MINISO's revenue growth remains solid, but rising costs pressure near-term earnings

Overview

MINISO's preliminary 2Q26 results were lackluster: revenue maintained double-digit growth, but higher selling and distribution expenses and financing costs related to directly operated store expansion led to weaker year-over-year operating profit. Nomura believes the company faces a near-term disconnect between revenue growth and profit improvement, though its proprietary IP strategy and store-format upgrades should still support long-term same-store sales growth; it therefore maintains its Buy rating.

Core views

Revenue growth continues, but margins are the key near-term pressure. Investment in proprietary IP and upgraded stores should benefit same-store sales and long-term brand capabilities, but will continue to weigh on margins in 2026. Even if seasonal improvement in the U.S. market drives a sequential recovery in 2H26, the weak earnings-growth trajectory could persist into FY27.

Analysis framework

The analysis assesses revenue and operating-profit performance based on preliminary 2Q26 results, company guidance, and market consensus expectations, and adjusts valuation and the target price using a forward 12-month P/E approach.

Methodology notes

• Valuation methodsForward 12-month P/E method

  15.0x forward 12-month P/E

  The USD18.90 target price is based on a 15.0x forward 12-month P/E, a multiple consistent with the analyst's assessment of the company's earnings-growth trend.

• Earnings ForecastsMargin sensitivity analysis

  Cuts to operating margin and net profit forecasts

  While maintaining FY26-28 revenue forecasts, normalized net profit forecasts are reduced due to a more cautious operating-margin outlook.

Asset mapping & comparison

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

• MNSO.US

  Core covered stock

  Strengths

  Rapid revenue growth; proprietary IP and upgraded stores are viewed as long-term drivers of same-store growth; the current FY26F P/E is 8.6x and valuation is considered undemanding.

  Weaknesses

  Rising selling, distribution, store-opening, and financing costs are pressuring near-term operating profit and margins.

  Comparison

  2Q26 revenue was broadly in line with market expectations, but adjusted operating profit was below expectations; the target valuation multiple was reduced from 17.5x to 15.0x forward 12-month P/E.

  Risks

  Slower domestic same-store sales and revenue growth, uncertainty in overseas operations, and intensifying competition domestically and abroad.

Key data

• 2Q26 revenueCNY5.76bn-CNY5.86bn, +16%-18% year over yearBroadly in line with Bloomberg consensus of CNY5.80bn.
• 2Q26 adjusted operating profitCNY772m-CNY812m, -6% to +1% year over yearBelow Bloomberg consensus of CNY805m.
• 1H26 revenueCNY11.5bn-CNY11.6bn, +22%-23% year over yearSlightly above company guidance for 20%-22% year-over-year growth.
• 1H26 adjusted operating profitCNY1.61bn-CNY1.65bn, +4%-6% year over yearSlightly below company guidance for high-single-digit year-over-year growth.
• FY26F P/E8.6xThe report gives FY26F EPS of CNY9.97.
• FY26F normalized net profit forecast revisionCut by 5.0% to CNY3.055bnThe revenue forecast is maintained at CNY25.183bn.

Impact & implications

In the short term, higher cost investment and margin pressure may constrain valuation recovery. However, if proprietary IP and store upgrades drive same-store growth and U.S. market seasonality improves, the company's medium- to long-term growth thesis could remain validated. The current low valuation is the main support for maintaining a positive rating.

Risks

• Slower same-store sales and revenue growth in China.
• Uncertainty in overseas business operations.
• Intensifying domestic and international competition.
• Cost pressure from proprietary IP investment, store upgrades, and directly operated store expansion may continue to exceed expectations.
• Actual earnings below expectations could prevent the target price from being achieved.

What to watch

• The magnitude of sequential operating-margin improvement from the U.S. peak season in 2H26.
• The effect of proprietary IP and upgraded stores on same-store sales growth.
• Changes in selling and distribution expenses, directly operated store-opening costs, and financing costs.
• Whether FY26-28 margins can gradually recover as forecast.
• Changes in domestic demand, overseas expansion, and the competitive environment.