BOCI cut its MINISO price target 40% to HKD20.6 for the H-shares and USD10.5 for the US-listed shares after quarterly results missed expectations. The broker cited an 84% drop in adjusted operating profit, foreign-exchange losses and surging expansion costs, and expects pressure to persist through the second half. BofA Securities also trimmed its target to HKD24.2.
BOCI cut its MINISO price target 40% to HKD20.6 after quarterly results missed expectations, citing overseas weakness and surging expansion costs.
Results will stay under pressure in the second half as the company enters a business adjustment phase, with an operational turning point unlikely before 2027, BOCI said in a research note.
Adjusted operating profit fell 84% year over year and adjusted net profit dropped 24%, while accounting-standard net profit swung to a loss, hit by foreign-exchange losses and a surge in expenses after rapid expansion. The broker cut its 2026-2028 adjusted earnings forecasts by 18%, 20% and 14% respectively. BofA Securities also trimmed its target to HKD24.2.
The stock fell sharply on Aug. 31 after the earnings release. BOCI said the thesis that rapid global expansion translates into profit growth will take longer to materialize, though it kept a Buy rating on both share classes and said valuation has become worth revisiting.
The downgrade follows a mixed interim report in which MINISO Group Holding Ltd. (09896.HK, MNSO.US) posted H1 revenue of RMB 11.5 billion, up 22.4%, with China sales growing 26.2% on channel upgrades and proprietary IP. Overseas revenue rose 40.9% to RMB 4.06 billion, but the company flagged a consolidation phase, closing underperforming distributor stores and slowing directly operated openings in North America and Europe as it refines the store model.
BOCI's caution centers on the overseas business, where distributor revenue declined 10% and directly operated markets outside North America remain in early investment stages. The broker expects the company to keep closing low-efficiency stores over the next two quarters, weighing on the high-margin distributor segment that had underpinned profitability.
The profit warning signals a longer path to margin recovery than the market had priced in. Investors will watch whether the company's shift toward larger flagship and Super MINISO formats in China, plus its proprietary IP push led by YOYO, can offset overseas drag through the second half and into 2027.
This article is for informational purposes only and does not constitute investment advice.
