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after spending nearly 6.3 billion yuan to "bottom out" yonghui, miniso's market value evaporated by 10 billion hong kong dollars. this merger and acquisition cost ye guofu a lot of money as he firmly believed that "he would not be wrong."

on the evening of september 23, yonghui superstores and miniso simultaneously released a major announcement that miniso will acquire 29.4% of yonghui superstores' equity for rmb 6.3 billion, including 21.1% held by dairy farm and 8.3% held by jd.com. after the transaction is completed, miniso is expected to become the largest shareholder of yonghui superstores.

ye guofu's investment in yonghui supermarket is based on yonghui's "explosive reform" experiment. ye guofu believes that"after traveling around the world, a better retail model is found in china, namely the pangdonglai model, which is the only way out for chinese supermarkets."

however, compared to pang donglai, which cannot get beyond henan, yonghui, which has stores all over the country, can better carry ye guofu's ambitions.

catching up with the trend of affordable consumption, miniso has been developing well in recent years, with the number of stores worldwide reaching 6,868. in august 2024, miniso released its performance report for the first half of 2024. during the reporting period, the group's revenue increased by 25% year-on-year to 7.76 billion yuan; adjusted net profit increased by 17.8% year-on-year to 1.24 billion yuan.

however, among the top 1,000 shopping malls, miniso’s effective coverage is not high enough.in ye guofu's plan, with the successful adjustment of yonghui, it will become the most important brand for commercial real estate to attract customers, and miniso can use this advantage to achieve rapid upgrading; on the other hand, miniso can also empower the yonghui team with the resources and experience advantages accumulated in the development of its own brand.

according to ye guofu's logic, yonghui's introduction of pangdonglai for transformation was more about selling at a good price than self-rescue.

in a previous article, alphabet list analyzed that pang donglai, which has only a dozen stores, would find it difficult to "revive" yonghui, which has thousands of stores. pang donglai, which is known for its humanization, has high labor and operating costs. once it is expanded on a large scale, it is bound to lead to a significant increase in costs.

on the other hand, yonghui’s current predicament cannot be solved by pang donglai’s transformation of a single store. if things go wrong, it may even become pang donglai’s “distributor.” after all, most consumers still pay for pang donglai’s self-operated products, not the supermarket itself.

after the announcement, on september 24, miniso's hong kong stocks opened sharply lower, falling by more than 30% at one point. by the close of the day, the stock price had fallen by 23.86% to hk$25.05 per share, with a market value of 31.1 billion yuan, and a market value of 10.3 billion yuan evaporated in one day. in contrast, yonghui superstores opened at the daily limit on september 24, at 2.48 yuan per share, with a total market value of 22.51 billion yuan.

secondary market investors are not optimistic about the retail model of supermarkets and hypermarkets. in the past period of time, many listed companies have performed mediocrely, and pangdonglai has never left henan.

as a leading hypermarket company, yonghui supermarket's performance has been under pressure, especially from 2021 to 2023, it has suffered losses for three consecutive years, with cumulative losses exceeding 8 billion yuan. since 2024, the stock price has even dropped to 2.08 yuan per share, a new low in nearly ten years, and has fallen 80% from the price of 11.03 yuan per share in 2020.

although yonghui has achieved breakthroughs in sales, customer flow and other dimensions after the restructuring of pang donglai, the lively performance of a single store cannot represent the current situation of yonghui or even the entire hypermarket.

yonghui supermarket's financial report for the first half of 2024 showed that the company achieved total operating revenue of 37.779 billion yuan, a year-on-year decrease of 10.11%; net profit attributable to shareholders of the parent was 275 million yuan, a year-on-year decrease of 26.34%.

at the same time, jd.com, one of yonghui's major shareholders, also reduced its holdings in yonghui twice in march and june this year.in 2015, jd.com first invested in yonghui superstores, acquiring a 10% stake at 9 yuan per share, totaling 4.31 billion yuan. during the cooperation period, jd.com entered all yonghui stores, and the two sides jointly expanded the fresh food o2o market. now jd.com is cashing out at a loss, and the price of the three equity transfers this year was less than 3 yuan.

neither jd.com nor pangdonglai can be the "white knight" of yonghui supermarket. it remains unknown whether miniso, which has significant differences from yonghui in all aspects, can revive yonghui supermarket, even though ye guofu has made a firm bet.

after announcing the acquisition of yonghui supermarket’s equity, ye guofu publicly stated, “i may make mistakes in other areas, but i will never make mistakes in retail.”

