Key Takeaways:
Citi and Nomura downgraded MNSO to Neutral after first-half adjusted net profit fell 2 percent, missing guidance, with store expansion targets cut sharply.
"The results missed expectations, and management has turned more conservative on the outlook for overseas and TOP TOY businesses," Citi said in a research note.
Revenue rose 22.4 percent to RMB11.5 billion, slightly above guidance for 20-22 percent growth, driven mainly by the China business. Adjusted operating profit excluding foreign exchange rose only 5 percent, below the group's high single-digit guidance. The store network reached 8,674 locations.
MNSO cut full-year revenue growth guidance from high-teens to mid-teens percentage growth. Net store openings target was slashed from 450-500 to 130-160, including an expected net closure of 100-110 overseas distributor stores in the second half. Adjusted net profit excluding FX was revised from about 7 percent growth to a high single-digit decline, with adjusted net margin decline widened from 1-2 percentage points to 3-4 percentage points.
Citi cut its 2026-2028 adjusted earnings forecasts by 23-27 percent. The bank lowered its US-listed share target price to USD11.3 from USD23.4 and the Hong Kong-listed target to HKD22.2 from HKD45.7. Nomura also downgraded MNSO to Neutral, cutting its US target price 38 percent to USD11.7.
The dual-listed company trades on the Hong Kong Stock Exchange (09896.HK) and the New York Stock Exchange (MNSO.US). Short selling data as of Aug. 31 showed HK$89.11 million in short positions, representing 17.2 percent of daily turnover. The sharp reduction in store opening guidance points to structural challenges in international expansion, particularly in the overseas distributor network. The company's TOP TOY brand, which sells designer toys and collectibles, also faces a more cautious outlook from management.
The downgrades come as Chinese consumer retail companies face intensifying competition in both domestic and overseas markets. MNSO's aggressive international expansion had been a key growth driver, but the expected closure of 100-110 overseas distributor stores in the second half suggests the pace of that expansion is slowing.
For holders, the downgrades point to a deteriorating growth outlook for MNSO's overseas and TOP TOY businesses. Investors will watch second-half store closure execution and whether the company can stabilize margins as selling costs rise.
This article is for informational purposes only and does not constitute investment advice.
