“The most cattle ten dollar store” back to Hong Kong listing, mingchuangyoupin is true scenery or false prosperity?
Red Star Capital Bureau noted that on the evening of March 31, minsky Premium (NYSE: MNSO) submitted an IPO application to the Hong Kong Stock Exchange for a dual primary listing in Hong Kong.On January 20, 2022, miniso store is located in Tianhe Road, Guangzhou City.IC Photo was listed on NASDAQ for the first time on October 15, 2020 at $20 per share.It peaked at $35.21 / share on Feb. 9, 2021.Since then, the name of the quality of the stock will be trapped in the “endless fall”.As of March 31, 2022, miniso closed at $7.80 / share, with a total market capitalization of about $2.39 billion, which has lost nearly 80% of its market value.Miniso’s “heavy hit” on the U.S. stock market may have something to do with the broader environment.But from miniso’s financial results, the enterprise’s own operating conditions are not optimistic.Minitso reported revenue of 9.395 billion yuan in 2019, 8.979 billion yuan in 2020 and 9.072 billion yuan in June 30, 2021, with net losses of 294 million yuan, 260 million yuan and 1.429 billion yuan, with cumulative losses of 1.983 billion yuan, according to the prospectus.That is to say, the three years of total revenue growth almost stagnation, but further loss.At the store level, miniso has 5,045 stores worldwide as of December 31, 2021.Among them, there are 3,168 domestic stores and 1,877 overseas stores.Before that, Miniso founder Ye Guofu once put forward the “thousands of millions of stores” plan, which pointed out that the annual revenue of 100 billion yuan by 2022, the global stores reach 10,000.Revenue and store opening of the two KPI, miniso obviously failed to meet the deadline.For the current performance and share price are relatively low miniso, this return to Hong Kong listing, what is the chance of success?Red Star Capital Bureau will mainly discuss the following three aspects: 1. Analyze the nature of the business model of Miniso;2. “overspeed” forward, moat fear “failure”;3. What new story can Miniso tell?(1) The nature of MINiso’s business model Before the establishment of MinISO, Ye Guoqiang had established a similar “two yuan store” – “Ah Ah”.”Alas” through the franchise model, the rapid expansion of stores.During its heyday, Alas opened more than 3,000 stores nationwide, according to public data.However, due to the rise of e-commerce and the enterprise’s own management problems, “Ah Ah” soon lost its competitiveness and was eliminated from the market.It wasn’t until 2013 that A trip to Japan convinced Ye to start his own business again, creating Miniso.Therefore, in a sense, Miniso is an upgraded version of Ye Guoqiang’s “Ah Ah” idea, which has made innovations in product positioning and product marketing.According to the prospectus, as of December 31, 2021, Miniso has 5,045 stores worldwide, including 1,877 overseas stores.Overseas, MINiso started its layout in 2015 and entered southeast Asia, America and Europe successively.There are three types of offline stores of mingchuangyoupin, which are directly operated stores, mingchuangpartner stores and agent stores.There are only a few outlets in Korea and abroad that need to pay real money.The stores in China are mainly named and created partner stores, and overseas are mainly agent stores.As of December 31, 2021, Miniso had only five directly operated stores in China and 136 overseas.The reason why there are more direct overseas stores at present lies in the complex business environment of overseas enterprises, which naturally need to “test the waters by themselves” in the early stage.If the overseas market is on the right track, miniso will likely continue to reduce the number of directly operated stores.Source: company financial statements, red Star capital bureau direct and join the distinction naturally need not say more.For the headquarters, the franchise can enter the enterprise without heavy store rent, employee wages and other costs, but also in the hands of franchisees to obtain more “benefits”;In addition, the “influx” of franchisees can allow Miniso to quickly occupy the market, improve market share, have more say in front of suppliers, and expand scale effect.We study this set of “join logic”, found that founder Ye Guoqiang really play this logic very “thorough”.2. Franchisee is the enterprise “money printing machine” franchise model itself is well understood, but the specific “gameplay” of each enterprise is different.According to miniso’s website, franchisees who