image credit: Bamboo Works
Key Takeaways:
Miniso reported its first-quarter profit nearly tripled year-over-year, but much of the rise was due to investment gains unrelated to its core business
The lifestyle retail operator's Top Toy chain recorded more than 50% revenue growth during the quarter to 515 million yuan
The latest financial report card from Miniso Group Holding Ltd. (9896.HK) (NYSE:MNSO) looks quite eye-catching at first glance. The operator of retail chains selling lifestyle and pop toy products reported its revenue grew 28.5% year-over-year to 5.69 billion yuan ($839 million) in the first quarter, while its profit nearly tripled to 1.25 billion yuan.
Benefiting from a high-single-digit increase in same-store sales, revenue from the company's core China operation rose 29.6%, while its overseas revenue also rose by 21.9%. Top Toy, the company's pop toy subsidiary, saw an even greater year-over-year surge of over 50%, as revenue reached 515 million yuan.
Miniso's progress in expanding its store network also looks impressive. At the quarter's end, the company's store count reached 8,565 outlets, up by 797 from a year earlier, with a net addition of 80 stores in the first quarter alone. Overseas the company currently operates 3,617 stores, up by 404 year-on-year, with a net 34 new additions year-to-date.
The strong performance led founder and Chairman Ye Guofu to boldly proclaim that Miniso's current valuation has yet to reflect the company's true potential. That remark comes as the company's stock price has shown little sign of life these days. Despite the seemingly strong first-quarter results, the company's Hong Kong-listed shares unexpectedly dropped 6% the day after the announcement, closing at HK$24.36.
Lackluster operating profits
A deeper dive into the company's financial results shows that, excluding foreign exchange gains and losses, the company's adjusted operating profit rose just 14.3% year-over-year to 838 million yuan in the first quarter. Furthermore, its adjusted net profit, also excluding foreign exchange gains and losses, grew by an even smaller 8.1% to 633 million yuan. Such increases are far less dazzling than ...
