Research published by Blue Lotus Research on January 15, 2023

 

(9 Pages, 9 graphs and tables)
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We expect Miniso to report C4Q22 top line, non-GAAP operating profit and GAAP net income 1.7%, (1.5%) and in-line vs. consensus. Our C1Q23 top line is 3.7% vs. the consensus; We view MNSO’s sustained growth driver to be bringing Made-In-China merchandises to the mall economies around the world; We re-evaluate the stock and maintain the Buy rating, with TP at US$22. The downward revisions of EPADS in 2023-25E are mainly attributable to 1) slower offline resumption pace from Covid impact in 2022, 2) rescheduled oversea expansion paces, compared to our previous update on Nov. 23rd, 2021.   Mall economy is a product of urbanization and middle-class Although we consider mall building in China, and to a less extend Asia, has gotten temporarily ahead of itself, it has just started in many developing countries. We consider North American and Australia malls to be different from malls elsewhere and thus their saturations do not constitute a reason for caution. Further, e-commerce and O2O complement the mall economy, making malls a showcase arena for new products, designs and concepts. Miniso leverages Chinese supply chain and East Asian pop culture, which has achieved great success in Southeast Asia, Latin America and Middle East.   Miniso and FUTU are of the same cultural phenomenon Although targeting different demographic segments, both of them achieved success in cultural spheres outside of US and Europe, with China-based products. We believe the driver behind is sustainable, and the growth will continue.   Highly leveraged model with some certainties Miniso sells completely different set of goods from Dollar General or Dollar Tree. It is basically a curated store of lifestyle cuties. This puts tremendous pressure on Miniso to refresh its inventory to enhance transaction frequency. It also heightens the inventory risk. However, e-commerce prevalence in China provides Miniso with some data input, reducing the inventory risk. This benefit, however, isn’t available in less-e-commerce-developed countries. This means the driving force of Miniso’s SKU portfolio will remain China-centric. (TBC)

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