Goldman Sachs maintains Buy on Miniso: membership, IP, and store upgrades offset macro pressure

Overview

This report is Goldman Sachs' summary and updated investment view following a virtual NDR held after Miniso's 1Q26 results. Management focused on four growth drivers for 2026: the membership system, IP products, store upgrades, and profitability improvement in mature overseas directly operated markets. Goldman Sachs believes that although macro uncertainty, cautious procurement in certain overseas distributor markets, and shipment delays will affect short-term sales and margins, the company is likely to support long-term structural growth through refined operations, supply chain optimization, flexible pricing, buybacks, and dividends.

Core views

The core view is to maintain Buy. Short-term market concerns mainly stem from weaker consumer sentiment in some overseas markets, shipment delays, inventory shortages, and pressure from freight and expenses; however, the China market remains resilient across city tiers, with higher-tier cities enhancing the experience through large-format stores and higher IP mix, while lower-tier cities continue to emphasize strong value for money. Mature overseas directly operated markets, especially North America, have room for operating leverage and margin improvement, while Europe and Oceania remain in the early investment stage. Valuation at about 9x 2026E P/E is considered attractive by Goldman Sachs.

Analysis framework

The report bases its assessment on the May 27 virtual NDR, management feedback after 1Q26 results, regional operating trends, membership and IP product data, store upgrade plans, differences between overseas directly operated and distributor models, and a target price framework of 15x 2026E P/E.

Methodology notes

• Valuation method12-month target price

  15x 2026E P/E

  Goldman Sachs assigns Miniso an ADR target price of US$21.2 and an H-share target price of HK$41.2, based on 15x 2026E P/E.

• Factor frameworkGS Factor Profile

  Growth, Financial Returns, Multiple, Integrated

  Goldman Sachs' factor framework compares stocks across growth, financial returns, valuation multiple, and integrated percentile ranking, with the integrated percentile combining relative attractiveness in growth, financial returns, and valuation.

• M&A frameworkM&A Rank

  M&A probability rating

  Goldman Sachs uses M&A Rank from 1 to 3 to assess the probability that a covered company becomes an acquisition target; the report discloses this framework as part of its general methodology description.

Asset mapping & comparison

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

• MINISO GROUP HOLDING LTD (MNSO.US ADR)

  Core covered asset

  Strengths

  Rising member sales contribution, strong proprietary IP pipeline, progress in China store upgrades, improving margins in U.S. directly operated business, and support from buybacks and an approximately 50% payout ratio.

  Weaknesses

  Some overseas distributor markets are affected by consumer sentiment, energy costs, and shipment delays; China margins are dragged by a higher O2O business mix and pricing discipline for new products.

  Comparison

  Goldman Sachs relatively rates it against its China consumer and retail coverage universe and maintains Buy; the report mentions valuation at about 9x 2026E P/E.

  Risks

  Declining China store efficiency, slower-than-expected global same-store sales recovery, geopolitics, higher-than-expected expenses, and weak Yonghui profitability.

• Miniso (H) (9896.HK)

  The same company's H-share covered asset

  Strengths

  Shares the same fundamental drivers as the ADR, with a target price of HK$41.2, supported by resilience in the China market, operating leverage in overseas directly operated markets, and shareholder returns.

  Weaknesses

  Affected by macro uncertainty, demand fluctuations in overseas markets, and margin pressure.

  Comparison

  The report provides target prices for both the ADR and H-share, with the H-share target price based on the same 15x 2026E P/E valuation framework.

  Risks

  Intensifying competition, lagging product innovation, product quality issues, slower-than-expected overseas expansion, and additional investment above expectations.

Key data

• China member sales contributionAbout 75% in 4M26Up from about 60% in 1Q25; management believes simplified membership benefits and a 10% rebate for new members drove acquisition and repeat purchases.
• U.S. membership scale and repeat purchase rateMore than 5 million members, repeat purchase rate above 50%Driven by more precise marketing and special offerings.
• Indonesia member sales contributionAbout 60%Showing that the membership system already accounts for a relatively high share of sales in some overseas markets.
• Proprietary IP revenue mixIn 4M26, mid-single-digit percentage of total sales and high-single-digit percentage of China salesIn April, IP sales in the online channel reached a double-digit share; YOYO's sales target is to first reach RMB1 billion.
• China store upgrade planAbout 300 stores in 2026Above the renovation scale of more than 200 stores in the previous year, mainly targeting stores under same-store sales pressure to improve location and format.
• Large-format store target400-500 stores by year-end, contributing more than 30% of salesLarge-format stores in higher-tier cities will feature an IP product mix of more than 70%.
• Overseas net new store target350 storesOf which 45%, or 160-180 stores, will be directly operated.
• U.S. sales growth targetAbout 40% year-on-year growth in 2026Progress in 1H26 is in line with management expectations, with strong 1Q26 partly offset by inventory shortages in April.
• U.S. margin improvementExpected improvement of low- to mid-single-digit percentage pointsAchieved through price increases on popular products, adjustment of local sourcing mix, and improved bargaining power; May price increases did not materially sacrifice volume.
• A&P expense ratio targetFull-year upper limit of about 3%Management believes the increase in advertising and promotion expense ratio in 1Q26 was mainly due to timing mismatch.
• IP royalty fee2.5%-3% of revenueManagement expects it to remain stable.
• Shareholder returnsStable payout ratio of about 50%, with plans for larger-scale buybacksManagement hopes to demonstrate confidence in the company's outlook through buybacks.

Impact & implications

In terms of investment implications, the report attributes the recent share price decline to market concerns over the macro backdrop, overseas distributor demand, and short-term margins; however, Goldman Sachs believes the company's improvements in membership, IP, store formats, and overseas directly operated margins are structurally meaningful, and together with buybacks, dividends, and a valuation of about 9x 2026E P/E, the risk-reward remains skewed positively.

Risks

• Intensifying competition in the China market, lagging product innovation, or product quality issues could reduce store productivity and weaken retail partners' willingness to expand.
• Global same-store sales recovery and store expansion may fall short of expectations.
• Geopolitical risks, especially the prolonged Middle East conflict, may affect demand, consumer behavior, and shipment timing in some overseas distributor markets.
• OPEX, freight, advertising and promotion expenses, or additional investment may exceed expectations.
• Yonghui profitability may underperform.
• A higher O2O business mix may dilute China margins.

What to watch

• Whether new member acquisition, repeat purchase rate, and member sales contribution in China can continue to improve.
• The intensive launch of new IPs from June to August and progress toward YOYO's RMB1 billion sales target.
• Progress on about 300 store upgrades in China, the year-end target of 400-500 large-format stores, and their sales contribution.
• Easing of inventory shortages in the U.S., the sales impact of price increases, and execution of reducing the local sourcing ratio from about 40% to about 30%.
• Order recovery in overseas distributor markets amid the Middle East conflict, energy costs, and shipment delays.
• Whether the A&P expense ratio is controlled at about 3% for the full year and whether IP royalty fees remain at 2.5%-3% of revenue.
• The implementation pace of larger-scale share buybacks and the approximately 50% stable payout ratio.
• The impact of Yonghui profitability on investors' risk perception.