however, investors were puzzled by this retail merger, causing miniso's stock price to plummet. one of the focuses of outside doubts was:in this merger and acquisition, yonghui found a buyer and jd.com was able to get out of the predicament, but what did ye guofu want?

miniso is financially sound and its business footprint is expanding. according to miniso's first half 2024 financial report, the group's revenue increased by 25% year-on-year to 7.76 billion yuan; adjusted net profit increased by 17.8% year-on-year to 1.24 billion yuan. as of june 30, 2024, the number of its stores worldwide has reached 6,868, including 4,115 in mainland china and 2,753 overseas.

but concerns remain. miniso's first-half financial report this year showed that the gmv of same-store stores in the mainland was declining, down 1.7% in the first half of the year, while the store closure rate was rising, rising to 3.6%. the reasons were varied, such as lease expiration, rent increase, store unprofitability and other considerations of partners.

in ye guofu’s future plan, miniso can work together with yonghui.

yonghui occupies many good locations across the country. if the adjustment is successful, it will become an important brand in commercial real estate to attract customers, and the two companies can take over stores together. at the supply chain level, yonghui will be able to complete the puzzle of fresh food and other tracks for miniso. at the same time, 1/4 of yonghui's sales come from daily necessities, most of which are third-party brands. miniso can assist yonghui in developing its own products and increasing gross profit margin based on the resources and experience of its own brand.

on the other hand, in ye guofu's view, now is the best time to "buy the dip" of yonghui.over the past three years, due to cumulative losses of more than 8 billion yuan, yonghui’s stock price has been declining, and its market value has dropped from a peak of 111.8 billion yuan to the current 22.5 billion yuan.

in ye guofu's view, yonghui supermarket's current investment cost premium is low and its safety margin is high. if yonghui supermarket starts to make a profit after the adjustment in the future, this investment will greatly optimize miniso's return on investment. after a detailed financial due diligence, ye guofu claimed in a conference call that he saw the turning point of yonghui supermarket's profitability.

however, after taking over yonghui, ye guofu has no intention to directly operate yonghui for the time being, and his energy is still focused on miniso. miniso will not control the majority of seats on yonghui's board of directors, become a controlling shareholder or actual controller, and will not consolidate financial statements. "this is a judgment based on the current situation," said zhang jingjing, cfo of miniso.

wen zhihong, chain management industry expert and general manager of hehong consulting, said that although from the perspective of business format, yonghui supermarket adopts the large store model, while miniso is mostly small stores, and the product structure is relatively different. however, miniso's ability is the ability to build its own brand, which is the core ability of the current retail industry to get out of differentiated competition. however, due to the large differences in business formats and product structures, the requirements for details such as supply chain construction capabilities and store management are also different, so there will be certain challenges in the future.

"it's right that no one can understand it. if everyone can understand it, i will have no chance." faced with controversy and doubts, ye guofu left this message on his circle of friends last night after the briefing.

five years ago, ye guofu looked down upon the hypermarket business, especially the traditional supermarkets in china.

"the days of hypermarkets will become increasingly difficult and they have no future." "community group buying will only last for another year or two, but supermarkets larger than 500 square meters will basically be dead."

at that time, in ye guofu's mind, costco was the "eternal god". he had said more than once in public that "in front of costco, miniso is just a primary school student."

today, pang donglai has become the new "god" in ye guofu's heart.

"over the past decade, i have traveled around the world and seen various retail formats and models. i discovered that a retail model that is better than costco, sam's club and trader joe's is in china, and that is the pang donglai model. in fact, i believe that the pang donglai model is the only way out for chinese supermarkets." in the conference call after the announcement, ye guofu "confessed" pang donglai again and again.

it was not only ye guofu who deified pang donglai, but also the entire retail industry, which triggered a wave of "explosive reform".

in june and july this year, yonghui supermarket began to carry out pangdonglai-style adjustments and reforms in its two stores in zhengzhou, eliminating and removing 70% of the goods from the shelves, reorganizing the product structure with reference to pangdonglai, and introducing pangdonglai's own products, including pangdonglai rice noodles, dl juice, dl craft wheat beer, dl oatmeal and dl laundry detergent, etc., while also improving the salaries and benefits of front-line employees.

the effect was immediate. in the first full month after the first remodeled store opened, the average daily sales reached 1.87 million yuan, 13.9 times the pre-remodeling level. the second remodeled store opened for more than half a month, and its performance reached 8.2 times the pre-remodeling level. afterwards, yonghui announced that the first batch of remodeled stores would be extended to 10 cities across the country. in august, yonghui had two daily limit ups.

