

Miniso continued to have high operating quality in China and maintained high growth in overseas markets 24Q2. Miniso's domestic exhibition stores have slowed down, with a net opening of 81 stores, but thanks to the quarterly restoration of comparable store sales, it still achieved revenue of 2.31 billion yuan, an increase of 18.3%; overseas continued a faster pace of exhibition stores, with a net increase of 157 stores, achieving revenue of 1.51 billion yuan, a year-on-year increase of 35.5%. The overseas growth rate slowed down compared to 24Q1 (52.6% year-on-year increase), which is to some extent a high base effect Also, due to the increase in shipping charges in Q2, some overseas distributors delayed replenishment.

The sales and management expense ratio has increased due to the rapid development of the direct market. The H2 peak season is expected to improve the 24Q2 company's gross margin to a record high, with a year-on-year increase of 4.1 pct to 43.9%, mainly due to the rapid development of the direct management market (net opening of 62 direct-run stores). However, this also led to a further increase in operating expenses. The share of SG&A in 24H1's revenue increased by 5pct to 24%. Among them, SG&A contributed by directly managed stores and increased the share of revenue by 3pct to 10%, which made the company more. Looking ahead to 24H2, with the entry of the peak operating season at home and abroad, the share of sales of high-margin interest products is expected to increase; at the same time, the further maturity of direct-run stores, especially in the North American market, is expected to dilute sales and management expenses and promote improved profitability.

The medium- to long-term growth target remains unchanged. Maintaining a 24-28 compound revenue growth rate of no less than 20%, the company maintained a 24-28 compound revenue growth rate of no less than 20%, and the annual net target of adding 900-1100 stores unchanged. The growth driving force in the Chinese domestic market comes from further penetration of stores, the continuous development of new store types (new 24-hour supermarkets launched in 24 years), and the expansion of large stores/theme stores; the overseas market Miniso's penetration rate in Southeast Asia, North America, Europe, the Middle East and North Africa is still low, and there is still plenty of room to open stores. In addition, TOP TOY is also in the phase of accelerated store opening. By optimizing the product structure and refining and updating the store model, the company is also expected to grow into the company's second growth curve.

Risk warning: offline retail competition is intensifying, tariff-related policies are disrupting, and domestic economic growth is falling short of expectations.