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11 years after its founding and 4 years after its listing, miniso's first acquisition was made in yonghui superstores, with a 29.4% stake valued at nearly 6.3 billion yuan. after the news was released on the evening of september 23,miniso (nyse: mnso) us stocks opened down more than 17% that night and fell 16.65% by the close.。

image source: screenshot of eastmoney website

on september 24, yonghui superstores (sh601933, share price 2.48 yuan, total market value 22.51 billion yuan) opened at the daily limit.miniso (hk09896, share price hk$25.05, market value hk$31.55 billion) hong kong stocks fell by more than 30% at one pointas of the closing of the day, the stock price fell 23.86% to hk$25.05 per share, with a market value of 31.1 billion yuan.the market value evaporated by 10.3 billion yuan in one day。

the reporter of "daily economic news" noticed that this is the first external capital operation of miniso since it established the home furnishing retail brand "miniso" and incubated the trendy toy brand top toy internally.

things change. miniso, once regarded as a "10-yuan store", has become a dark horse in the retail industry by relying on its ip strategy. yonghui supermarket, once a "gifted student" in new retail, has suffered losses in recent years. before the acquisition news was announced, miniso's market value (hong kong stock market value of over hk$41 billion) was about 1.8 times that of yonghui supermarket (over rmb 20 billion).

does the stock price performance on the 24th mean that the market is not optimistic about this investment? in a conference call on the evening of september 23, an investor asked why miniso, which has been overseas for many years, did not look at overseas investment opportunities, but returned to china to invest in physical retail. ye guofu, founder, chairman of the board and ceo of miniso group, responded:i have traveled around the world, but i have not found a high-quality asset that i am more excited about than yonghui., yonghui’s current price is also the lowest... i hope everyone will be patient and trust my judgment. i may make mistakes in other areas, but i will never make mistakes in retail.”

ye guofu said that he is optimistic about the pang donglai model in the long term, and he was very excited after pang donglai decided to adjust yonghui supermarket and achieved good results.what he is interested in is the "pangdonglai model + yonghui supermarket's national channels"in the future, yonghui supermarket will be able to collaborate with miniso in terms of channel upgrading and self-construction of the supply chain.

image source of miniso store: photo taken by wang fan, a reporter from china business news

"big brother" was acquired by "up-and-coming star"

this acquisition by miniso is an acquisition of equity of the "big brother" by a "rising star" in the retail circle.

in terms of market position, miniso was founded in 2013 and yonghui supermarket was founded in 2001. the former has a history 12 years shorter than the latter. in terms of scale, miniso's revenue in 2023 (natural year, not fiscal year) is less than 15 billion yuan (i.e. the first half of fiscal year 2023 plus the second half of fiscal year 2022), which is also far lower than yonghui supermarket's 78.6 billion yuan in the same period. however, the former has been profitable in recent years, while the latter has been losing money. in terms of store network, miniso's small stores and franchise model are expanding significantly faster. as of the end of june this year, miniso had 4,115 stores in the mainland, while yonghui supermarket currently has more than 800 stores.

therefore, this acquisition is particularly regrettable. as china's "first fresh food stock", yonghui supermarket was once the most promising supermarket chain in china.

when yonghui supermarket was first established, the domestic market had already been occupied by international supermarket chains such as walmart and carrefour. if yonghui supermarket had a similar positioning to these brands, it would have been difficult for it to compete. the founders of fujian, brothers zhang xuanning and zhang xuansong, focused on the "tough nut to crack" - the fresh food sector from the beginning, and took a differentiated development path. the fresh food area of ​​the first yonghui supermarket that opened occupied about 60% of the area.

with its business strategy of direct sourcing from the source, yonghui supermarket quickly broke out from the gap between major giants and successfully landed on the shanghai stock exchange in 2010. in 2015 and 2017, jd.com and tencent successively invested in yonghui supermarket. in 2018, yonghui supermarket's market value once exceeded 100 billion yuan, and the number of chain supermarkets exceeded 1,000 in 2020.

