In an impressive display of growth and strategy, Miniso, known in Chinese, has once again captured the attention of investors. On November 29, the company unveiled its third-quarter financial report for the year, revealing a 22.8% year-on-year increase in revenue, reaching a notable 12.28 billion yuan (approximately 1.9 billion USD) for the first three quarters of the year. Moreover, its overseas business played a significant role, generating over 4.5 billion yuan, with a remarkable growth rate of 41%. The gross profit margin also showed a positive trend, increasing by 3.7 percentage points to 44.1%, while the adjusted net profit stood at 1.93 billion yuan, translating to an adjusted net profit margin of 15.7%.

Following the announcement of the financial results, Miniso's stock experienced a surge, particularly in the Hong Kong market, where it saw an increase of over 18%. As of December 4, the stock price stabilized at a 7% gain, trading at 48.00 HKD with a total market capitalization nearing 60 billion HKD. In the American market, the same upward trend was evidenced, with shares soaring by more than 9%, bringing the price to 25.02 USD per share and elevating its market value to over 7.7 billion USD.

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The impressive performance of Miniso underscores the company's proactive approach and strategic foresight. In recent years, Miniso has been committed to expanding its footprint in overseas markets, which has resulted in accelerated revenue growth and store expansion. Furthermore, the successful implementation of its intellectual property (IP) strategy has been instrumental in enhancing both sales revenue and gross margin.

Ye Guofu, the founder, chairman, and CEO of Miniso Group, has articulated the company's vision to adapt to the evolving retail landscape by focusing on two key trends: quality retail and interest-driven consumption. He emphasized the importance of returning to the essence of retail, centering the consumer experience and serving their desire for a fulfilling life.

"The Trend of the 'Guzi Economy' is Thriving,"

Miniso's First-Mover Advantage is Apparent

The emerging "Guzi Economy" represents a new focal point in China’s consumer landscape. The term "Guzi," which phonetically translates to "Goods" in English, has become a catch-all term for merchandise derived from various IP licenses related to comics, animation, gaming, idols, and special effects. This encompasses a vast array of secondary goods appealing to consumers engaged in the "two-dimensional" (2D) subculture.

According to CITIC Securities, China’s spiritual consumption has robust economic and demographic foundations, coupled with a strong supply side of quality IP and talent. The demand side reveals a growth in cultural confidence and consumption expenditure, making the scale of the IP derivative market potentially exceed 500 billion yuan.

The development space in the "Guzi Economy" industry chain is considerable, with both IP and channels having become pivotal. Miniso is strategically positioned to benefit from the surge of interest in "Guzi" culture, indicating a ripe moment for the company to capitalize on this trend.

Ye Guofu believes that the market for IP consumer products is vast—potentially surpassing a trillion yuan—and Miniso's IP strategy is therefore exceedingly promising. Reports indicate that the top ten global IP licensors account for nearly 70% of the retail total for IP consumer goods, with the top twenty representing more than 80%. This demonstrates a powerful concentration of success among leading players.

Currently, Miniso has established collaborations with over 150 renowned IP figures globally, encompassing 6 of the top 10 global IP licensors and 9 of the top 20. This impressive network enables Miniso to remain at the forefront of consumer trends.

On October 29, Miniso announced a collaboration with the highly popular Harry Potter franchise, leading to unprecedented demand and record-breaking sales across its stores. Earlier, the collaboration with the character “Chiikawa” exemplified the rising consumer craze for second-dimensional products, with pop-up stores being frequented by throngs of enthusiastic youth.

In terms of its investments in the 2D IP sector, Miniso has gained authorization with prominent anime and gaming franchises that resonate with fans. Looking ahead, the company plans to launch its self-developed Guzi-related merchandise on a monthly basis to provide consumers with immersive two-dimensional experiences.

Moreover, Miniso has partnered with various influential second-dimensional IPs to create dedicated sections in specific stores, resulting in a significant surge in sales—recording a 50% quarter-on-quarter increase since the designation of over 300 new stores by Q3 2024.

Miniso's leadership in the "Guzi Economy" is further exemplified by initiatives that co-create consumer experiences, such as collaborations with over a hundred trendy product users to produce custom "pain cars."

As of September 30, 2024, Miniso Group boasts a global store count of 7,420. For Miniso, these physical outlets serve not only as sales points but also as spaces where consumers can engage directly with the emotional values that IP brings to life.

Leveraging its scale advantages and a sophisticated supply chain, Miniso aims to democratize access to goods that embody emotional value for consumers worldwide, effectively harnessing the "Guzi Economy." With a network of over 7,000 global stores, Miniso can adeptly reach the young consumer demographic while managing costs through enhanced supply chain strategies, integrating resources from over 1,400 global suppliers—thus lowering the entry barrier into this growing market.

