Ye Guofu "heats up the stove," Miniso aims to play the "own IP" card

Miniso is about to complete the most important piece of its trendy toy story.

At the performance meeting, Chairman Ye Guofu announced that nine artist IPs have been signed, and in the future, it will adopt a dual-driven model of international IP and proprietary IP.

Ye Guofu stated that proprietary IP is a major strategy for the group this year and in the future.

“In the past, Miniso had advantages in product development, marketing, and channel advantages in cooperation with international IPs, but the only thing missing was proprietary IP. As long as we align our understanding of proprietary IP and start taking action, I believe we have a great future,” said Ye Guofu.

Just a day earlier, Pop Mart broke through a market value of 420 billion under Wang Ning's optimistic expectation of "easily reaching 30 billion."

The rapid growth of Pop Mart in global markets such as North America has validated the potential and space of the trendy toy market for subsequent entrants.

This is also a huge opportunity for Miniso, which has established over 3,000 overseas stores.

In the first half of the year, Miniso achieved revenue of 9.393 billion yuan, a year-on-year increase of 21.1%; adjusted net profit was 1.278 billion yuan, a year-on-year increase of 3%.

The TOPTOY brand has seen rapid growth, with second-quarter revenue increasing by 80% year-on-year to 400 million yuan, and recently secured a round of strategic financing led by Temasek during the reporting period, with a post-transaction valuation of approximately 10 billion Hong Kong dollars.

Proprietary IP will definitely bring valuation imagination space, but before that, Miniso needs to prove itself first.

Large Store Support

Miniso has a deep accumulation in the IP trendy toy field, more commonly known in the market as a "channel brand."

In recent years, through collaborations with high-profile IPs like Chikawa and Harry Potter, Miniso has achieved rapid product launches and traffic conversion.

The product premium brought by IP has increased its gross profit margin by 13 percentage points over three years.

However, the non-exclusive cooperation model is easily replicable, leading to severe homogenization competition in the market. Continuous marketing investment is more about accumulating invisible assets for the IP value side, failing to effectively convert into its own barriers.

High licensing fees continue to squeeze profits; compared to Pop Mart's 70% gross profit margin achieved through proprietary IP, Miniso's licensing fee growth rate has consistently exceeded revenue in recent years.

In just the first half of the year, Miniso's licensing expenditure reached 240 million yuan, a year-on-year increase of 31.5%.

Compared to the licensing fees of internationally renowned IPs, the expenditure on signing early-stage artists is indeed considered "a small amount."

But more critically, the success of MINISO LAND may have shown Miniso the potential of promoting IP as a channel.

MINISO LAND is Miniso's existing highest-level store format, designed as an "IP amusement park" to create a new retail experience.

The existing 11 MINISO LAND stores have an average monthly sales of 4 million yuan, with inventory turnover and capital recovery efficiency far exceeding ordinary stores, and showing strong customer attraction.

The MINISO LAND Global No. 1 store on Nanjing East Road in Shanghai achieved sales of over 100 million yuan in just nine months. In June, the world's first MINISO SPACE entered Nanjing Deji Plaza, successfully breaking into the high-end luxury business district "Most IPs cannot enter Deji by themselves, but they can through us," said Ye Guofu.

In May of this year, the WAKUKU second-generation rubber plush products under "Letsvan" were launched offline at MINISO LAND in Shanghai and Nanjing, setting a record for single-day sales of one million.

A month later, the limited rubber hanging cards on the opening day of MINISO SPACE at Nanjing Deji Plaza once again caused fans to queue up at dawn to purchase.

The strategy of launching major stores to ignite market enthusiasm, followed by regular stores to sustain sales, is being replicated onto MINISO's own IP.

Ye Guofu introduced that the IP "Youyou-chan," launched in collaboration with signed trendy toy artists, sold out quickly upon release and has frequently been out of stock.

He expects this IP to achieve sales exceeding 100 million, "with this year's sales scale expected to reach 40 million, and next year to break the 100 million mark."

There is an essential difference between simply serving as a channel to broaden the market coverage for IP and deeply participating in IP incubation, operation, and building its long-term vitality.

Even leading brands like Pop Mart are continuously strengthening IP content construction, enriching the story background and detail settings for LABUBU, thereby extending the IP lifecycle.

