CICC has released a research report maintaining its adjusted net profit forecasts for MINISO Group (09896, MNSO.US) at RMB 3.1 billion for 2026 and RMB 3.5 billion for 2027. The current Hong Kong and U.S. stock valuations correspond to approximately 9 times the adjusted P/E for 2026/2027. The outperform industry rating and target prices of HK$39.16 and US$20.32 are unchanged, representing a 13x adjusted P/E for 2026 and implying an upside potential of 51% and 50%, respectively. Key points from CICC are summarized below.
Q1 2026 results met market expectations. Revenue increased 28% year-over-year to RMB 5.7 billion. Adjusted net profit, excluding foreign exchange gains and losses, grew 8% year-over-year to RMB 630 million, aligning with market forecasts.
Domestic business continues high-quality accelerated growth. Revenue from MINISO's domestic operations rose 30% year-over-year to RMB 3.2 billion. The company is driving store upgrades through popular product lines, with IP collaborations—including K-POP—fostering diversified market expansion. Member contribution further increased to over 70%. By channel, offline revenue grew 27% year-over-year to RMB 2.9 billion, with same-store sales increasing by a high-single-digit percentage. The period saw a net addition of 25 stores, bringing the total number of theme park series stores to 61 by quarter-end. Under the large-store strategy, theme park and flagship stores now account for 12% of total stores and contribute approximately 30% of sales. Online revenue surged 55% year-over-year to RMB 340 million. TOPTOY revenue increased 51% year-over-year to RMB 510 million.
Overseas operations focus on system building and quality improvement in key markets. Overseas business revenue grew 22% year-over-year to RMB 1.9 billion. The company is optimizing its overseas operational systems and channel upgrades through standardized practices, pilot replication, and mentorship programs, while emphasizing product depth and operational efficiency. In key markets, North America achieved mid-double-digit same-store sales growth, while Europe and Latin America posted positive same-store sales growth. The Indonesian market showed continued operational improvement following strategic adjustments.
Gross margin slightly declined, while selling expense ratio increased. The company's gross margin decreased by 0.9 percentage points year-over-year to 43.3% in Q1 2026, primarily due to a lower proportion of higher-margin overseas business and an increased share of optimized domestic product mixes and innovative business segments. The selling expense ratio, excluding share-based compensation, increased by 1.6 percentage points year-over-year, mainly driven by higher direct store-related expenses and advertising costs. The administrative expense ratio decreased by 0.4 percentage points. During the period, gains of RMB 870 million were recognized from an investment in an AI company, and a share of profit from Yonghui amounted to RMB 80 million. Excluding the impact of these and other non-operating items, adjusted net profit grew 8% year-over-year to RMB 630 million.
Development trends indicate strong performance in both domestic and key overseas markets since April. The company is focusing on member operations, channel upgrades, and IP content. Guidance for the first half of 2026 projects revenue growth of 20-22% year-over-year, with same-store sales in Mainland China expected to grow at a mid-single-digit rate and North America at a high-single-digit to low-double-digit rate.
Risks include a weaker-than-expected retail environment, slower-than-anticipated channel upgrades, and delays in new business development.