CICC: Maintains Outperform rating on MNSO (09896), lowers target price to HK$39.16.

CICC released a research report stating that due to macroeconomic uncertainties, it has lowered its adjusted net profit forecast for MNSO (09896, MNSO.US) for 2026/2027 by 11%/16% to RMB 3.1/3.5 billion. The current Hong Kong and US stock prices correspond to 11/10 times the 2026/2027 P/E ratio. The company maintains an outperform industry rating, with performance volatility affecting valuation. The target price is lowered by 22% to HKD 39.16/USD 20.32, corresponding to a 2026 P/E ratio of 14 times, with an upward potential of 27%/32%. The company forecasts a 10-20% increase in revenue for 2026, with the overseas direct sales market, led by the United States, expected to optimize operations and increase inventory turnover. Key points by CICC: 4Q25 performance meets market expectations The company's 4Q25 revenue increased by 33% to RMB 6.3 billion, with adjusted net profit, excluding the Yonghui and stock payment salary expenses, increasing by 8% to RMB 850 million, meeting market expectations. Improved consumer experience leads to strong terminal performance Miniso's domestic business further focuses on quality products and IP, enhancing shopping experiences through channels such as the Joy Park store. Domestic revenue in 4Q25 increased by 25% to RMB 2.9 billion, with growth rates increasing quarter by quarter throughout the year. Offline revenue increased by 23%, slightly better than the guidance. A total of 161 stores were opened during the quarter, with 26 Joy Park stores by the end of the period, leading to a 40-50% increase in sales for the year. Online revenue for Miniso increased by 37%. TOPTOY revenue increased by 112% to RMB 600 million, with 334 stores by the end of the quarter and over 20 proprietary IPs. Peak season for overseas direct sales, positive performance adjustment in the United States In 4Q25, Miniso's overseas business entered its peak season, with revenue increasing by 31% to RMB 2.8 billion. The main reduction in same-store units was mainly due to markets such as Southeast Asia. In key markets like the United States, revenue increased by 57%, with a 20-30% increase in same-store sales on the lower end, exceeding the guidance of low double digits. The US market achieved good operational and user stickiness improvements following strategic adjustments, with significant increases in daily sales for both new and old stores, with member consumption contributing over 50%. Pressure on main business profit margins due to inventory optimization and increased investment, slow overseas inventory turnover Due to product mix optimization, the gross profit margin in 4Q25 decreased by 0.7 ppt. After excluding SBC expenses, selling expenses increased by 2.2 ppt, mainly due to increased direct sales expenses and IP strategic investments; the management expense ratio decreased by 0.5 ppt. Net financial expenses were RMB 90 million due to the acquisition of Yonghui and stock-linked securities, with 55 million RMB attributed to Yonghui's loss and 16 million RMB due to the redemption of TOPTOY preferred shares, leading to a net increase in adjusted net profit of 8%. In response to strategic tariff stocking, the inventory turnover days for Miniso's overseas business increased by 41 days to 228 days, while domestically it stood at a healthy level of 74 days. Operating cash flow in 4Q25 increased by 93% to RMB 260 million. Risk warning: Retail environment below expectations, channel enhancement below expectations, new business development below expectations.