The pursuit of cost-effective products in overseas markets, especially in North America, is the driving force for the growth of MINISO's performance.
Yang Xianhuawen.
MINISO (MNSO.)ny；9896.HK) is known as Pinduoduo offline. When Pinduoduo's market value surpassed Alibaba and became the largest Chinese concept stock in the United States, MINISO, which also has the advantage of "cost-effective + going overseas", has also attracted more and more attention from the market. From hitting a new low in September 2022 to September 2023, a year later, MINISO's share price has risen nearly 6 times.
Backed by the advantages of China's manufacturing and the control of the huge ** chain, MINISO's overseas business is like a bamboo. Ye Guofu, the actual controller of MINISO, who just announced its first financial report for fiscal 2023 (as of the end of September 2023), said that this was "the best quarter so far in the company's history".
In the face of the continued high inflationary pressure in Europe and the United States, companies focusing on cost-effective products ushered in an investment window period.
A new high in performance
In the absence of any warning, on December 4, MINISO fell by more than 14% in a single day in the U.S. stock market, and then fell by more than 14% in Hong Kong.
At the subsequent meeting, MINISO said that Li Minxin, the company's executive vice president, had a plan of 1 million shares, but stopped the plan after actually selling tens of thousands of shares. MINISO also announced that Zhang Jingjing, the company's chief financial officer and vice president, Huang Zheng, general manager and vice president of MINISO's overseas ** market, and Yao Jianzheng, general manager and vice president of MINISO China operations, plan to buy a number of shares in the public market in the next month.
In fact, just before the turmoil, MINISO had just handed over a quarterly report of the company's "best in history". From July to September 2023, MINISO achieved revenue of 379.1 billion yuan, a year-on-year increase of 367%；Net profit attributable to the company was 61.3 billion yuan, a year-on-year increase of 488%。
In terms of channel expansion, the number of MINISO stores exceeded 6,000 for the first time to reach 6,115, of which the number of stores in China was 3,802, an increase of 533 stores year-on-yearThe number of overseas stores was 2,313, an increase of 286 over the same period last year. The number of TOP TOY stores of the company's other brand also reached 122.
It was the best quarter in the company's history so far, with revenue, margins and net store openings all reaching record highs," said Ye Guofu, founder of MINISO, with his excitement palpable. In addition, benefiting from overseas markets and brand upgrades, 41The gross profit margin of 8% also refreshed the record high of MINISO.
In fact, this is not a flash in the pan of MINISO. MINISO, which had been losing money for many years, turned losses into profits in 2021 and handed over a 2022 financial report with a doubling of performance. Cross-border companies that attack globalization with "cost-effective + overseas" are ushering in a harvest period.
Global price-performance ratio
Founded in 2013, MINISO is exactly 10 years ago, according to the company's introduction, MINISO is a "global value retailer that provides a rich variety of trendy lifestyle and home furnishing products featuring IP design", simply put, MINISO is a brand retailer that mainly sells lifestyle products and trendy toys.
Until the 2020 fiscal year, MINISO was in the red, but in the 2021-2022 fiscal year, MINISO not only quickly turned around its losses, but also made rapid profits.
In the 2021-2022 fiscal year, MINISO achieved a net profit attributable to the company of 63.8 billion and 176.9 billion yuan, the company lost 141.5 billion yuan, and the growth of the company's earnings is not premised on a substantial increase in revenue. In the 2018-2020 fiscal year, MINISO's revenue was around 9 billion yuan, and in the 2021-2022 fiscal year, it was 1008.6 billion and 1147.3 billion yuan.
Compared with the doubling of profit, MINISO's revenue did not perform well, and one of the main reasons for the sharp increase in net profit was the improvement of gross profit margin. In fiscal year 2022, MINISO's gross profit margin has reached 3873%, compared to 2679% has increased by nearly 12 percentage points, and the company's gross profit margin has exceeded 40% in the first quarter of fiscal 2023.
The rapid growth of overseas markets with better profits is the driving force for MINISO's profit improvement. In fiscal year 2022, MINISO's revenue from overseas was 382.2 billion yuan, a year-on-year increase of 446%, compared to 76 percent for the Chinese market5.1 billion yuan, an increase of only 28%；Overseas markets accounted for 333%。
This can also be seen in the growth of GMV in different markets. In the 2020-2022 fiscal year, the GMV achieved by MINISO stores in China was 1040.6 billion yuan, 10.4 billion yuan and 1067.1 billion yuan, no significant increase;The GMV achieved by MINISO stores in overseas markets was 48600 million yuan, 641.4 billion and 907.2 billion yuan, the gap with the Chinese market is rapidly narrowing.