on july 30, ye guofu went to henan to see the restructured yonghui supermarkets for the first time. during the few days he visited the stores, even at 2 p.m. on thursday, which was a quiet time, the two yonghui supermarkets were still crowded. in august, he went to henan again for inspection.

after visiting the restructured yonghui, ye guofu was deeply touched. "i was thinking, how great it would be if this store was mine," ye guofu said in a conference call.

however, the results of the "explosive reform" experiment cannot be viewed only in the present, and the performance of a single store does not represent the overall situation.

on the one hand, compared with pang donglai, which has its own traffic, yonghui can only "borrow" traffic temporarily. with the spread of word-of-mouth on the internet, pang donglai has become a "net celebrity" supermarket, attracting a large number of customers, including tourists from other places, forming a traffic economy, and naturally increasing customer flow and sales.

according to data released by xuchang, during this year's spring festival, the three supermarkets of pangdonglai angel city, times square and life plaza were extremely popular, receiving 1.1633 million tourists in three days, far exceeding the number of tourists received by the most popular scenic spot in henan. pangdonglai was therefore called a "6a-level scenic spot" by netizens without an off-season.

on the other hand, even the legendary pang donglai has not been able to leave henan. pang donglai, which is known for its humanistic approach, will face greater cost challenges once it is replicated on a large scale, especially in first- and second-tier cities. even the founder of pang donglai, yu donglai, once said that the comprehensive costs of stores and employee benefits in zhengzhou are much higher and are not suitable for full replication.

is the pangdonglai model a better retail model than costco? it is not yet possible to verify. but what is certain is thatwhether it is costco, sam's club or pangdonglai, they are basically "prominent schools" in the domestic market now, with many domestic apprentices. carrefour, wumart and hema have all learned from them for a while, but they all ended in failure in the end.

there have been many attempts to find foreign players. in the past decade, internet giants have launched a vigorous new retail movement and entered offline supermarkets. jd.com and tencent invested in yonghui, alibaba bought rt-mart, suning acquired carrefour, and jd.com and tencent invested in yonghui, but all of them failed.

back to yonghui itself, yonghui supermarket was once known as the "king of chinese supermarkets" and became the "no. 1 fresh stock" after entering the capital market in 2010. at its peak, the number of yonghui stores reached 1,440, but it had shrunk to 1,000 in 2023, and it suffered a net loss of 1.329 billion yuan that year, with a cumulative loss of 8 billion yuan in three years.

in fact, as early as 2018, after the zhang brothers, the founders of yonghui supermarket, split up,yonghui once "sold itself" to save itself while transforming its business. it has tried community stores, green label stores, membership stores and super species stores, but none of them have been able to reverse the downward trend.

in addition, in the first half of this year, yonghui frequently issued announcements of management changes, and many senior employees resigned. following the resignation of the financial director, board secretary, and chairman of the board of supervisors at the beginning of the year, in february, vice president peng huasheng resigned. he joined yonghui in 2001 and is a veteran. in april, yonghui announced that two vice presidents, wu guangwang and lin jianhua, were dismissed.

now, all these challenges and pressures are on ye guofu. although miniso and yonghui are both retail companies, the announcement also pointed out that the two will work together to transform to a quality retail model.

however, the two companies are very different in terms of scale and business model. internet giants and pang donglai have failed to become yonghui's "white knight", so can ye guofu take on the heavy responsibility?

hou yi, yonghui's former rival and founder of hema fresh, praised ye guofu's courage and determination in his wechat moments, and expressed his firm belief that china's retail industry could produce a trillion-dollar supermarket: "from the reforms of pangdonglai, as long as the original interest structure and mechanism of supermarkets are broken and the ka supplier procurement system is completely abandoned... i believe that under the leadership of mr. ye, china's retail industry will surely embark on a high-speed and healthy path of development and completely defeat e-commerce."

looking back, ye guofu bet on the affordable chain model and the overseas market. today, offline supermarkets are another big bet for ye guofu. whether it is a win or a loss, time will tell.

reference: "with 6.3 billion yuan to buy yonghui supermarket, ye guofu's ambition can no longer be hidden", qiu chuji;

"miniso's stock price plummeted after it announced its acquisition of yonghui, ye guofu: it's right not to understand", jiemian news;

"34 billion guangzhou boss buys 80 billion yonghui at the bottom", 21st century business review;

"6.3 billion bet on yonghui, ye guofu's "mysterious" belief in pangdonglai", consumer bus;

"ye guofu invested 6.3 billion to acquire yonghui, and miniso "spent everything" to help jd.com get out of trouble", source: guanchao new consumption.