According to Zhitung Finance APP, Hua Chuang Securities released a research report stating that considering the high growth and profit margin maintenance of MINISO's (09896) overseas direct operation market in 2025-2026, it predicts MINISO's net income for 2024-2026 to be 2.734 billion / 3.745 billion / 4.82 billion, with a target price of 64-70.4 Hong Kong dollars, upgraded to a 'strong buy' rating. The company has raised its guidance for new store openings this year, from 900-1100 stores to 1200 stores, including 650-700 overseas and 350-400 domestic, with 100 TOPTOY stores. The company's annual profit margin guidance is 16-16.5%, with Q4 expected to have the highest profit margin of the year. The overseas store opening situation this year is good, laying a foundation for revenue growth next year and providing guidance for accelerated growth next year.

Item: In Q3 2024, the company's revenue grew 19.3% year-on-year to 4.52 billion yuan, and the adjusted net income (Non-IFRS) was 0.69 billion yuan, a year-on-year increase of 6.9%, both in line with expectations. The adjusted net profit margin was 15.2% (-1.7pp), and the gross margin was 44.9% (+3.1pp), reaching a historical high. In the first three quarters of 2024, the company's revenue was 12.281 billion yuan, a year-on-year growth of 22.8%, with a gross profit of 5.42 billion yuan, a year-on-year increase of 34.1%, and an adjusted net income of 1.928 billion yuan, a year-on-year growth of 13.7%.

Main points from Huachuang Securities are as follows:

The opening of stores in the overseas direct sales market has accelerated, while same-store growth has slowed in the third quarter.

In Q3 2024, overseas revenue was 1.81 billion yuan, with a year-on-year increase of +39.8%, and overseas business revenue accounted for 40.0% of the company's total revenue, an increase of +5.9 pp year-on-year. From Q1 to Q3 2024, overseas revenue grew by 41%, with direct sales market revenue growing by 64% and comparable agency market revenue growing by 22% year-on-year. The income proportion of the overseas direct sales market rose from 15% in the same period of 2023 to 20% this year. In the first three quarters, the company’s overseas same-store growth was in the high single digits, slowing compared to the 16% growth rate in the first half of the year. The previous year's third quarter had a high growth base due to the global success of the popular IP Barbie. Between Q1-3 of 2024, MINISO's total number of global stores increased by a net of 773 to 7186, with an overseas net increase of 449 to 2936, of which the direct sales market added 302 stores and the agency market added 147 stores. The net increase in stores in the direct sales market contributed over 61%, mainly from the USA and Indonesian markets.

Store openings domestically remain steady, with an increased focus on immediate retail layout.

In Q3 2024, domestic revenue was 2.71 billion yuan, a year-on-year increase of +8.7%, with MINISO brand revenue growing by 5.7% year-on-year to 2.44 billion yuan, and TOPTOY brand revenue increasing by 50.4% year-on-year to 0.27 billion yuan. From Q1 to Q3 2024, 324 new domestic stores were opened for a total of 4250 stores, with the opening speed meeting expectations. Same-store sales declined in the single digits, and the average transaction value increased by 0.2%, while the number of transactions decreased in the single digits. Weaker domestic consumer demand has pressured foot traffic, but the company's same-store performance outperformed other offline retail. The recovery situation in higher-tier cities is better than in lower-tier cities, mainly due to significant contributions from IP products and rapid growth in average transaction values. The company is strengthening its immediate retail layout and cooperating deeply with Meituan, having achieved an 80% year-on-year growth in the first three quarters, with accelerated openings of 24-hour flash warehouses in the third quarter to expand consumer coverage and effectively boost store performance.

In the third quarter of 2024, the company's gross margin reached 44.9% (+3.1pp), setting a new historic high, primarily benefiting from the increase in the proportion of high gross margin overseas market revenue and the increase in the proportion of IP Commodities.

Due to the increase in opening costs of direct stores in North America, the sales expense ratio in Q3 2024 rose by 5 percentage points to 22%, and the management expense ratio increased by 0.8 percentage points to 5.2%, of which over 60% of the cost increase is related to the new direct stores opened in the past year. Since the end of October, Harry Potter has made its global omnichannel debut, setting records in multiple overseas markets. New store openings this year will enter peak season in the fourth quarter, contributing to better performance.

Recently, MINISO announced the acquisition of 29.4% of Yonghui's shares, becoming Yonghui's largest Shareholder.

The strategic significance of this move is that Yonghui can provide essential "must-have products" that support daily life for Q&M Dental, while MINISO offers emotional value "optional products" to Global Consumers. By integrating "must-have + optional consumption," it can help MINISO Group navigate uncertainties and cross economic cycles. Yonghui's impact on MINISO's Earnings Reports mainly lies in investment gains and losses, which will be reflected after the completion of the transaction in the first half of 2025. Currently, Yonghui Superstores’ acquisition process is in line with expectations. MINISO and Yonghui Superstores will collaborate in areas such as procurement, private label product development, and cost reduction and efficiency improvement in stores.