Miniso (MNSO) Report Interpretation

Overview

This earnings review assesses Miniso after 2Q26 results and a reset to FY26 guidance. Goldman Sachs sees China as resilient but expects overseas operational transition, weak distributor sales and margin pressure to delay earnings recovery; it maintains Buy with lower price targets.

Core views

Miniso reported 2Q26 revenue of Rmb5.81bn, up 17% year-on-year and modestly ahead of Goldman Sachs estimates. Gross margin reached 45.3%, up about 2 percentage points year-on-year and 1.8 percentage points above the institution's estimate, aided partly by US tariff refunds, which added about 1.2 percentage points year-on-year in the quarter. However, adjusted operating profit excluding FX declined 3% year-on-year and was 2% below expectations because lower-margin overseas distributor sales reduced operating leverage. Adjusted net profit excluding FX fell 10% year-on-year to Rmb591mn, below expectations amid higher finance costs, especially lease-liability interest for overseas directly operated stores. Management reset FY26 expectations around the overseas transition. Revenue growth guidance was lowered from high-teens to mid-teens year-on-year, while adjusted operating profit excluding FX is now expected to decline by a high-single-digit percentage rather than grow about 10%. Adjusted operating margin is expected to contract by 3-4 percentage points, versus the previous expected 1-2 percentage-point decline. The full-year net-store-opening target was cut sharply to 130-160 from 450-500, mainly reflecting overseas closures. For 2H26, management expects group revenue growth in the high-single digits, comprising mid-teens growth in China, low-single-digit overseas growth and broadly flat Top Toy revenue; overseas self-operated revenue is expected to grow by low teens while distributor revenue declines by low teens. China remains the central offset. July-to-date GMV rose about 20% year-on-year, with mid-single-digit growth in same-store daily sales, driven by both order volume and average selling price. Management maintained low-single-digit same-store-sales-growth guidance for China. The report highlights IP and collectible products, which represented about 25% of domestic sales in 1H26, as drivers of traffic, conversion and pricing. Membership sales contribution increased from 73% in 1Q26 to 77% in 1H26, while spending per member was about twice that of non-members. Store strategy is shifting toward productivity: MINISO Land stores generate roughly twice the sales per square meter of regular stores and have an average payback period of under one year, compared with 16-18 months for regular stores. Management sees long-term China store potential of 7,000-8,000 locations. Overseas operations are the key drag. In the US, 2Q same-store-sales growth weakened versus 1Q, partly because of shortages of popular IP products; management expects supply conditions to ease from September. New North American stores have stronger initial productivity and margins than existing outlets, but management plans to moderate openings and focus on sustaining store-level profitability after the first year. Europe remains in an integration and stabilization phase following the move to direct operations in France and Italy, while rapid UK expansion has diluted productivity. Other markets showed mixed conditions: Indonesian GMV was broadly flat excluding FX, India faced softer demand, the Philippines was affected by closures of low-productivity stores, and Mexico delivered about 20% local-currency GMV growth in 1H26. Goldman Sachs reduced its 2026-28E adjusted-net-profit forecasts excluding FX by 10-17%, reflecting a more conservative overseas recovery path and slower margin normalization. It lowered its 12-month targets to US$15.0 per ADR and HK$29.3 per H-share from US$21.2 and HK$41.2, respectively, and reduced the valuation basis to 13x 2026E P/E from 15x because earnings visibility has weakened. The institution nevertheless maintains Buy, citing a roughly 8x 2026E P/E valuation, active repurchases and management's commitment that FY26 dividends plus buybacks will be at least 50% of adjusted net profit excluding FX.

Analysis framework

Goldman Sachs compares reported quarterly results with its estimates, then links management guidance to sales mix, store productivity, overseas operating conditions and margin assumptions. It revises earnings forecasts accordingly and values the ADR and H-share on a 13x 2026E P/E multiple.

Methodology notes

• Valuation methodsP/E and PEG Valuation

  2026E price-to-earnings valuation

  Goldman Sachs derives its 12-month price targets using a 13x 2026E P/E multiple, reduced from 15x because overseas earnings visibility has weakened.

• Industry AnalysisVolume-price decomposition

  Same-store-sales and GMV drivers

  The report separates demand performance into order volume, average selling price, traffic, conversion, product mix and store productivity.

• Corporate Fundamentals and FinanceOperating and Financial Leverage Analysis

  Operating deleverage from sales mix and overseas investment

  The report explains that weaker high-margin distributor contribution and costs associated with directly operated overseas stores pressure operating profit and margins.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Miniso ADR (MNSO.US)

  Primary covered security; China resilience and shareholder returns support the maintained Buy rating, while overseas transition delays earnings recovery.

  Strengths

  Resilient China GMV, IP and membership drivers, productivity-led store strategy, buybacks and at least 50% FY26 adjusted-net-profit shareholder-return commitment.

  Weaknesses

  Overseas distributor revenue weakness, lower operating leverage and pressure from direct-store lease costs.

  Comparison

  Valued at roughly 8x 2026E P/E; target is based on 13x 2026E P/E, down from 15x.

  Risks

  Lower China store productivity, weaker global same-store-sales recovery, higher operating expenses and geopolitical risks.

• Miniso H-share (09896.HK)

  Primary covered security representing the same Miniso operating outlook and valuation thesis.

  Strengths

  Same operating catalysts as the ADR, including China demand resilience and shareholder-return plans.

  Weaknesses

  Same overseas-transition and margin pressures as the ADR.

  Comparison

  12-month target is HK$29.3 versus a reported price of HK$21.24.

  Risks

  Lower China store productivity, weaker global same-store-sales recovery, higher operating expenses and geopolitical risks.

Key data

• 2Q26 revenueRmb5.81bnUp 17% year-on-year and modestly above Goldman Sachs estimates.
• 2Q26 gross margin45.3%Up about 2 percentage points year-on-year and 1.8 percentage points above Goldman Sachs estimates; tariff refunds contributed about 1.2 percentage points year-on-year.
• 2Q26 adjusted net profit excluding FXRmb591mnDown 10% year-on-year and 6.8% below Goldman Sachs estimates.
• FY26 revenue guidanceMid-teens year-on-year growthReduced from high-teens growth guidance.
• FY26 adjusted operating margin3-4 percentage-point year-on-year declineWorse than the prior expected 1-2 percentage-point decline.
• FY26 net store opening target130-160Reduced from 450-500, mainly due to overseas store closures.
• 2026-28E adjusted net-profit revision-10% to -17%Reflects a more conservative overseas recovery trajectory and slower margin normalization.

Impact & implications

The report argues that China can continue supporting group demand through IP products, membership and higher-productivity formats, but overseas distributor weakness, direct-operation integration and investment needs will weigh on growth and margins through FY26. The lower target prices reflect this delayed recovery, while valuation and capital returns underpin the maintained Buy view.

Risks

• Lower China store productivity due to stronger competition, lagging product innovation or product-quality issues that reduce retail partners' willingness to expand.
• Worse-than-expected recovery in global same-store sales and store expansion.
• Geopolitical risks.
• Higher-than-expected operating expenses and additional investments.
• Yonghui's earnings performance.

What to watch

• China same-store sales and July-style GMV momentum, including the contribution from IP products and membership.
• Overseas distributor revenue, closures of low-productivity stores and the pace of self-operated market stabilization.
• US IP-product supply from September, US gross-margin development and holiday-season promotional pressure.
• European integration and store productivity in France, Italy and the UK.
• Delivery of the commitment that FY26 dividends plus buybacks will be no less than 50% of adjusted net profit excluding FX.