want to open a store need to pay three fees: royalty, merchandise deposit and decoration deposit.Counting only the first two items, every new franchise stores, miniso has a substantial income.But for franchisees, if they want to normally open a store, they also need to add store rent, labor costs, etc., with a total investment of about 2 million yuan.According to miniso’s website, 38 percent of sales earned after a store opens go to franchisees (33 percent for food), with the rest going to miniso headquarters.For example, the total revenue of mintru product that the franchisee joins in a month is 1 million yuan, then the franchisee gets 380,000 yuan, and the 380,000 yuan franchisee needs to pay the expenses of the store operation, and finally gets the money he earns;For the headquarters, the purchase cost must be less than 620,000 yuan, which is earned by miniso headquarters.It can be said that franchisees bear almost all the operational risk.Miniso naturally likes the more franchisees the better.It is worth mentioning that before going public in the US, founder Ye Guofu used to be a legal person of a company called Fenlibao.The company can provide loan services for franchisees who lack funds, around and around, and the money of franchisees eventually flows to the same place.There may have been a huge financial system hidden behind miniso at the time.At a later stage, miniso spun off Zalibao before listing, perhaps for a “successful LISTING in the US”.In general, through the “touch porcelain” product design and cheap price, MTRP has gained the attention of consumers;At the same time, by attracting franchisees and “helping” franchisees, MTRC stores are increasing, forming today’s “behemoth”.(2) “overspeed” forward, the moat fear “failure” mingchuangyoupin business model, it seems that can be spinning like a top of high speed “good business”.But in the face of the rapidly changing consumer market, any “small episode” may make the enterprise moat “failure”.In 2020, the novel coronavirus epidemic began to spread around the world, which is undoubtedly a huge disaster for the main offline stores of Miniso.Entering 2021, the epidemic was under control in many parts of the world, but miniso’s revenue performance did not appear to be outstanding, according to its latest earnings report.According to miniso’s earnings report, miniso’s revenue growth began to slow down in the first quarter of fiscal year 2022, reaching 59%, 28% and 21% in the past three quarters respectively.By business, Miniso’s domestic revenue in the second quarter of fiscal year 2022 was 2.05 billion yuan, accounting for 74% of the total revenue.The domestic market remains miniso’s main source of revenue.But in fact, miniso’s domestic business is not doing so well.According to the financial results, in the past four quarters, the company’s domestic business revenue was 1.79 billion yuan, 1.95 billion yuan, 2.03 billion yuan, 2.05 billion yuan, year-on-year growth was 74.8%, 43.0%, 17.9%, 12%, domestic business revenue contraction is more obvious.Then there is the “sea” business.Miniso’s overseas stores account for 37% of the total number of stores, but due to the wide geographical distribution, it does not form a scale advantage.In addition, although miniso’s overseas directly operated stores are not too many, they account for a relatively high proportion compared with domestic stores, and they bear more risks related to rent and rent for enterprises.Finally, as far as the global control of the epidemic is concerned, the overseas market is also affected greatly, and the “road to sea” of MINiso is uncertain.As of June 30, 2021, Miniso launched an average of about 550 SKUs (inventory units) per month, providing consumers with a broad product portfolio of more than 8,800 core SKUs, according to the prospectus.The products of MTRP cover 11 categories such as home furnishing, electronic appliances, textiles, bag accessories, cosmetic tools, toy series, cosmetics, skin care, leisure food, perfume, stationery and gifts.However, as the products basically adopt OEM mode, the “high quality and low price” of MINtronics makes some OEM factories have to “shoddy” to save costs, and the quality control of Mintronics is facing no small challenge.In fact, mingchuangyupin has repeatedly reported quality problems, plagiarism and other negative news.For example, around the time of its listing in the United States in 2020, Shanghai Drug Administration released the Notice on the Quality of cosmetics Supervision and Sampling in the first phase of 2020. According