China's Miniso sees modest trading debut after $608m US IPO

The company sold 30.4 million American Depository Shares (ADS) at $20 apiece, according to a filing, above the indicative range of $16.50-18.50. The stock opened at $24.43 on October 15 before falling back to close at $20.88 on a generally weak trading day for the US markets.

Hillhouse holds a 4.2% stake in Miniso while Tencent has 3.1%. They committed RMB1 billion ($146 million) to the company in 2018, partly to support the development of intelligence retail functions and overseas expansion.

Miniso was established in 2013 by Guofo Ye, who previously launched jewelry and accessories retailer Aiyaya, growing the business to more than 2,000 stores within five years through a franchise model. He is said to have worked alongside Japanese designer Miyake Junya, though Junya is not mentioned in the prospectus.

Miniso is modeled on Japan’s JPY100 - or dollar-store - concept, and initial marketing efforts portrayed the company as a successful Japanese brand looking to expand into China. Following a similar strategy to that employed by Aiyaya, Miniso had more than 2,000 stores in China and 1,000 overseas when Hillhouse and Tencent invested. The company said it wanted to have 10,000 stores across 100 countries by 2022 and annual sales of RMB100 billion.

As of June, there were 4,200 outlets, of which all bar 219 operate on a franchise basis. Miniso had 2,500 stores in China and 1,680 across 80 other countries and regions. Gross merchandise value came to RMB19 billion in 2019, making it the largest global branded variety retailer of lifestyle products, according to Frost & Sullivan.

The company offered approximately 8,000 product lines, most of them under the Miniso brand. Home décor, small consumer electronics, textiles and accessories, beauty and personal care, toys, snacks, stationery, and gifts are the major product categories. It claims to roll out brands at speed, leveraging an in-house product development team, co-branding efforts, and efficient supply chains.

This agility means Miniso can respond quickly to consumer trends. However, its biggest selling point is arguably affordability. More than 95% of products sell for less than RMB50.

Revenue came to RMB8.98 billion for the 12 months ended June 2020, down 4.4% year-on-year. Over the same period, the company’s net loss narrowed from RMB294.4 million to RMB260.2 million, while its gross margin increased from 26.7% to 30.4%.

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• Topics
• Greater China
• IPO
• Consumer
• China
• Tencent
• Hillhouse Capital Management