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

CICC released a research report stating that it maintains its non-IFRS net profit forecast for MNSO (09896, MNSO.US) in 2026/27 at 3.1/3.5 billion yuan, unchanged. The current Hong Kong and US stocks are trading at 10/9 times 2026/27 non-IFRS P/E, maintaining an outperform industry rating and an unchanged target price of 39.16 Hong Kong dollars / 20.32 US dollars, corresponding to 14 times 2026 non-IFRS P/E, with 41%/44% upside potential. Key points from CICC: 1Q26 non-IFRS net profit excluding exchange gains and losses is expected to increase by 7%-10% year-on-year. The company expects revenue in 1Q26 to be 5.68-5.73 billion yuan, a year-on-year increase of 28%-29%; adjusted net profit excluding exchange gains and losses is expected to be 620-640 million yuan, a year-on-year increase of 7%-10%. Miniso focuses on improving the shopping experience domestically, with good growth expected to continue in 1Q26. Miniso's domestic business continues to focus on quality products and hot IPs, optimizing the shopping experience through the park series of stores and renovations of old stores, and innovating in star IP content cooperation. From January to February, Miniso's mainland China market GMV increased by more than 25% year-on-year, achieving high single-digit or higher year-on-year growth in same-store sales. The bank expects good performance to continue in March domestically, with high single-digit in-store growth expected in the quarter. On the store level, with the continued implementation of the large store strategy, the bank expects a slight increase in Miniso stores domestically. Overseas direct markets continue to lead growth. The overseas direct market is expected to continue to achieve faster growth than other markets in 1Q26, with a focus on the United States deepening the strategy of combining top-tier IPs and localization. From January to February, Miniso's GMV in the US market increased by more than 50% year-on-year, with same-store sales achieving 20% or more year-on-year growth. The bank expects this performance to continue in March, helping the North American market achieve 10%-20% high single-digit in-store growth for the quarter. In addition, the bank expects double-digit same-store growth in Europe and Mexico, and some improvement in performance in the Indonesian market. Gross margin and expenses may still fluctuate, investment income drives high profit growth. In terms of gross margin, considering that the proportion of direct procurement in the US is expected to continue to increase in 1Q26, and the company actively optimizes its inventory, the bank expects a slight decrease in gross margin year-on-year. Regarding expenses, the bank expects that the company's continued preparation of new stores in direct regions will lead to upfront cost allocation. The company incurred exchange losses during the period, but benefited from the income of 87-88 million yuan from investing in an artificial intelligence company and a share of Yonghui's profits of 0.8 billion yuan, achieving a profit of 12.3-12.5 billion yuan in 1Q26, an increase of 195%-200% year-on-year. Excluding the acquisition of Yonghui, issuance of stock-linked securities, and income from investments in artificial intelligence companies, adjusted net profit excluding exchange gains and losses is expected to increase by 7%-10% year-on-year to 620-640 million yuan. Risk warning: Retail environment worse than expected, channel improvement worse than expected, new business development worse than expected.