Ye Guofu has expressed that the future vision for Miniso involves deepening its partnerships with leading globally recognized IP licensors. By utilizing its expansive network of stores, design capabilities, and supply chain integration, Miniso seeks to produce an expanding range of appealing and functional products.

Essentially, Miniso is poised to evolve by consistently refining its IP strategy with a concentrated focus on the two-dimensional fandom, propelling the development of the Guzi Economy.

Accelerating Globalization,

IP as a Growth Driver

In Miniso's significant strategic framework, overseas ventures are eagerly anticipated by the capital market. Miniso has not disappointed, as its overseas business revenue surpassed 4.5 billion yuan, achieving a year-on-year increase of 41% in the first three quarters of this year. Specifically, revenue from direct markets increased by 64%, while the agency market saw a growth of 22%. Notably, international revenue now comprises nearly 40% of Miniso’s total revenue, highlighting the efficacy of its globalization strategy.

The remarkable growth of Miniso's overseas operations can be attributed primarily to its robust IP strategy. During the first three quarters, IP merchandise constituted over 40% of overseas sales, which spiked nearly 85%, consequently enhancing the overall profit margins in international markets.

Superstore expansion stands as another key driver of growth in Miniso's international market. These stores are not just retail terminals but also pivotal settings for executing its IP strategy. By September 30, 2024, Miniso had established a presence in 112 countries and regions globally, with 2,936 stores, including a net increase of 449 stores in just three quarters—already surpassing the entire year’s growth from the previous year. Projections suggest a net increase of 650-700 stores by year-end.

Analyzing the countries involved in Miniso's overseas expansion, more than 67% of net new stores contributed by direct markets were reportedly located in the United States and Indonesia. In August of this year, Miniso opened its 200th store in the United States, establishing a significant footprint in the market from its base in Santa Monica, Los Angeles. The same month, Miniso launched its largest global store—a 3,000-square-meter flagship located in Central Park, Jakarta, which made history on its opening day by exceeding 1.18 million yuan in sales, setting a new record for single-day sales globally.

At the end of October, a range of co-branded products with Harry Potter debuted in the Central Park flagship store, breaking the global single-day sales record within just six hours. This not only showcased the captivating allure of its super IPs but also emphasized Miniso's powerful growth trajectory in the Indonesian market.

Ye Guofu indicated that moving forward, Miniso aims to enhance consumer engagement within overseas markets by refining its membership systems and conducting extensive consumer research. This effort will also focus on developing localized products and operational strategies tailored to the unique characteristics of local markets, furthering the mission of "China’s Miniso, a joyful world."

Returning to the essence of retail, Miniso aims to create fulfilling consumer experiences by focusing on quality retail and interest-driven consumption.

In an unexpected yet significant transaction in September, Miniso decided to invest cash totaling 6.27 billion yuan to acquire a 29.4% stake in Yonghui Supermarket, positioning itself as the largest stakeholder following the completion of this deal.

This strategic investment is aimed at integrating both "essential and optional consumption" across both Chinese and global markets to shape a distinctive retail giant dedicated to serving consumers’ desire to enhance their quality of life and create a powerful brand identity. Ye Guofu carries high hopes for this alliance.

At the corporate earnings meeting, he expressed that Miniso aspires to leverage the ongoing adjustments within Yonghui's operations to excel in quality retail and innovate conventional supermarket approaches, ultimately delivering superior products and services that elevate the consumer experience. Miniso will invest increased energy into researching consumer behavior and consumption trends, ensuring a person-centered approach that returns to the core of retail.

He further pointed out that with the acquisition of Yonghui stocks, Miniso will comprise the brands of Miniso, TOPTOY, and Yonghui—each coexisting with its unique product categories, service demographics, and pricing. This multi-brand matrix will gradually take shape within the retail arena. Additionally, leveraging years of supply chain resource accumulation and product design capabilities, Miniso's "centralized platform" will enhance the empowerment and efficiency of these brands.

Reflecting on the first three quarters, Miniso has actively adhered to its strategic blueprint aimed at enhancing global branding. With the latest positioning of "global IP co-branded collection stores," Miniso is making strides toward achieving its goal of becoming the world's leading IP design retail group, achieving significant milestones and establishing itself as a pioneer in the global retail transformation.

Ye Guofu reiterated that Miniso's core business continues to align with the unwavering objectives outlined in the 2024-2028 five-year plan, which includes maintaining a compound annual growth rate of no less than 20% in revenue, achieving faster per-share earnings growth than revenue growth, and expanding its global footprint by opening 900 to 1,100 new stores annually. By 2028, it targets for IP product sales to exceed 50%. Additionally, Miniso commits to distributing no less than 50% of adjusted net profits as dividends each year and will consistently engage in stock buybacks to ensure predictable returns for its shareholders.