China smartphone shipments slumped in June on inventory overhang: Jefferies
On Monday, JPMorgan upgraded Miniso shares listed on the New York Stock Exchange (NYSE:MNSO), shifting the rating from Neutral to Overweight and raising the price target to $22.00, up from the previous $15.00. The firm’s analysts expect a turnaround for the retailer, citing several factors that could drive growth, including a recovery in China’s same-store sales growth (SSSG), aggressive overseas expansion, and a clearer path to improvement for Yonghui (YH), in which Miniso recently acquired a 29% stake. According to InvestingPro data, Miniso maintains a "GREAT" financial health score, with strong fundamentals including a solid 2.04x current ratio and more cash than debt on its balance sheet.
The company’s share price has declined by 20.7% year-to-date according to InvestingPro data, underperforming the Hang Seng Index which has risen by 19%. Despite this decline, the company has demonstrated strong operational performance with revenue growth of 11.3% and an impressive gross profit margin of 44.9% in the last twelve months. JPMorgan anticipates that Miniso’s China performance will rebound from a high single-digit decrease in 2024 to a mid single-digit increase in 2025. The analysts also highlight the company’s robust plans for international store openings, which are expected to account for 50-70% of all new openings, alongside a 1.1 percentage point operating margin uplift.
JPMorgan’s positive outlook is further supported by Miniso’s strategic moves, including a leadership change at Yonghui with a goal to significantly reduce losses in 2025. Additionally, Miniso has announced a shareholder return plan, which includes a buyback worth HK$1.7 billion by June 2026 and a dividend payout ratio exceeding 50%. InvestingPro analysis shows the company has maintained dividend payments for 5 consecutive years, with an impressive dividend growth of 66.7% in the last twelve months.
Financially, Miniso reported a 22.8% year-over-year increase in revenue and a 15.4% rise in adjusted earnings for 2024, aligning with expectations. The firm maintains its estimations for 2025 and projects margin improvements in 2026, forecasting sales and earnings to grow at compound annual growth rates (CAGRs) of 18% and 24%, respectively, over the 2025-27 period.
In a shift from discounted cash flow (DCF) to a price-to-earnings (PE)-based valuation approach, JPMorgan’s new price targets for Miniso’s American Depositary Receipts (ADR) and Hong Kong shares are set at US$22 and HK$43, respectively, up from US$15 and HK$29. These targets are benchmarked to 15 times the firm’s estimated 2025 PE ratio, which is the market-cap weighted average 2025 trading PE of China discretionary stocks covered by JPMorgan. Miniso is currently trading at a P/E ratio of 15.8x, with a 24% earnings CAGR projected for 2025-27, compared to its peers Five Below (NASDAQ:FIVE) at 17 times PE with a 10% CAGR and Pop Mart at 42 times PE with a 24% CAGR. For a deeper understanding of Miniso’s valuation and growth prospects, investors can access comprehensive analysis and additional metrics through InvestingPro’s detailed research reports, which are available for over 1,400 US-listed companies.
In other recent news, HSBC analysts have initiated coverage of Miniso with a Buy rating and set a price target of $29.30. The firm highlights Miniso’s strong position as a leading lifestyle retailer in China, along with its rapid international expansion. Analysts from HSBC project a compound annual growth rate (CAGR) of 22.5% for Miniso’s non-GAAP net profit and a revenue CAGR of 22.8% from 2024 to 2026. A significant portion of this growth, approximately 75%, is expected to come from overseas markets. By 2026, the contribution from international markets is predicted to rise to 51% of total revenue and 44% of overall profit, compared to estimated figures of 40% and 30% for 2024. This indicates a strategic focus on global market penetration. The optimistic outlook is supported by Miniso’s supply chain capabilities, which are seen as crucial for its expansion. HSBC’s positive rating reflects confidence in the company’s ability to leverage these strengths to drive future financial performance.
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