to the notice, a removable nail polish of Miniso was found to contain 589.449μg/g chloroform, which was quickly searched on Weibo and triggered heated public debate.For example, in May 2021, Guangzhou Municipal Administration for Market Supervision announced the spot check results of the quality supervision of protective masks in Guangzhou in 2020.In the supervision and sampling inspection in the fourth quarter of 2020, 2 batches of “MINISO (nominal)” disposable masks (production date/lot No. : 2020-09-15/1971028501;2020-09-15/1971028503) were found to be unqualified for the fracture strength item of the mask belt and the connection between the mask belt and the mask body.As of April 1, 2022, there are 1034 effective complaints of Black cat about Mingshouyupin, and the feedback problems include quality problems, service problems, return problems, etc.In addition to the product strength of the product, in the fierce market competition, the brand strength of MTRP is also challenged.In recent years, Miniso’s competitors are growing with the help of capital.For example, KK Group, which has submitted its prospectus to THE Hong Kong Stock Exchange, has many similarities in its business play with Minicuopin. It owns four brands KKV, THE COLORIST COLORIST, X11 and KK Pavilion, and its products cover beauty makeup, fashion games, food and drinks, household goods and stationery, etc.According to the prospectus, in 2018, 2019 and 2020, KK Group’s earnings were 155 million yuan, 463 million yuan and 1.646 billion yuan respectively.In the first half of 2020 and the first half of 2021, its revenue was 502 million yuan and 1.683 billion yuan respectively, with an astonishing growth rate in the past year.KK Group, whose product positioning and core user groups are highly similar to Miniso, is undoubtedly one of minISO’s stronger competitors today.In the overseas market, although there are regional differences, there are also competitors.In the United States, for example, Miniso faces rivals like Dollar Tree, a low-price retail giant.(iii) What new stories can MINiso tell?In general, when a company’s main business is already flagging or seeing a ceiling, it will often try to move into new businesses and require a second revenue growth curve.Miniso launched TOPTOY, a trendy brand, in December 2020.It is positioned as “the gathering point of trendy games in Asia”. Its first store opened in Guangzhou Zhengjia Square on December 18, 2020. With an area of over 400 square meters, it has over 4000 SKUs, bringing together Hello Kitty, Marvel, Disney, DC, Naruto and other IP and trendy brands.It can be seen that the name of quality products also targeted in recent years by the capital and consumers “love” tide play market.Miniso may also be able to tell a new story to the capital markets by playing with the tide.According to the prospectus, as of December 31, 2021, the total number of TOP TOY stores is 89;In the second quarter of fiscal year 2022, TOP TOY achieved revenue of 130 million yuan, up 20% quarter-on-quarter.But can the tide play track become miniso’s second growth curve?It may still not be easy.With respect to tide playing market, what spell is IP.At present, TOP TOY is mainly engaged in outsourcing and cooperative IP games, that is to say, TOP TOY has few self-owned IP.Weak proprietary IP means it is difficult for a brand to build its core moat. After all, IP like Hello Kitty, Marvel, Disney and so on can hardly be exclusive, and competitors are constantly fighting here.On the other hand, even bubbomat (HK: 09992), a leading player with a large number of its own IP, is suffering from the aggravation of industry regulation, short IP life cycle and other reasons, and its market value has significantly decreased.Therefore, entering the tide to play the track of minchuangyoupin, facing their own late entry, the lack of their own IP shortcomings, while the whole environment is not optimistic.Mingchuangupin wants to rely on tide to play to become their own revenue baton, the challenges they face can be imagined.Summary: The combination of “small profits but high sales” and “joining expansion” has made Minchuangupin the “strongest ten-yuan store” in globalization.However, with the saturation of stores in the domestic market, the uncertainties in the overseas market, and the second growth curve of the enterprise not running through, for now, the eager listing of Minchuo may not be so “glorious”.Red star news reporter Yu Yao Liu Mi responsible for editing Ren Zhijiang (download red star news, the news prize!)