MINISO: Revenue "Money Printing Machine," Spending "Shredder"?

On the afternoon of November 21st, Beijing time, $Miniso(MNSO.US) $MNSO(09896.HK) MINISO (9896.HK) (MNSO.N) released its Q3 2025 earnings. By closing inefficient small stores and focusing on larger ones, the company's same-store revenue growth further expanded after turning positive in the second quarter. However, concerns arise as the expenses associated with opening stores in the U.S. increased in the third quarter, affecting profit release. Key points are as follows:

1. Revenue exceeded guidance upper limit: In 3Q25, MINISO Group achieved total revenue of 5.8 billion yuan, a year-on-year increase of 28.2%, slightly exceeding the company's previous guidance upper limit of 25%-28%.

Breaking it down, benefiting from the company's precise launch of a series of high-demand IP co-branded products popular among young people during the summer peak season and the advancement of the large store strategy, domestic same-store revenue growth further expanded after turning positive in the second quarter.

Among them, the main brand MINISO grew by 19.3% year-on-year, with a slight acceleration quarter-on-quarter. Notably, Top Toy continued to show explosive growth, with a trend of accelerating quarter-on-quarter for three consecutive quarters, growing by 112% year-on-year.

Overseas, with a slowdown in store opening speed, overall growth slightly fell to 28%, but the positive aspect is that through focusing on store locations and localized operations, same-store growth turned from negative to positive.

2. Store openings slightly accelerated quarter-on-quarter. In terms of store numbers, domestically, with the number of stores returning to positive growth in the second quarter, MINISO's store opening speed slightly accelerated in the third quarter, adding 102 new stores, still concentrated in second and third-tier and lower-tier markets.

Overseas, 117 new stores were added, mainly in Asia and the Americas, with the proportion of directly operated stores further increasing by 1.1 percentage points to 17.5%. In North America, MINISO continues to shift from a dispersed layout to focusing on densely populated areas (California, Florida, New York, etc.) for cluster-style store openings.

3. Gross margin slightly declined. In terms of gross margin, Dolphin Research speculates that on one hand, during the summer peak season, to increase market share, the company increased the proportion of low-margin, high-traffic, high-turnover daily necessities, and on the other hand, in overseas regions, to welcome the Q4 year-end peak season, the company conducted discounts and promotions on some seasonal or old products, resulting in a year-on-year decline in gross margin by 0.2 percentage points to 44.7%.

4. Increased expense investment, profit release below expectations. In terms of expense investment, as MINISO is currently in the stage of overseas (especially North America) business expansion, facing a large amount of upfront investment in store openings, personnel recruitment, and brand promotion, the sales and management expense ratios both increased in the third quarter, with adjusted net profit reaching 770 million yuan, slightly below market expectations (810 million yuan)

5. Detailed financial data overview:

Dolphin Research's overall view:

Overall, MINISO's performance in revenue in the third quarter is undoubtedly good, whether domestically or overseas, the trend of same-store revenue improvement quarter-on-quarter clearly indicates that MINISO's "large store strategy" is effective. Essentially, it is about maximizing store efficiency by comprehensively enhancing consumer shopping experience and brand perception.

If broken down, the "large store strategy" is actually about setting up independent IP theme areas, allowing consumers to take photos, interact, and have immersive experiences, thereby extending their stay in the store and increasing transaction conversion rates; on the other hand, optimizing categories and SKUs allows consumers to purchase more products in one stop, thereby increasing linkage rates.

With revenue passing the test, the biggest issue this quarter is actually the increased expense investment leading to a significant decline in the company's core operating profit margin by 4.3 percentage points to 15%, which is basically the lowest level in a single quarter in the past three years.

For a company still in a period of rapid expansion and relying on fixed asset investment to scale up, the mismatch between input and output is an inevitable stage to go through, and MINISO is clearly in this period.

Since MINISO chooses a direct operation model for store expansion in North America, whether it is front-end store-related rent, decoration, and other expenses or back-end digital systems, executive & talent recruitment, all require a large amount of upfront investment, which is understandable.

But the core observation is whether these upfront expenses can bring the company a high-profit, high-growth second growth curve in the future, which is also the only way to solve the current "revenue increase without profit increase" issue.

From a valuation perspective, based on the current operating pace, assuming the overseas peak season in the fourth quarter raises the company's overall profit margin, the corresponding adjusted net profit for MINISO in 2025 is roughly 2.9 billion yuan, with an implied 2025 PE of only about 15x, which is not high compared to Dolphin Research's expected 20% compound growth rate on the revenue side.

However, since MINISO is still in the stage of upfront investment for business expansion in the U.S., profit release still requires time, which will have some suppression on valuation. Therefore, the key to whether to intervene still depends on whether MINISO can gradually improve its profitability through sustained high growth overseas and the release of operating leverage while maintaining stable growth domestically.

But overall, before the "second growth curve" in North America is truly established, the pace of the company's expense investment is actually difficult to grasp, and Dolphin Research suggests that conservative investors can consider positioning after sustained improvement in North American performance.

Below is a detailed interpretation of the financial report:

I. Revenue exceeded guidance upper limit

In 3Q25, MINISO Group achieved total revenue of 5.8 billion yuan, a year-on-year increase of 28.2%, slightly exceeding the company's previous guidance upper limit of 25%-28%.

Breaking it down, domestically, MINISO's main brand achieved revenue of 2.91 billion yuan, a year-on-year increase of 19.3%, with a trend of slight acceleration compared to the previous two quarters, indicating that the "Chief Growth Officer" team established by MINISO's product center at the end of last year is indeed effective, as the team has connected the five major departments of product - operations - channels - marketing - digitalization, making tactical execution and implementation more efficient compared to the previous organizational structure.

