Goldman Sachs Group, Inc.: Reiterates "Buy" rating on MNSO (MNSO.US), expecting smooth expansion of stores and progress in overseas business in the fourth quarter of 2024.

MNSO (MNSO.US) will announce its performance for the fourth quarter of 2024 (ending in December 2024) around late March. Recently, Goldman Sachs Group, Inc. released a financial report outlook for MNSO 2024 Q4. Goldman Sachs Group, Inc. expects MNSO's sales for the fourth quarter of 2024 to increase by 25% to 4.79 billion Chinese yuan, and for the overseas market, Goldman Sachs Group, Inc. believes the company is likely to achieve a 45%-50% year-on-year growth. The firm reiterated a "buy" rating for MNSO with a target price of $27.9 per ADR/H share in the US and 54 Hong Kong dollars based on a forecasted P/E ratio of 20 times in 2025. Specifically, Goldman Sachs Group, Inc. predicts that MNSO's business in China will grow by 7% (or 4% offline growth), compared to a year-on-year growth rate of 6% in the third quarter of 2024. Overseas business is expected to grow by 47%, with the DTC market growing by 72% and the distribution market by 21%. Top Toy is forecasted to grow by 53% year-on-year, benefiting from steady store expansion. In terms of profit margin, the firm projects that MNSO's gross margin will increase by 2.3 percentage points to 45.5% year-on-year (further growth from 44.9% in the third quarter of 2024, with the higher profit margin overseas DTC market entering peak season), benefiting from the increase in the overseas DTC portfolio and the improved profit margin of Top Toy. Regarding store network, Goldman Sachs Group, Inc. stated that in the fourth quarter of 2024, MNSO's brand will have 130 stores, reaching 4,380 stores by the end of December, meaning a total of 454 stores will be opened throughout 2024. For the overseas market, Goldman Sachs Group, Inc. currently expects a net increase of 220/669 stores in the fourth quarter of 2024/for the full year of 2024, with the full-year target being raised to 650-700 stores. Looking ahead to 2025E, Goldman Sachs Group, Inc. predicts a 22% revenue growth for MNSO, with OPM slightly expanding due to cost savings in the overseas DTC market (this should help offset the drag from increased investments in the Chinese market).