MINISO Hong Kong Shares Tumble as Profit Squeeze Overshadows Sales Growth

Shares of MINISO (09896.HK) fell more than 3% in Hong Kong trading, hitting their lowest point since January 2023, as concerns over profitability and a downbeat forecast weighed on investor sentiment. The stock's value has been effectively halved year-to-date amid mounting pressures on the company's bottom line.

Stock Performance

MINISO's stock dropped by 3.47% to close at HK$17.83 on Tuesday, after touching an intraday low of HK$17.75. The session saw a total turnover of HK$102 million, according to market data.

The decline reflects growing investor concern following the company's latest financial disclosures, which point to a significant disconnect between revenue growth and profitability.

Profitability Under Pressure

While MINISO's revenue grew in the first half of the year, its profits failed to keep pace. The company's financial results revealed several headwinds impacting its earnings:

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• First Half 2024 Revenue: ¥11.50 billion, a 22.4% increase year-over-year.
• First Half 2024 Adjusted Net Profit: ¥1.22 billion, a 1.7% decrease year-over-year after excluding foreign exchange losses.
• Second Quarter 2024 Adjusted Net Profit: ¥590 million, a 10.5% decrease year-over-year.

The company attributed the profit decline to the impact of currency exchange losses, weakening performance in its overseas business, and a sharp increase in expenses tied to its rapid global expansion.

Analyst Outlook

Looking ahead, MINISO has projected a high single-digit percentage decline in full-year adjusted net profit. It also expects its adjusted operating profit margin to contract by 3 to 4 percentage points compared to the previous year.

Analysts at BOC International said in a note that they expect MINISO's performance to remain under pressure in the second half of 2024. The firm believes the company is entering a "business adjustment phase" and that an "operating inflection point" may not materialize until 2025 at the earliest. According to the bank, the investment thesis that MINISO's rapid global expansion can translate into profit growth will require more time to be proven.