Yonghui Hasn’t “Fattened Up” Yet, But MINISO Is Almost “Out of Milk”

In Q1 2025, MINISO posted a "revenue up, profit down" performance. According to its financial report, revenue rose 18.9% year-on-year to RMB 4.427 billion, but adjusted net profit fell 4.8% to RMB 587 million, with net profit margin dropping from 16.6% to 13.3%.

The main reasons were MINISO’s aggressive overseas expansion and increased IP licensing costs. In Q1, IP licensing expenses jumped 39.6% year-on-year, while expenses related to overseas directly-operated stores (including rent, depreciation and amortization, and salaries excluding stock-based compensation) surged 71.4%.

Additionally, same-store sales declined mid-single digits year-on-year again in Q1. MINISO’s revenue growth now heavily relies on opening new stores, while its operational efficiency continues to decline.

On the day of the financial report release, MINISO’s stock price plummeted, closing at USD 18.29 per share, down 17.58%.

Ye Guofu is also seeking growth beyond MINISO. The acquisition of Yonghui was a key leap in his pursuit of new growth narratives. After taking control of Yonghui, Ye began drastic reforms—shutting underperforming stores and cutting out middlemen. However, institutional estimates suggest a single-store renovation could exceed RMB 8 million, and with widening losses, the reforms resemble a desperate dash.

Carrying the burdens of both companies is no easy feat, but Ye also has a Plan C. Market rumors suggest he plans to spin off the toy brand TOP TOY for a Hong Kong IPO, aiming to raise USD 300 million.

MINISO's P/E ratio is only 16.8x, far lower than Pop Mart's 87.5x. If TOP TOY lists independently, it might leverage the "trend toy" concept to secure a higher valuation and ease MINISO's cash flow pressure.

Yet, this is another dance on a knife’s edge—the trend toy market is fiercely competitive. Pop Mart has already built an IP ecosystem moat. For TOP TOY to achieve a high valuation, it must continuously break through in revenue, profit, and store count. Behind rapid expansion lies soaring operational costs and brutal market battles.

Ye’s appetite for risk and ambition is evident from anecdotes in 101 Retail Details of MINISO. Before MINISO gained prominence, he secured nearly 100 store locations in Guangzhou with a RMB 200 million investment.

In acquiring Yonghui, Ye went all in. He said he made the decision within a week, targeting a "Fat Donglai-style supermarket," confidently stating: “I might make mistakes elsewhere, but I won’t in retail.”

From launching MINISO in the “RMB 10 store” era to now leading Yonghui Superstores, Ye’s every step reflects ambition and a gambler’s mindset. Now he’s maneuvering through MINISO’s growth bottleneck, reforming Yonghui’s loss-making operations, and possibly paving the way for TOP TOY’s IPO.

But dancing on the knife’s edge means each step forward is fraught with danger.

For Ye Guofu, who holds 63.78% of MINISO, the company is undeniably his “wallet.” Yet based on MINISO’s Q1 2025 financial report, that wallet seems deflated.

The report shows Q1 revenue at RMB 4.427 billion, an 18.9% YoY increase. However, adjusted net profit was RMB 587 million, down 4.8% from RMB 617 million in the same period last year; adjusted net margin dropped from 16.6% to 13.3%, clearly reflecting revenue growth without profit growth.

A major reason for margin pressure is the surge in selling expenses. Unlike its domestic franchise-driven expansion, MINISO uses direct operation and agency models overseas.

As of March 31, 2025, MINISO had 608 directly-operated overseas stores, up from 327 a year earlier. Revenue from these stores rose 85.5% YoY during the period, while related expenses rose 71.4%.

Put simply, growth in overseas markets came mostly from store count increases, with no revenue growth per store. Per-store costs remain high, gross margins are low, and these stores contribute little to profit.

Domestically, same-store sales have not turned positive; revenue growth still mainly depends on store expansion.

For retail businesses, same-store sales are a key indicator of operational efficiency. But to quickly boost performance metrics, many companies prioritize opening new stores, masking underperformance at existing ones.

Ye seems aware of the issue. In the earnings call, he mentioned plans to optimize channel and franchisee structures, tailor product allocations based on consumer profiles and channel characteristics, expand the IP collaboration matrix in both depth and breadth, and improve member retention and repurchase rates.

However, domestic market saturation is already apparent. According to self-media source “Jinduan,” MINISO’s penetration rate in Tier-1 city shopping centers reached nearly 50% in 2024. Excluding suburban malls, store expansion in these cities is nearing saturation, with nationwide penetration at 66%.

Clearly, MINISO’s domestic growth via store expansion is unsustainable. Ye, familiar with capital market expectations, has in recent years rebranded MINISO’s business model with buzzwords like “interest-driven consumption” and “globalization.” IP co-branding and overseas expansion became its twin engines of growth.

IP partnerships have driven up gross margins. MINISO has collaborated with over 150 global IPs, selling over 800 million IP-branded products, lifting gross margin from 26.7% in 2019 to 44.9% in 2024.

