Jingwu Financial News | Huachuang Securities pointed out that MINISO (09896) reported a revenue growth of 19.3% year-on-year in Q3 2024, amounting to 4.52 billion yuan, and an adjusted Net income (Non-IFRS) of 0.69 billion yuan, a year-on-year increase of 6.9%, both of which meet expectations.

The report states that domestic revenue in Q3 2024 was 2.71 billion yuan, up 8.7% year-on-year, with MINISO brand revenue growing by 5.7% year-on-year to 2.44 billion yuan, while TOPTOY brand revenue increased by 50.4% year-on-year to 0.27 billion yuan. From Q1 to Q3 of 2024, the domestic net increase of stores was 324, reaching 4,250 stores, with the store opening speed meeting expectations. Same-store sales declined by single digits, with average customer spending up 0.2% and average customer visits down by single digits. The weakening domestic Consumer demand has led to noticeable foot traffic pressures, but the company’s same-store performance was better than other offline retailers, particularly as same-store recovery in first-tier cities outpaced that in lower-tier cities, mainly due to a significant contribution from IP commodities in first-tier cities, leading to a faster growth in average customer spending.

The report further indicates that the company’s overseas revenue in Q3 2024 was 1.81 billion yuan, a year-on-year increase of 39.8%, and the overseas business revenue accounted for 40.0% of the total revenue, up 5.9 percentage points year-on-year. From Q1 to Q3 2024, overseas revenue grew by 41%. In the first three quarters, the company experienced same-store growth in overseas markets in the high single digits, a slowdown compared to the 16% same-store growth in the first half of the year. The high growth base in the third quarter this year is attributed to the popular IP Barbie experiencing global sales last year. In Q1-Q3 2024, the total number of MINISO stores globally increased by 773 to 7,186 stores, with a net increase of 449 overseas stores reaching 2,936 stores, among which 302 were added in the direct sales market and 147 in the agency market. Over 61% of the net new stores came from the direct sales market, mainly from the USA and Indonesia markets.

The report states that the company has raised its guidance for net new stores this year from 900-1100 stores to 1200 stores, with plans to open 650-700 overseas and 350-400 domestically, as well as 100 stores for TOPTOY. The annual profit margin guidance is set at 16-16.5%, with Q4 expected to have the highest profit margin of the year. The strong performance in opening stores overseas this year lays the foundation for revenue growth next year, providing guidance for accelerated growth. Considering the company's high growth in overseas direct sales markets and profit margin improvement projected for 2025-2026, the report forecasts MINISO's Net income for 2024, 2025, and 2026 to be 2.734 billion, 3.745 billion, and 4.82 billion respectively (previous values were 2.809 billion, 3.493 billion, and 4.418 billion), corresponding to valuations of 21.9X, 16X, and 12.4X. Referring to comparable company valuations, a target price of 64-70.4 Hong Kong dollars is given, upgrading the rating to 'strong buy'.