"No one understands it, and that's right.

If everyone understood, I wouldn't have a chance."

After the official announcement of the stake in Yonghui Supermarket, the founder of Miniso, Ye Guofu, said this in his WeChat Moments.

On July 30th, Ye Guofu visited the first store in Zhengzhou, Henan, which was adjusted by Pang Donglai to help Yonghui Supermarket, and it was this trip that made him see the potential of Yonghui Supermarket after the adjustment, and also promoted the completion of a 6 billion acquisition case.

On September 23rd, Miniso announced that its wholly-owned subsidiary, Juncai International, intends to acquire 2.668 billion shares of Yonghui Supermarket (about 29.4% of the target company's total issued share capital) for 6.27 billion yuan.

After the acquisition is completed, Miniso will become the largest shareholder of Yonghui Supermarket.

The outside world is puzzled by this sudden cooperation: one is a retailer that started with small department stores, and the other is a supermarket operator with food as the core, although both belong to the retail industry, the actual operation is quite different.

Advertisement

This kind of doubt is also reflected in the attitude of the capital market.

On September 24th, Miniso's Hong Kong stock fell more than 37% at one point, and its market value shrank by nearly 10 billion Hong Kong dollars at the close, while Yonghui Supermarket's stock price rose by more than 10%, and JD.com, one of the sellers, rose by more than 10%.

"No one understands it, and that's right.

If everyone understood, I wouldn't have a chance."

After the transaction announcement, Ye Guofu said this in his WeChat Moments in response to the surging doubts.

Miniso enters, JD.com retreats.

This time, the 2.668 billion shares of Yonghui Supermarket that Miniso acquired, 1.913 billion shares (about 21.1% of the target company's total issued share capital) came from the Dairy Company, which belongs to the Jardine Matheson Group; another 755 million shares (about 8.3% of the target company's total issued share capital) came from JD World Trade and Suqian Hanbang, both of which are acting in concert and controlled by JD.com.

After the transaction is completed, Miniso will become the largest shareholder of Yonghui Supermarket.

However, according to what Zhang Jingjing, the chief financial officer of the company, said at the telephone meeting last night, the transaction is expected to be completed in the first half of 2025, and the company will not act as the controlling shareholder and actual controller of Yonghui Supermarket, nor will it consolidate the financial statements.

The 6.27 billion yuan transaction amount will be paid in cash by Miniso, which is also not a small amount.

The financial report shows that as of the end of June, Miniso's cash and cash equivalents were 6.233 billion yuan, which is not enough to cover the transaction amount.

In response, Zhang Jingjing explained, "The company's current cash on hand is nearly 7 billion yuan, with almost no interest-bearing debt, and it is expected to obtain low-cost financing of 60% of the transaction price from banks and other external channels in the future."

As for the target company Yonghui Supermarket, it is a supermarket operator with fresh food as its characteristic, mainly operating large-scale comprehensive supermarkets, supermarkets, and community supermarkets, with a total of about 850 stores, spread across more than 25 provinces and municipalities in the country.

In recent years, Yonghui Supermarket's operating conditions have not been optimistic.

From 2021 to 2023, the company's revenue was 91.06 billion yuan, 90.09 billion yuan, and 78.64 billion yuan, respectively, and it has been declining year by year; the net profit attributable to the parent company has also been negative for three consecutive years, with a cumulative loss of more than 8 billion yuan.

The decline in the first half of this year has not stopped, with Yonghui Supermarket's revenue down 10.11% year-on-year, and the net profit attributable to the parent company down 26.34% year-on-year.

JD.com, the seller, may have already had the intention to retreat.

At the end of 2023, JD.com held 13.39% of Yonghui Supermarket's shares, and disclosed two plans to reduce holdings in the first half of the year, and as of the announcement date of the equity transaction, the holding ratio has been reduced to about 11.25%.

After the transaction is completed, JD.com is expected to hold less than 3% of the shares.

The outside world is puzzled, what charm does Yonghui, which is not in good operating condition, have to attract Miniso to invest heavily?

In the minutes of the telephone meeting that were leaked online, the management of Miniso spent a long time describing to the outside world why they are taking a stake in Yonghui.

Ye Guofu first talked about his first visit to Pang Donglai two years ago, and the products and cooked food in the store left a deep impression on him.

He believes that Pang Donglai is a very influential enterprise in the retail industry in the past two years, and its business model is very successful.

Recently, Ye Guofu has inspected Pang Donglai and many stores that have been adjusted by Pang Donglai for Yonghui, and the sales of the stores have been very hot after the adjustment, which has made him see opportunities.

Ye Guofu believes that Pang Donglai is more suitable for China's family sales model, and wants to reshape the pattern of offline supermarkets in China based on this, and the performance of several adjusted stores has been greatly improved, which makes him feel that it can be replicated to other places in the country.

However, the success of individual stores does not mean that all stores are successful, and the road for Yonghui Supermarket to transform into "Pang Donglai" is still very long.

For Miniso, the company hopes that after Yonghui is adjusted, it can become a supermarket that attracts customers, which is also very helpful for the upgrade of Miniso's channels, and can help Miniso get better locations, making the company's layout more perfect and diversifying the risks of cyclical businesses.

At present, Miniso needs to find more breakthroughs in the Chinese market.

In the first half of this year, Miniso achieved a revenue of 7.759 billion yuan, a year-on-year increase of 25%, mainly driven by the overseas market.

During the period, its overseas revenue rose by 42.6% year-on-year to 2.732 billion yuan, while domestic revenue was 5.027 billion yuan, with a growth rate of 17.2%, far less than the overseas market.

In mainland China, most of Miniso's revenue comes from offline business.

As of the end of June, it had 4,115 Miniso stores, a net increase of 511 stores compared to a year ago.

Although the number of stores is increasing, the single-store efficiency is declining.

In the first half of the year, the company's comparable same-store GMV (total merchandise value) decreased by 1.7%, while the same period last year was an increase of 28.1%.

This is obviously an unfavorable signal.

For this 6.27 billion yuan gamble, the capital market chose to vote with its feet.

On September 24th, Miniso's Hong Kong stock price opened low, fell to 20 Hong Kong dollars/share at one point, down more than 37%, and finally closed at 25.05 Hong Kong dollars/share, with a total market value of 31.55 billion Hong Kong dollars, down nearly 10 billion Hong Kong dollars compared to the previous trading day.

In contrast, Yonghui Supermarket's stock price rose by 10% on September 24th, closing at 2.48 yuan/share; JD.com, one of the sellers, also saw a significant increase in its Hong Kong stock price, closing at 124.6 Hong Kong dollars, up more than 10%.