However, this model has drawbacks. On one hand, IP licensing significantly raises selling costs—up 40% in Q1 2025. On the other hand, reliance on IPs leads to homogenized competition and shortens product life cycles.

According to Zheshang Securities, due to product fatigue, customer traffic to MINISO stores quickly peaks and declines, forcing the brand into an endless loop of chasing new IPs.

Meanwhile, Ye is replicating MINISO’s domestic model abroad. In Q1 2025, MINISO’s overseas revenue hit RMB 1.59 billion, a 30% YoY increase, with overseas revenue accounting for 3 percentage points more of total revenue. By March 31, 2025, MINISO had 3,213 overseas stores.

However, unlike its domestic franchise model, MINISO mostly uses direct or agency models overseas. Despite higher gross margins under direct operation, most overseas stores are in prime locations, leading to significantly higher costs.

With a global economic slowdown, rising overseas store costs, and intensifying domestic competition, Ye’s “wallet” is shrinking as expenses surge.

MINISO’s acquisition of Yonghui is essentially a quest for new growth.

At first, Ye claimed that he and his team would stay focused on MINISO. But within six months of becoming Yonghui’s largest shareholder, internal power struggles surfaced. As he gained real control over Yonghui Superstores, Ye increasingly shifted his attention there.After all, he acquired Yonghui to make money. A loss-making Yonghui holds no value for him.

With “loss reduction” as the premise, Ye has focused on two major reforms

Unlike Yonghui’s previous KA (key account) model, Ye implemented several reforms—cutting out middlemen, promoting “bare price direct procurement,” and establishing direct partnerships with suppliers while eliminating various fees.

On March 29, Yonghui held its 2025 Global Supplier Conference. Ye said he would establish long-term partnerships with 200 core suppliers, personally screening them and meeting each CEO at least once a year.

Ye announced plans to renovate about 200 stores in 2025 and close 250–350 stores. To meet this target, Yonghui would need to close almost one store per day.

Such moves require heavy investment. Securities firms estimate each renovation could cost over RMB 8 million. Even if costs are controlled later, completing all renovations by end-2026 will still strain cash flow.

Ye quickly sold some Yonghui stores to support these upgrades. On March 18, Yonghui announced it would sell 12 stores in Heilongjiang and Jilin to regional retail giant BeBetter Group.

Still, asset sales alone cannot cover the massive funding gap. From FY2024 to Q1 2025, Yonghui’s losses have continued and even worsened, intensifying Ye’s challenges.

Long-term losses at Yonghui loom over Ye like a sword of Damocles. Investor doubts about his management are rising. This could impact MINISO’s market confidence, stock price, financing ability, and valuation.

Ye knows that unless he turns Yonghui around soon, MINISO could be dragged down too. He must accelerate reforms to reduce this risk.

Despite owning two listed companies, Ye’s ambitions are still growing—he seems to be preparing a third.

Rumors suggest MINISO is considering spinning off its toy brand TOP TOY for a Hong Kong IPO, aiming to raise around USD 300 million. Talks are reportedly underway with potential advisors.

Though MINISO hasn’t confirmed this, back in July 2022, when MINISO had its second Hong Kong listing, Ye stated his hope to list TOP TOY within three years.

Currently, TOP TOY is rapidly expanding. In the reporting period, revenue reached RMB 340 million, up 58.9% YoY, mainly due to rapid store growth. As of Q1, it had 280 stores—net addition of 120 stores YoY.

Spinning off units to unlock value is common in capital markets.

For a retail capital player like Ye, this is about seeking valuation reappraisal.

Despite MINISO having higher revenue and profit than Pop Mart, its market cap is just over HKD 50 billion, compared to Pop Mart’s HKD 300 billion. The gap lies in narrative—MINISO is seen as a distributor, while PopMart is seen as an IP brand developer, viewed as more lucrative.

In 2024, Pop Mart’s gross margin was 66.8%, MINISO’s was 44.9%.

Since 2020, MINISO has incubated TOP TOY as a standalone store brand. Unlike MINISO’s general merchandise positioning, TOP TOY is positioned as a “trend toy collection store” and “China’s LEGO,” with per-customer spending around RMB 130.

Unlike Pop Mart’s in-house IP creation, TOP TOY mostly relies on licensing well-known IPs like Sanrio, Disney’s Mickey, Pleasant Goat, and Egg Party.

Some investors believe spinning off TOP TOY could support its independent growth and provide MINISO with new financing channels to relieve cash pressure.

Although growing rapidly, TOP TOY faces fierce competition. Pop Mart and others have already established market dominance. Ye must carve out a unique positioning for TOP TOY to convince investors.

This is clearly another high-stakes bet—but Ye seems unable to stop. Before MINISO hits its ceiling, he must find new profit engines, turn Yonghui around, and list TOP TOY before the market window closes.