MINISO 1Q26 profit alert: adjusted net profit meets expectations, Buy maintained

Overview

This report is UBS's take on MINISO's 1Q26 earnings preannouncement. The core conclusion is that adjusted net profit is broadly in line with UBS's expectations, while revenue and adjusted operating profit are better than expected; the sharp increase in net profit is mainly driven by fair value gains on investments, investment gains from Yonghui Superstores, and the absence of last year's one-off expenses, among other non-operating or one-time factors.

Core views

UBS maintains a positive view on MINISO. 1Q26 revenue is expected to grow 28-29% YoY, above UBS's estimate; adjusted operating profit is expected to grow 13-16% YoY, also above UBS's estimate of 11% YoY growth; adjusted net margin is expected to decline 1.8-2.3 percentage points YoY, slightly weaker than UBS's earlier expectation of a 1.7 percentage point decline. Overall, operating profit is better than expected, but margins remain under some pressure.

Analysis framework

The report compares the earnings preannouncement with UBS's expectations, breaking down revenue, adjusted operating profit, adjusted net profit, the gap between net profit and adjusted net profit, and combining the 12-month rating, target price, forecast returns, and DCF valuation framework to form the investment view.

Methodology notes

• Valuation methodThree-stage DCF model

  Discounted cash flow valuation

  UBS uses a three-stage DCF model to derive MINISO's target price, reflecting future cash flows, growth stages, and discount assumptions.

• Rating frameworkForecast Stock Return

  Forecast stock return

  UBS defines forecast stock return as the sum of the expected share price upside over the next 12 months and the dividend yield. In this report, the implied share price upside is 86.2%, the forecast dividend yield is 5.3%, and the forecast total stock return is 91.6%.

Asset mapping & comparison

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

• MNSO.US

  Covered company

  Strengths

  Revenue growth is above UBS's expectations, adjusted operating profit is above expectations, and the valuation model indicates strong 12-month expected returns.

  Weaknesses

  The YoY decline in adjusted net margin is slightly larger than UBS previously expected, and the ROIC forecast is trending downward.

  Comparison

  UBS's 2026E EPS is RMB 10.30, above consensus of RMB 10.15; 2027E and 2028E EPS are slightly below consensus.

  Risks

  Uncertainty in international relations, potential litigation related to counterfeiting, uncertainty around ADR regulation, changes in the fair value of TOPTOY preferred share redemption liabilities, foreign exchange losses, and rising financing interest expense.

• TOPTOY

  Sub-brand and profit driver

  Strengths

  The trendy toy business expands the company's category boundaries; as of 2024, TOPTOY had 276 stores in China and overseas.

  Weaknesses

  Rising share-based compensation expense and changes in the fair value of preferred share redemption liabilities may weigh on profits.

  Comparison

  Compared with the MINISO flagship brand, TOPTOY is still at a relatively earlier stage of expansion and investment.

  Risks

  Business expansion, financing instruments, and equity-related expenses may introduce profit volatility.

Key data

• 12-month target priceUS$26.50UBS valuation result, corresponding to a Buy rating.
• Current priceUS$14.23The company disclosure sheet shows the price date as 2026-05-13.
• Implied share price upside86.2%From the forecast return assumption in the report.
• Forecast total stock return91.6%Includes a forecast dividend yield of 5.3%.
• 1Q26 revenue pre-announcementRMB 5.678-5.728 billionUp 28-29% YoY, above UBS's estimate of RMB 5.554 billion.
• 1Q26 adjusted operating profit pre-announcementRMB 829-849 millionUp 13-16% YoY, above UBS's estimate of 11% YoY growth.
• 1Q26 adjusted net profit pre-announcementRMB 624-644 millionUp 7-10% YoY, broadly in line with UBS's expected 9% YoY growth.
• 1Q26 net profit pre-announcementRMB 1.228-1.248 billionUp 195-200% YoY; the gap versus adjusted net profit is mainly due to investment fair value gains and other non-recurring factors.
• 2026E EPSRMB 10.30UBS forecast, slightly above consensus of RMB 10.15.
• 2026E P/E9.4xUBS forecast basis.

Impact & implications

The report suggests two implications for MINISO's short-term earnings quality: on the operating side, revenue and adjusted operating profit are better than expected, supporting UBS's Buy rating; on the earnings structure side, the sharp rise in net profit is mainly driven by investment gains and fair value changes, while adjusted net profit growth is more moderate, so investors need to distinguish operating earnings from one-off or non-operating gains.

Risks

• Uncertainty in international relations may affect global expansion.
• Potential litigation risk surrounding counterfeiting allegations.
• Uncertainty around ADR status and related regulation.
• Foreign exchange losses, share-based compensation expense, and rising interest expense may compress profits.
• Changes in investment fair value and changes in TOPTOY-related redemption liabilities may cause net profit volatility.

What to watch

• Whether revenue, adjusted operating profit, and adjusted net profit in the official 1Q26 results fall within the guidance range.
• Whether the YoY decline in adjusted net margin continues to widen.
• The sustainability of fair value gains from investments in an AI company and from Yonghui Superstores.
• Overseas store expansion progress and the impact of changes in international relations on the global business.
• TOPTOY's business growth, share-based compensation expense, and fair value changes related to preferred shares.