MINISO's home life and other products are designed to pay attention to the fashion and creativity of appearance, and most of the products have a low unit price, and the retail price of most of the company's products is below 50 yuan. As of FY2022, the Company launched approximately 530 SKUs per month, provided consumers with an optional core SKU portfolio of approximately 9,700 options, and established co-branding relationships with 80 IP licensors.
In fiscal year 2019, the company opened 1,414 overseas stores, 2,187 stores in fiscal 2022, and 2,313 stores in the first quarter of fiscal 2023, that is, at the end of the third quarter of 2023, an increase of nearly 1,000 stores.
In terms of the key development of overseas markets, MINISO has also shifted from Asia to the American market, mainly the United States. In fiscal 2019, the Asian market, excluding China, contributed 17Revenue of 3.8 billion yuan, with revenue of 104.9 billion yuan. In fiscal 2022, Asian countries other than China contributed 182.1 billion yuan, the Americas brought 17With an income of 3.8 billion yuan, the two are already comparable.
In the latest financial report disclosed a few days ago, MINISO said that the company's revenue in the North American market increased by nearly 160% in the third quarter of 2023. The consumption Xi of overseas markets that pursue more cost-effective products has benefited MINISO significantly.
Overseas users' pursuit of cost performance is more vividly manifested in the face of Pinduoduo's financial report that exceeded expectations. In the third quarter of 2023, Pinduoduo achieved revenue of 688400 million yuan, a year-on-year increase of 939%；The net profit was 155400 million yuan, a year-on-year increase of about 47%. The rise of overseas markets has become the key to Pinduoduo's exceeding expectations.
Both Pinduoduo and MINISO are able to provide cost-effective products in the global market, based on China's first-chain advantages.
In the prospectus, MINISO said that the company relies on the advantages of China's huge ** chain and directly purchases from ** merchants who meet the requirements, and large-scale procurement has further created the company's procurement cost advantage. By the end of 2021, there were more than 1,000 MINISO buyers.
Whether it is Pinduoduo or MINISO, these cross-border enterprises with the advantage of cost performance have fully released the comparative advantages of China's ** chain, so that related enterprises can provide differentiated products with cost advantages. Against the backdrop of high inflation in Europe and the United States, this comparative advantage is further amplified.
The retail market is a fully competitive market, and the current "Pinduoduo" meets the demand for cost performance in the European and American markets, and the strength of the overseas market determines the level of future performance growth.
Uncertainty in the North American market
MINISO's sales are mainly offline stores, and the company currently has more than 6,000 stores around the world, thanks to strong demand, the company's stores are far from saturated. After the epidemic, the company has also accelerated the pace of opening stores. As of the end of the third quarter of 2023, MINISO has completed the net growth target of 350-450 domestic stores ahead of schedule.
At the end of 2022, the number of MINISO stores in China was 3,325, and by the end of the third quarter of 2023, it reached 3,802, a net increase of 477, and the company expects another net increase of 100-200 stores in 2023, and the number of stores in China is expected to approach 4,000.
Unlike the larger-than-expected growth in the number of domestic stores, the expansion of overseas market channels, which is the main engine of MINISO's growth, is not as expected. As of the end of the third quarter of 2023, the number of stores in the company's overseas markets was 2,313, an increase of 198 from 2,115 at the beginning of the year.
From the perspective of overseas revenue structure, the growth of MINISO's overseas revenue basically depends on the North American market, and other overseas markets have not changed much. In fiscal 2019, revenue in Asia excluding China was 17$3.8 billion, compared to $18.8 in FY20222.1 billion yuan, almost unchanged;The European market starts from 12.5 billion yuan increased to 1$5.1 billion also didn't have much impact, only the revenue of the American market increased from 104.9 billion yuan to 173.8 billion yuan, contributing significant revenue growth.
MINISO is also investing more and more in North America. In fiscal 2021, MINISO's non-current assets in the Americas were 19.1 billion yuan, which has grown to 51.2 billion yuan, more than doubled.
Since the epidemic, high inflation in the United States has impacted consumers' enthusiasm for consumption, and low-priced and discounted goods are sought after, which is the reason why cost-effective products such as Pinduoduo and Minisoso sell well. At present, inflation in the United States has begun to cool, and the growth of MINISO seems to be slowing down.
MINISO said that in October 2023, the GMV of the company's overseas business increased by about 30% year-on-year, and the average single-store GMV of MINISO increased by about 11%. From July to September 2023, the company's domestic and overseas single-store GMV both maintained a growth of about 25%. From July to August, the GMV of the company's overseas business increased by about 50% and more than 45%.
In the third quarter of 2023, MINISO's revenue in the North American market increased by 160% year-on-year, "The business development of emerging markets represented by North America is encouraging. "The North American market has become the key to MINISO's growth, and once consumers here switch, MINISO's growth will lose its main momentum.