The company's performance continued to grow steadily in the first quarter of 2024. The company achieved revenue of 3,724 million/yoy +26.0% in 2024Q1, mainly contributed by a 19% increase in the average number of stores and a 9% increase in same-store growth; adjusted net profit of 617 million/yoy +27.7%. The company's 2024Q1 performance was still strong under the high base for the same period last year. At the same time, the company accelerated store opening speed, with a net increase of 217 stores in a single Q1, an increase of nearly three times compared with the number of net new stores added in the same period of the previous year.

Looking at domestic business, 2024Q1 achieved domestic revenue of 2,502 million/yoy +16.2%, MINISO offline store revenue increased 15.6% year on year, net increase of 108 stores, and same-store sales recovered to 98% in the same period last year; TOPTOY's revenue was 214 million/yoy +55.1%, a net increase of 44 stores to 160, and same-store sales increased 26% year over year. At present, the TOP TOY business is becoming more mature, achieving positive profits for two consecutive quarters, while gross margin increased by 8 pcts year-on-year, so the company raised the annual guideline for adding stores to 100.

In terms of overseas business, the company's overseas revenue in 2024Q1 was 1,222 million/yoy +52.6%, a net increase of 109 stores. Among them, overseas direct sales revenue increased 92% year over year, accounting for 58% of overseas revenue. Overseas GMV increased 46% year-on-year in the quarter, with direct sales and agency markets growing 104%/29% year-on-year respectively, while North America/Europe/Latin America/Asia increased 108%/81%/40%/34% year-on-year respectively. In terms of comparable same-store sales, overseas same-store sales increased 21% year-on-year. Among them, the direct-management/agency market increased by 32%/18% respectively, and all overseas regions achieved positive same-store growth; judging from the net increase in stores, the direct sales market contributed about 60% of new stores.

The gross margin continued to rise, and the sales expense ratio increased. In Q1 2024, the company's gross margin/adjusted net margin was 43.4%/16.6%, respectively, +4.07pct/+0.20pct year over year, mainly due to the direct sales market accounting for +12pct of revenue from overseas markets, while TOP TOY's gross margin increased by 8 pct year over year. In terms of cost ratios, sales/management expense ratios were 18.7%/5.1%, compared to +3.83 pct/-0.12 pct. The sales expense ratio increased significantly, mainly due to 1) business growth driving an increase in expenses such as personnel expenses and logistics expenses; 2) an increase in wages and rent expenses related to overseas direct business; 3) an increase in promotion and advertising expenses driven by brand strategy upgrades and instant retail business growth.

Risk warning: Macroenvironmental risks, new product launches fall short of expectations, industry competition intensifies.

Investment advice: With its core competencies in product development, supply chain integration and globalization, the company continues to grow strongly, gross margin has further increased, and its leading position as a global discount retailer continues to be consolidated. In the future, as the company's IP products continue to explode and the share of overseas direct sales markets increases, MINISO's business will grow steadily. At the same time, the success of the TOP TOY model will also contribute a second growth curve to the company.

Due to the company's fiscal year settlement date change, the annual calculation deadline was changed from June 30 to December 31, so we adjusted our future profit forecast accordingly. The net profit forecast for 2024-2026 is estimated to be 2,75/33.30/3,958 billion yuan, corresponding to PE of 21/17/14x, maintaining a “buy” rating.