in the new retail era, yonghui supermarket has fallen behind. due to competition from online shopping, community group buying, and same-city delivery, yonghui supermarket has not had an easy time in recent years.from 2021 to 2023, yonghui supermarket's net profit after deducting non-operating items was -3.833 billion yuan, -2.565 billion yuan and -1.976 billion yuan respectively, with a cumulative loss of about 8.375 billion yuan in three years.。

yonghui superstores' official website shows that as of september 23, the company had 838 stores, no longer in the thousands. as of september 24, yonghui superstores' market value also dropped to 22.5 billion yuan, which is incomparable to the 100 billion yuan market value at that time.

now,miniso acquired 29.4% of yonghui superstores for 6.3 billion yuan, with a price of 2.35 yuan per share, buying at a low point.but,after all, this "bottom-fishing" transaction bought a loss-making assetthis puzzled some investors of miniso.ye guofu said in a conference call that night that investors should trust their own vision. "many people don't understand it, and this is my opportunity," he said.

“i would like to remind you that yonghui supermarket is one of the top 500 chinese companies., and it is also the chain supermarket group that has ranked second in china's sales scale for several consecutive years. from 2007 to 2020, yonghui superstores' net profit compound annual growth rate was 22%. for 14 years, it has maintained rapid and excellent compound growth. "miniso chief financial officer zhang jingjing said in a conference call on the evening of september 23.

zhang jingjing also introduced: "in the past three years, we have seen yonghui supermarket taking various measures to reduce losses, and its business has gradually stabilized. it has been losing money for three years, but for a supermarket of such a large scale, it has solid conditions for profitability."

miniso will become the largest shareholder of yonghui superstores, but zhang jingjing said: “but wenot expected to control the boardtherefore, we will not be the controlling shareholder or actual controller of yonghui superstores, nor will we consolidate its financial statements. "

image source: daily economic news data map

“i wonder how nice it would be if this store was mine.”

let’s look at miniso. although its growth has been accompanied by controversy, it is indeed a “dark horse” in the retail industry.

miniso's "three highs and three lows" principle is well known in the industry, namely "high appearance, high quality, high frequency, low cost, low gross profit, and low price", creating the ultimate cost-effectiveness. on the other hand, miniso has cooperated with nearly 100 well-known brands and ips around the world, including disney, sanrio, and pokémon, opening up the ceiling of "interest consumption" in new retail.

today, miniso, with an annual turnover of over 10 billion yuan, is indeed an indispensable presence in the retail industry, and has also brought tangible impacts to the traditional retail industry.as for the reason for the acquisition of yonghui supermarket, ye guofu first talked about pangdonglai。

"on july 30 this year, i went to zhengzhou, henan, and visited the first store that pang donglai helped yonghui to renovate. i went there at 4 p.m. and it was very crowded. i came again the next afternoon and i saw that there were still a lot of people.there were a lot of people on the two weekday afternoons. i was thinking, how great it would be if this store was mine."ye guofu said in a telephone conference on the evening of september 23 that he has been observing whether the model of pangdonglai can go beyond xuchang and whether it can lead china's retail industry to a new world.

“later, pang donglai opened a second yonghui supermarket. i went there again in august and the business was booming. i was deeply touched and felt that this was a huge opportunity.. " ye guofu said, so he finalized the investment.

ye guofu believes that china's offline supermarkets are facing a structural opportunity that comes only once every 20 years. ye guofu analyzed, "the decline of traditional supermarkets is due to competition from e-commerce, but more importantly, it is due to their own reasons. a careful study of offline supermarkets will reveal that they used to be 'second landlords'. you sell the products, i deduct a few points, and it has nothing to do with me whether the sales are good or not, and they are gradually moving away from the real needs of consumers."