TOP TOY, as MINISO's trendy toy brand, achieved revenue of 580 million yuan in the third quarter, a year-on-year increase of 112%, showing very impressive performance, with single-quarter growth reaching a new high in nearly three years. Since Top Toy recently submitted its Hong Kong IPO prospectus, Dolphin Research will further discuss its views on Top Toy's business in conjunction with the information in the prospectus:

Firstly, from a business model perspective, Top Toy and MINISO are essentially no different, both are "Android" open ecosystems. The core gameplay is to redesign, deconstruct, and stylize characters based on authorized IPs (Disney, Sanrio, etc.) to make them more suitable for the aesthetics of trendy toy carriers such as blind boxes, figures, and building blocks (IP secondary creation).

However, if we only talk about "IP secondary creation" itself, many trendy toy designers and studios can achieve it. Top Toy's core competitiveness actually lies in leveraging MINISO's strong supply chain capabilities to convert into mass-produced products at extremely low costs and extremely fast speeds, and covering global trendy toy consumer groups through MINISO's channels.

Therefore, in Dolphin Research's view, Top Toy is more like a trendy toy supermarket, compared to Pop Mart, the advantage is that if the popularity of a single authorized IP declines, Top Toy can quickly switch to other popular IPs in the market, reducing dependence on a few core IPs.

But the downside is also obvious, excessive reliance on external IPs will make Top Toy just a channel brand. Copyright holders often authorize the same IP to multiple manufacturers to maximize benefits, and since the IP secondary creation process has little difference in Dolphin Research's view, this also leads to serious product homogeneity in the market, ultimately resulting in Top Toy's profitability not being high. As seen in the chart below, TOP TOY's gross margin is basically stable at around 30%, far lower than Pop Mart's ultra-high gross margin of 70%.

In fact, if we compare Pop Mart's business model to Apple's IOS ecosystem, achieving full industry chain control through self-owned IPs, creating extremely high brand premiums and customer loyalty, MINISO and TOP TOY are more like Android open ecosystems, creating trendy toy collection stores through a large number of authorized IPs, therefore, from the perspective of moat, obviously MINISO's barriers are lower, making it difficult to obtain higher profits in the industry chain.

To reverse this situation, in the first half of 2025, TOP TOY invested 5.1 million yuan to acquire a 51% stake in trendy toy company HiTOY Haichuang Culture, obtaining three major IPs "Nommi", "Honey", and "MayMei", attempting to enhance the creation of self-owned IP assets through acquisition & control of external trendy toy companies.

If the operation is successful, it can naturally increase the incubation cycle of Top Toy's self-owned IP products and improve profitability.

But Dolphin Research believes it is still too early at this stage, and the biggest challenge for Top Toy is how to efficiently integrate the acquired IP team with the internal organizational structure, making it truly part of its operational system.

In the context of slowing domestic growth, MINISO has placed its "second growth curve" bet overseas (especially in North America), so the growth of overseas business has always been a point of concern for investors.

Overall, overseas revenue in the third quarter reached 2.31 billion yuan, a year-on-year increase of 27.7%, with a trend of slight deceleration quarter-on-quarter, mainly due to a high base in the same period last year (phenomenal IPs like Barbie and Mario exploded in popularity in the third quarter last year).

By region, North America's performance was the most impressive, benefiting from adjustments in store opening strategies (concentrated store openings, opening large stores) and localized operations by the new U.S. CEO, North America's same-store revenue turned from low single-digit declines to high single-digit growth, showing significant improvement. Growth in Asia and Europe was relatively stable.

II. Store openings slightly accelerated quarter-on-quarter

In terms of store numbers, domestically, with the number of stores returning to positive growth in the second quarter, MINISO's store opening speed slightly accelerated in the third quarter, adding 102 new stores, still concentrated in second and third-tier and lower-tier markets. In China, MINISO continued to close inefficient stores located in inefficient locations or with expired leases in the third quarter, while opening larger, higher-standard stores in premium shopping districts, shifting the overall strategy from competing on net store numbers to improving store quality and single-store output.

In high-maturity markets such as Southeast Asia and Latin America, MINISO continues to deepen cooperation with local partners, accelerating the densification and penetration of the store network.

III. Same-store revenue growth further accelerated quarter-on-quarter

From the core indicator measuring single-store efficiency—same-store revenue growth, domestic same-store revenue expanded from low single-digit growth to high single-digit growth. The core lies in the company's intensive launch of multiple IP new products with extremely high fan appeal during the summer (such as Chiikawa, Sanrio, Harry Potter, etc.), and multiple targeted marketing activities for students and young tourists during the summer.

Overseas same-store revenue also successfully turned positive, on one hand, the company conducted large-scale themed displays and promotions in overseas stores for the back-to-school season, and on the other hand, compared to the frequent stockouts of popular products in the same period last year, this year, due to the improvement of overseas warehousing layout and supply chain digital management capabilities, the arrival rate of popular products has also significantly increased.

IV. Increased expense investment, profit release below expectations

In terms of gross margin, Dolphin Research speculates that on one hand, during the summer peak season, to increase market share, the company increased the proportion of low-margin, high-traffic, high-turnover daily necessities, and on the other hand, in overseas regions, to welcome the Q4 year-end peak season, the company conducted discounts and promotions on some seasonal or old products, resulting in a year-on-year decline in gross margin by 0.2 percentage points to 44.7%.

In terms of expense investment, as MINISO is currently in the stage of overseas (especially North America) business expansion, facing a large amount of upfront investment in store openings, personnel recruitment, and brand promotion, the sales and management expense ratios both increased in the third quarter, with adjusted net profit reaching 770 million yuan, slightly below market expectations (810 million yuan)