On Friday, Citi initiated coverage on Miniso Group Holding Limited (NYSE:MNSO), a global retailer known for its trendy lifestyle products featuring intellectual property (IP) designs, with a Buy rating and a price target of $26.80.
The firm highlighted the company’s growth potential, citing expectations for its IP merchandise sales to drive profit margins.
The coverage notes Miniso’s strategy to expand its overseas business, which is anticipated to contribute to a compound annual growth rate (CAGR) of over 20% from 2024E to 2026E. The firm’s analysis suggests that Miniso’s growth will be fueled by both its China operations and its increasing international presence.
Additionally, Citi mentioned the potential added value from Miniso’s recent move to acquire a 29% stake in Yonghui, a development that could provide further benefits to Miniso’s investment profile. The firm believes that any better-than-expected performance from Yonghui could offer additional upside to Miniso’s stock.
Citi’s initiation of coverage extends to both Miniso’s American Depositary Receipts (ADRs) and its Hong Kong-listed shares. The firm’s positive outlook reflects confidence in Miniso’s business model and its ability to capitalize on the growing demand for IP-based merchandise in the global retail market.
In other recent news, global retailer Miniso has been the subject of several analyst downgrades following its announcement to acquire a 29.4% stake in Yonghui Superstores. JPMorgan downgraded Miniso from ‘Overweight’ to ‘Neutral,’ reducing the price target to $15.00 from $27.00. Similarly, BofA Securities downgraded the company from ‘Buy’ to ‘Underperform,’ citing potential risks linked to the acquisition and uncertainties about the synergies between Miniso’s value retail model and Yonghui’s food and beverage focus. Jefferies also joined the downgrade trend, shifting Miniso’s rating from ‘Buy’ to ‘Hold’ and slashing the price target to $14.91, reflecting concerns over Miniso’s recent acquisition strategy.
Despite these downgrades, Miniso’s CEO, Guofu Ye, remains confident about the growth potential of the Yonghui deal, expecting shared resources and enhanced economies of scale. The acquisition is expected to be completed in the first half of 2025, subject to regulatory approvals.
InvestingPro Insights
Miniso Group Holding Limited’s recent financial data and market performance align well with Citi’s bullish outlook. According to InvestingPro data, the company’s revenue growth…
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