"there are only two paths for the ultimate future of global retail: low-price retail and specialty retail. miniso, sam's club and costco all belong to the latter."he said that he has always been a fan of costco, but in the past two years he found that there is a better model in china than costco and sam's club, that is the pangdonglai model.。

"my wife went to sam's club. the purple sweet potato there was very good, but she took it and put it back. why? the portions at sam's club were too big. if my children were not at home, they would not be able to finish them in a week." ye guofu said that, in comparison, pang donglai pays more attention to customer experience, respects employees more, is more suitable for chinese families, and does not have a membership system.

“i am very excited about the pang donglai model that yonghui is currently adjusting., we have also seen changes from the adjustment data.the successful adjustment of several stores fully demonstrates that the pang donglai model can be replicated throughout the country and can be replicated in yonghuiye guofu called the current yonghui "the fat donglai version of yonghui". he also believed: "yonghui's mechanism is very good. if it continues on this path, its business will be completely transformed in the next few years and will definitely create a new benchmark for china's retail industry."

you can’t just be a “second landlord” for third-party products

ye guofu is optimistic about yonghui supermarket because he sees the "shadow" of pang donglai in yonghui supermarket and the national channel capability that pang donglai does not have but yonghui supermarket is very good at. chinese consumers expect pang donglai to go beyond henan and replicate across the country, which may be realized by yonghui supermarket after the acquisition of miniso in the future.

however, although pang donglai can help yonghui supermarket adjust and renovate 5 stores, can it renovate 850 stores?

“i’ve seen that five stores have already made very successful adjustments, and pang donglai will continue to support yonghui in the future and teach it step by step.retail is not high-tech, it is not that complicated, and yonghui has a strong learning ability.i think yonghui will definitely speed up the adjustment of all its business models and quickly turn the situation around,” said ye guofu.

in ye guofu's view, the marriage between miniso and yonghui superstores is a two-way achievement.yonghui supermarket’s national channel advantage,it can help miniso open stores in better locations. on the other hand, miniso's own-brand supply chain capabilitiescan help yonghui supermarket build a differentiated proprietary product structure, no longer like a "sub-landlord" of third-party products.

"among the top 1,000 shopping malls in the country, miniso's effective coverage is not high enough, while yonghui supermarket occupies many good locations across the country. with the successful adjustment of yonghui, it will surely become the most important brand in commercial real estate to attract customers, and miniso can use this advantage to quickly upgrade our channels." ye guofu believes.

"we saw two yonghui stores in zhengzhou, and the first store after we came out of the door was miniso. and because these two yonghui stores opened (after the adjustment), the performance of nearby miniso has increased significantly. miniso can leverage yonghui's advantages to upgrade its channels, and together with yonghui, it can obtain the best locations and the best rental conditions in the same business format in more commercial properties," he said.

ye guofu (file photo) image source: photo by wang fan, reporter of china business network

in terms of supply chain collaboration, ye guofu believes: "in yonghui supermarket's revenue structure in the past two years, about a quarter of sales came from daily necessities (which miniso excels in), most of which are third-party brands, and private brands account for only single digits in total sales. miniso has been deeply involved in private-label household products for more than ten years and has accumulated rich supply chain resources. after the investment, we will use the advantages of our private-label brand to assist the yonghui team in developing better independent brand products and better serve consumers." miniso hopes to create a "chinese version of sam's club" by joining forces with yonghui supermarket.

wen zhihong, a chain management industry expert and general manager of hehong consulting, told the daily economic news reporter: "in recent years, large retail supermarkets have to resist the impact of e-commerce. it is very important to reflect the differentiation of goods, that is, private-label goods. from this logic, it is not difficult to understand why miniso wants to invest in yonghui supermarket. it is trying to replicate this capability to yonghui supermarket."

however, wen zhihong also reminded: "although both are in the retail industry, their formats are different. miniso sells daily necessities and small stores, which is very different from the product structure of yonghui's large supermarket format, and the requirements for supply chain capabilities are also very different. therefore, for miniso, whether it can achieve cross-format replication and migration of its core dna is a very challenging task."