At the same time, there are voices questioning whether MINISO's accelerated "trendy toyization" will create competition with its trendy toy brand TOP TOY overseas.

Earlier this year, TOP TOY, backed by MINISO's IP and supply chain strength, announced a goal of opening 1,000 stores within five years, achieving over 50% of overseas sales.

The management responded at the earnings meeting: MINISO has extended from daily goods to the trendy toy field, while TOP TOY focuses on the professional trendy toy track, with differences in positioning, product forms, and average transaction prices.

However, it has been observed that there is still no clear separation between the two brands regarding core IP resources such as Sanrio.

In the first half of the year, TOP TOY invested 5.1 million yuan to acquire a 51% stake in the trendy toy company HiTOY, bringing the three major IPs: Nuomi Er (Nommi), Honey, and Mei Mei (MayMei) under its umbrella.

How to balance the marketing resources among various IPs may pose a new challenge.

Efficiency Improvement in Progress

Behind the increased focus on its own IP, MINISO achieved positive same-store sales growth for the first time in four quarters this quarter, signaling a positive reversal from its difficulties.

The "close small stores, open large stores" strategy executed in the domestic market is proving effective.

As of the first half of the year, the number of large stores over 400 square meters has exceeded 200, with half of them newly opened in 2024.

These types of stores significantly outperform the average in terms of sales per square meter, single-store sales, and profitability, with only 5% of large stores contributing a double-digit percentage of sales in the Chinese market in the first half of the year.

In the second quarter, despite the high base formed by the Chikawa collaboration in the same period last year, same-store sales still achieved low single-digit growth, successfully turning from a decline in the first quarter to positive growth.

Ye Guofu stated that the company has established a performance growth team led by the merchandise center in the domestic market, connecting cross-departmental links between merchandise, operations, channels, and marketing, significantly improving the speed and operational efficiency of pushing best-selling products to stores Management confirmed that from the beginning of the year to August, domestic same-store growth has turned positive, and they are confident in achieving positive same-store growth for the entire year.

The overseas market is actively introducing operational methodologies that have been validated domestically.

Management stated that Miniso will adopt a quality-first strategy in the North American market, focusing on developing trendy toy categories and achieving refined operations through a localized team.

In the second quarter, revenue in the U.S. market grew by over 80% year-on-year, with same-store sales achieving mid-single-digit positive growth.

Additionally, the sales efficiency of new stores opened in North America this year has reached 1.5 times that of older stores, with a nearly 30% higher sales per square meter, and a better rent-to-sales ratio compared to older stores.

Market concerns arising from the aggressive store opening strategy are gradually easing as operational conditions improve.

However, from the profit perspective, the increase in gross margin is partially offset by adjustments in store structure: many new stores in North America are still in the profit improvement stage, putting some pressure on overall profit margins in the short term.

In the first half of this year, Miniso's operating profit margin was 16.5%, a decline of 2.8 percentage points compared to the same period last year.

The related costs of direct-operated stores, such as rent and labor, have significantly increased as upfront investment costs, leading to a year-on-year increase of over 40% in sales expenses in the first half of the year.

Miniso's medium to long-term target operating profit margin is 20%.

Under the premise of stable profits from domestic franchise operations, whether the company can achieve this target still depends on the subsequent operational efficiency of overseas direct-operated stores.

The pace of direct store openings has clearly slowed down. Miniso plans to maintain a net increase of over 500 overseas stores for the year while reducing the proportion of overseas direct-operated stores from around 40% to 35%.

Among them, the target for new stores in the U.S. for the year is 80, nearly halving from last year, and shifting from a dispersed layout to focusing on densely populated areas in California and other regions for clustered store openings to enhance logistics and marketing efficiency.

"Since the speed of store openings has slowed down, we must refine the single-store model better," said Ye Guofu, indicating that they will allocate 100 square meters as a trendy toy area in large stores of 600-800 square meters to attract more young people to the store.

The previous leveraged investment in Yonghui may have somewhat limited Miniso's larger-scale capital investment.

Starting from this quarter, Miniso will account for its investment in Yonghui using the equity method, resulting in a book loss of 119 million yuan.

In the first half of the year, Yonghui Superstores closed 227 stores, with a net loss of 241 million yuan.

According to the plan, the adjustment of 300 stores will be completed before the Lunar New Year in 2026. Before that, it is expected that losses will continue to exert pressure on Miniso's financial performance