Affected by the high base, the company's single Q3 revenue growth slowed slightly. The company achieved revenue of 12.28 billion/yoy +22.8% in the first three quarters, adjusted net profit of 1.93 billion/yoy +13.7%, and an adjusted net profit margin of 15.7% /yoy-1.3pct. Excluding the impact of exchange profit and loss, the adjusted net interest rate was 15.9% /yoy-0.6pct.

Single Q3 achieved revenue of 4.523 billion/yoy +19.3%, adjusted net profit of 0.686 billion/yoy +6.9%, and adjusted net profit margin of 15.2% /yoy-1.7pct. Due to the impact of the high revenue base of the popular IP company Barbie in the same period last year, the revenue growth rate for single Q3 slowed slightly, while profit margins declined due to the company's accelerated development of direct-run stores. Looking at Q4, overall revenue is expected to increase by 25-30%, with overseas growth of 45-50%; domestic growth is expected to be 10-15%; and TOP TOY continues to grow 50-55% year-on-year.

Looking at Mingchuang's business in China, the 2024Q3 Mingchuang brand achieved revenue of 2.439 billion/yoy +5.7% in China, adding 135 to 4,240 new stores. In the first three quarters, Mingchuang Premium's offline store revenue in mainland China was +11.8%. Among them, store opening increased 14.7% year on year, and same-store sales declined in the number of units; O2O business increased nearly 80% year on year, and e-commerce business increased 19% year on year. Looking at overseas business, 2024Q3 Mingchuang achieved revenue of 1.81 billion/yoy +39.8%. Among them, overseas direct managers/agents achieved revenue growth rates of 55.4%/26.5% respectively. In Q3, Mingchuang had a net increase of 183 new overseas stores to 2,936; the number of overseas same-store units increased year-on-year in the first three quarters. Looking at the TOP TOY business, 2024Q3 achieved revenue of 0.272 billion/yoy +50.1%, adding 39 stores to 234. Judging from the same store's performance, the same store increased 5% year-on-year in the first three quarters. As TOP TOY's share of self-developed products increased month-on-month, profits continued to improve. At the same time, TOPTOY successfully tested the waters at the MINISO LAND store in Indonesia and opened its first overseas store in Thailand, laying the foundation for global expansion.

The increase in IP share led to an increase in gross margin, and overseas store expansion accelerated sales expenses increased. The Q3 single company achieved a gross profit margin of 44.9% /yoy+3.1 pct, an increase of 1.5 pct over the previous quarter, and a record high for a single quarter.

Mainly due to 1) the increase in the share of high-margin overseas direct sales markets; 2) the increase in the share of IP products; and 3) the continuous improvement of TOP TOY's gross margin. The ratio of net sales and distribution/general administration/financial revenue in Q3 was +5.1/0.7/3.5pct, respectively. The rapid expansion of overseas direct stores led to an increase in sales expenses.

Risk warning: Macro environmental risks, IP co-branding falls short of expectations, industry competition intensifies.

Investment advice: Relying on its strong channel capabilities and supply chain advantages, the company continues to deepen its retail interests, continuously optimizes its product structure through popular IP co-brands to drive an increase in gross margin; at the same time, it accelerates overseas store opening, and continues to expand its global store footprint steadily. At the same time, the company's acquisition of Yonghui Supermarket progressed steadily. By creating a cost-effective and quality consumption scenario, the company gradually built a unique multi-brand matrix on the retail circuit by using its complementarity with the famous brand's service customer base and price band dimensions. We maintained the company's 2024-2026 net profit of 2.755/3.33/3.958 billion yuan, and the corresponding PE was 19/16/13x, maintaining the “superior to the market” rating.