Get all your news in one place.
100’s of premium titles.
One app.
Start reading
Investors Business Daily
Investors Business Daily
Business
JED GRAHAM

Hot China-Based Stock Miniso Adds 277 Stores In One Quarter, Flashes Buy Signal

Chinese retailer Miniso topped fiscal fourth quarter earnings estimates early Tuesday, helped by faster-than-expected store openings — including a flagship store in New York's Times Square. MNSO stock signaled a move above another buy point in morning stock market action.

Miniso Earnings Results

Miniso earned an adjusted profit of 25 cents per ADS or American depositary share, up 127% from a year ago and 3 cents ahead of estimates. Revenue grew 30% to $448.5 million, topping views of $434.4 million.

In Chinese currency terms, factoring in devaluation against the dollar, adjusted profit per ADS grew 150% on 40% revenue growth.

Miniso, which says it's out to create a globally recognized "lifestyle super brand," ranks No. 1 in Investors Business Daily's Retail-Discount & Variety industry group, based on fundamental and technical factors, according to IBD Stock Checkup.

Rapid Store Growth

Miniso added 277 stores in fiscal Q4. That was up 592 stores vs. a year ago. Of the new stores, 221 are in China and 56 overseas. Miniso now has 5,791 stores, with 3,604 in China and 2,187 overseas. The company also added 2 Top Toy stores in China, bringing its total to 118.

The company said that overseas markets contributed more than 40% of operating profit in the latest quarter, up from about 25% in the prior quarter.

China's Debt Crisis Mounts As Everything Goes Wrong; S&P 500 Risk Limited

Revenue from Miniso's offline stores in China grew 42%, as the store count rose 9% and average revenue per store grew 31%. Revenue tumbled during Covid lockdowns in 2022 and average revenue per store still hasn't fully recovered to pre-Covid levels. Overseas revenue grew 42%, including an 11% increase in the store count.

"Leveraging China's efficient supply chains and the design capabilities we have accumulated during the past ten years, Miniso is able to offer global consumers budget-friendly products and build our customer-friendly image," CEO Guofu Ye said in the earnings release. "The value-for-money proposition enables us to show great advantages in navigating through economic cycles."

Miniso also announced a dividend for the fiscal year of 41 cents per ADS to holders as of Sept. 7.

Miniso's High Margins

The stores, geared to young, female customers, aims for a treasure-hunt shopping experience, launching 100 new products every seven days.

Barry Wang, the Hong Kong-based co-portfolio manager of Oberweis Asset Management's China Opportunities Fund, told IBD that about 75% of Miniso products are priced below $7.

Miniso was profiled in IBD's The New America feature on Aug. 4.

"Most of their products are self-designed, not commoditized products, which helps pricing and margin," Wang told IBD. MNSO stock is among his fund's top holdings.

In the June fiscal fourth quarter, gross profit rose to 39.8%, up from 39.3% in the prior quarter and 33.3% a year ago.

MNSO Stock

MNSO stock rose 6.5% to 21.69 in early Tuesday trading. On Monday, MNSO stock closed up 1% to 20.36, in the upper end of a 5% buy zone above a 19.49 buy point, according to MarketSmith.

Though rising above that buy point, MNSO stock has been etching out a shelf pattern over the past month, a fairly tight consolidation following its July 24 breakout. The 21.56 top of that shelf could serve as another entry point. A move past last week's high of 21.15 would break a trend line and could be actionable.

The stock market's current "In Correction" status suggests investors should be building watchlists and paring exposure to between 20% and 40%. New purchases are not recommended.

MNSO stock has a 99 Relative Strength rating from IBD, meaning it has outperformed 99% of all stocks over the past year. However, investors should be exercising a higher degree of caution now that the stock market rally has been knocked off its stride.

Be sure to read IBD's The Big Picture every day to stay in sync with the market direction and what it means for your trading decisions.

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.