occurrences

The company announced financial results for 2024Q3. 2024Q3 achieved revenue of 4.52 billion yuan, or +19.3% year over year, of which MINISO China/MINISO overseas/TOP TOY revenue was +5.7%/+39.8%/+50.4%, respectively.

2024Q3's gross margin was 44.9%, a record high; adjusted net profit was 0.69 billion yuan, +6.9% year over year.

Domestic same stores are under phased pressure to actively innovate the store format matrix

Due to macroeconomic disturbances, Mingchuang's Chinese stores have been under some pressure since the beginning of the year. YTD, MINISO is the single digit of the decline in domestic same-store sales. In terms of volume price, customer unit price is +0.2%, and passenger traffic is in the single digit of the year-on-year decline; by city, YTD high-tier cities have better same-store sales than lower-tier cities. The underlying reason is the difference in customer unit price due to different IP shares. This phenomenon proves the driving effect of interest consumption centered on IP strategies on performance. On the store expansion side, 2024Q3 has a net increase of 135 stores. The store layout is mainly in Tier 1-2 cities. According to current progress estimates, there is a high degree of confidence in achieving the target of 350-450 domestic stores throughout the year. At the same time, the company innovated the store format matrix and actively explored diversified store development opportunities around IP scenarios and category scenarios.

Overseas growth continues at a rapid pace, and cost pressure is expected to ease during the peak season, and Mingchuang's overseas markets will continue to grow rapidly in 2024Q3. The comparable revenue growth rate of the direct/agency market is 55.4%/26.5%, respectively. Focusing on the North American market, the year-on-year growth rate of YTD Mingchuang's 122 stores in North America was a medium unit, maintaining healthy growth on the same store side while rapidly expanding stores. At the same time, the accelerated expansion of direct stores led to an increase in costs and expenses. During the 2024 YTD period, direct-run store revenue increased by 104%, while related expenses (including rent, depreciation and amortization, wages, etc.) increased by 75%; as North America enters the peak sales season, the cost drag down or is expected to slow down.

TOP TOY's share of self-developed products continued to rise. In the first three quarters of 2024, when the first overseas store landed, TOP TOY's revenue/same-store growth rates were +43%/+5%, respectively, and Q3 companies' self-developed products continued to rise. In October, the first overseas TOPTOY store landed in Thailand, fueling global expansion.

Globalization continues to advance + steady profit growth, and to maintain the “increase in holdings” rating, we expect the company's 2024-2026 revenue to be 17.32/20.78/24.99 billion yuan, respectively, with comparable growth rates of 25.2%/20.0%/20.2%, and net profit to mother of 2.72/3.33/4.07 billion yuan, respectively. Comparable growth rates are 20.7%/22.3%/22.3%, and EPS is 2.2/2.6/3.2 yuan/share, respectively. In view of the company's supply chain advantages and the strengthening of IP transformation capabilities, the global strategy continues to advance, maintaining the “gain” rating.

Risk warning: macroeconomic growth is slowing; market competition is intensifying; overseas market development falls short of expectations, etc.