Emerging Middle-Class And Urbanization Will Catalyze Retail Expansion

Key Takeaways

• Accelerated international expansion, proprietary brand development, and flagship store upgrades are fueling stronger revenue growth, higher margins, and increased operating leverage.
  
• Data-driven membership and emerging market focus enhance customer loyalty and recurring sales, positioning MINISO for sustained, above-peer profitability.
  
• E-commerce competition, cost inflation, and store expansion risks threaten MINISO's revenue growth, margins, and profitability amid market saturation and geopolitical uncertainty.

Catalysts

An investment holding company, engages in the retail and wholesale of lifestyle products and pop toy products in China, rest of Asia, the Americas, Europe, Indonesia, and internationally.

• Analyst consensus sees international expansion as a key driver, but given MINISO's rapid 30 percent overseas revenue growth this quarter, increased local sourcing, and aggressive cluster-based store expansion in the U.S., there is potential for profits to scale faster than expected, significantly boosting total revenue and improving operating leverage over the next several years.
  
• Analysts broadly agree IP collaborations will support margins and earnings, but the company's accelerated in-house IP development-with new proprietary brands now delivering hundreds of millions in sales and a pipeline of exclusive global releases-points to substantial untapped upside in brand equity and premium pricing power, suggesting margin and earnings expansion far above current forecasts.
  
• The company's strong focus on channel optimization-closing underperforming locations while converting existing stores into large, high-efficiency flagship and IP-led stores-is leading to a step change in revenue per store and profitability, positioning MINISO to outperform peers in urban, high-density markets where experiential retail is driving higher customer spending.
  
• Rising middle-class consumption, especially across underpenetrated emerging markets in Southeast Asia, Latin America, and Middle East-where MINISO is rapidly increasing store count-creates a multi-year runway for double-digit revenue growth, as local consumers shift spending to affordable, aspirational lifestyle goods.
  
• The integration of robust data analytics and membership ecosystems is giving MINISO a competitive edge in capturing and monetizing urban consumer loyalty, driving recurring in-store traffic and cross-sell rates, which directly supports higher same-store sales, accelerated inventory turn, and fatter net profit margins.

MINISO Group Holding Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on MINISO Group Holding compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming MINISO Group Holding's revenue will grow by 23.7% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 13.9% today to 16.4% in 3 years time.
• The bullish analysts expect earnings to reach CN¥5.5 billion (and earnings per share of CN¥15.95) by about August 2028, up from CN¥2.5 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 13.6x on those 2028 earnings, down from 18.0x today. This future PE is lower than the current PE for the US Multiline Retail industry at 18.0x.
• Analysts expect the number of shares outstanding to decline by 0.78% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.56%, as per the Simply Wall St company report.

MINISO Group Holding Future Earnings Per Share Growth

Risks

• Persistent rise of e-commerce and digital-first retail continues to erode foot traffic to MINISO's brick-and-mortar stores, with store traffic and same-store sales in China still showing low single-digit declines despite improvement efforts, which may cap long-term revenue growth.
  
• Intensifying competition from both other global discount chains and digital-native retailers threatens MINISO's ability to sustain pricing power on trend-driven, low-margin goods, increasing the risk of compressed gross margins and lower earnings.
  
• Heavy reliance on opening large and flagship physical stores for growth exposes MINISO to risk of market saturation and diminishing returns per new store, especially as the company already saw no net domestic store count growth in the most recent quarter, which could limit future topline revenue expansion.
  
• Ongoing cost inflation, including higher labor, rent, logistics, and inventory holding costs-exacerbated by direct store operation expansion-has pushed selling and administrative expenses to 28 percent of revenue, up by 5 percentage points year-over-year, threatening to squeeze net margins if not offset by significant operating leverage.
  
• Heightened geopolitical risks and U.S.-China trade tensions create uncertainty over tariffs and supply chain disruptions, forcing MINISO to increase inventories and diversify sourcing at higher upfront cost, which can lead to expense volatility and put downward pressure on net profitability.

Valuation

• The assumed bullish price target for MINISO Group Holding is $26.59, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of MINISO Group Holding's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $26.59, and the most bearish reporting a price target of just $16.49.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be CN¥33.5 billion, earnings will come to CN¥5.5 billion, and it would be trading on a PE ratio of 13.6x, assuming you use a discount rate of 9.6%.
• Given the current share price of $20.13, the bullish analyst price target of $26.59 is 24.3% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.