MINISO Group Holding Limited

Hello, everyone. Thank you for waiting and welcome to the first half of the second quarter of 2020. Now, all participants are in the listening mode. After the speaker, we will have a Q&A session. Before participating in the Q&A session, please mark your name and organization, and note that this event will be recorded. This phone call will provide English voice transmission. 你可以在Zoom会议中点击传译来选择语言。 我们已于今天早些时候公布了2025年第二季度及上半年业绩, 现在可以在我们的投资者关系网站中查阅。 参加今天会议的有我们的创始人兼首席实行官叶国富先生和首席财务官张静金先生。 Before we continue, I would like to invite everyone to participate in the security statement in our financial news article. This statement will also be applied to this phone call, because we will publish a pre-published statement. Please note that we will discuss non-international financial report standards and financial indicators today. We have also explained these indicators in the documents submitted to the U.S. Attorney General's Office and the Hong Kong Intermediate. and adjust it according to the most comparable index of the international financial report. Unless there is another explanation, the currency units are people's interests. In addition, we have prepared a PPT with financial and business information for today's call meeting. If you are using Zoom meeting, you can see it now. You can also preview it in our investor relations website later. Next, let's invite Mr. Ye Guofu to start speaking.

Hello, everyone. Thank you for waiting and welcome to receive private goods. Hello, everyone. Welcome to participate in the second quarter of the private goods foundation in 2025, which is the first half of the year. In the second quarter, the private goods foundation sales income adjustment, after adjustment, and the adjustment of the EPS will exceed the expectations. The increase in the number of businesses in Taiwan and China or beyond our previous leading range. At the same time, we have achieved significant progress in both the IP strategy and the major power model. Next, we will share with you the performance highlights and key points of this quarter and talk about future strategy planning. In the second quarter, the overall GMV of the company increased by 21%, and the income increased by 23.1%. Since the fourth quarter of the company's power supply, the first positive growth, This has not only exceeded the previous expectations, but also increased the speed of the first quarter. Our two major brands, Mingchao Youping and TopToy, have increased their revenue in the second quarter. Mingchao Youping's brand growth is close to 20%, while TopToy has achieved 87% of its strong revenue growth. In terms of profit and loss, the company's net profit is 44.3%, and the net profit increase is mainly due to The increase in foreign income rates has been optimized in accordance with the interest rate. After the adjustment of this system, the net profit is 8.5 billion, which is 8.5% growth. After the adjustment, the net profit is 17.2%. The trading system has improved significantly. We expect that with the increase in sales in the second half of the year, the net profit will continue to increase. Next, I will cover domestic and overseas. and three major business models to introduce the business situation of this quarter. First of all, the domestic business continues to maintain a high-quality growth. The sales growth is 13.6%. Compared with the past seven years, the total sales of domestic consumer goods has increased by 5.4% and the sales of food products has increased by 6.3%. You can see that the domestic business The increase in domestic business not only surpasses the overall retail market, but also surpasses the increase in online channels, which proves the huge advantage of Mingchang's offline stores. . . . . . . The full-fledged channel upgrade can not only effectively boost the growth of revenue, but also provide a more balanced and high-quality core value for the development of enterprises. In the second quarter, the overseas market grossed more than 1.9 billion yuan, with a 28.6% growth rate. Among them, the U.S. grossed more than 80% of the total growth rate. This growth rate has not only contributed to the increase in power supply, but also to the growth of high-quality new electricity this year. China China 283 of which are not in China, and 10 are not overseas. The effective implementation of the product differentiation strategy has led to continuous improvement in product competitiveness. Tengdian's growth in the second quarter has increased significantly, and Maoliuli has significantly improved. Taobao is also the leader of the Chaohua Corridor, occupying a unique market position. In the future, it will continue to expand its brand stores and Internet, while constantly improving its own brand. and the sales contribution of free IP. Next, I will focus on sharing with you the two strategic movements behind the performance, large-scale strategy and free IP. As of the end of June, Mingchang Youping has already set up 11 micro-computer stores nationwide, covering Shanghai, Beijing, Guangzhou, Chengdu, and the core cities. The average number of micro-computer stores has reached 4 million. Shanghai, Nanjing, Luodian, and global demand stores opened for nine months with a sales of more than 100 million. It broke through the new height of Mingchao's high-end single-storey stores. In June, Nanjing, Deji opened a space store, which is also a long-term product. The product has made a breakthrough into heavy-duty stores. It opened a new space for Mingchao to deploy in high-end stores. Lanliu store has a larger storage space, so as to create different IP theme scenarios. Jinxian, Shambing, and Chengjing's space experience, Lanliu store has realized the modernity and customer value In addition to higher user utilization, Lantian Electronics' single-storied performance not only breaks new heights, but also contributes to the use rate of single-storied electricity with higher than the average level. As a result, Lantian Electronics not only achieves excellent profit performance by itself, but also forms the core strategy of the brand's incubation and creation of the mock-up zone, and continues to provide new growth opportunities for limited-storied and regular-storied electricity. The first new products and limited editions of Ruoyan Electronics were verified by fast data, and they were repackaged into large-capacitated large-capacitated large-capacitated large-capacitated large-capacitated large-capacitated large-capacitated large-capacitated In the last 100 years, we have already opened more than 200 branches in 400 square meters. More than half of them were opened in 2024. These branches are also small and small. The profit is higher than the average water level. You can see that despite the past two seasons, our store has not changed much. But the structure of the channel has been upgraded. We will not simply pursue quantity growth. but to continuously optimize the channels, and to dig up more opportunities through different platforms. Regarding overseas markets and major markets, especially in our largest leading country, the U.S., under the pull of the major market model, the operating situation and brand performance have not only improved, but the new door-to-door electricity cost of the U.S. in 2025 is 1.5 times higher than that of the previous generation, and the average cost is nearly 30% higher, and the rate is also better than that of the previous generation. The core advantage of this product is that it provides a variety of cross-products for different families through large stores, from collection, to cosmetic products, to children's toys and gifts. Since everyone in the family likes fashion toys, large stores can meet the needs of families of all ages, and become the destination for American families to buy fashion goods. So why can only we run into a large store model? I think we can't leave out MINISO's outstanding supply chain and product capability. MINISO has always paid great attention to the development and efficiency of free products. MINISO has more than 90% of its revenue from free products, has thousands of product development and design teams, and has accumulated more than 1,500 global high-quality supply chain resources. Only the absolutely efficient supply chain management capability can support a multi-spec, high-end, high-profile trend of department store large stores. In the future, with the large store model, and the global chain of optimization and demolition. The opening and closing of open space overseas is constantly opening up, and the speed of performance will also make the product more balanced and more stable. Whether in China or overseas, large stores are the core entities of the deepening of the IP stand-alone layout of private goods. The contents of the channels are mutually dependent on each other. Through the continuous innovation of new space experiences, we greatly enrich the IP image. . . . It has reached the highest record of single-storey in the Australian market for the first time in over 500,000 yuan. Another one is the IP strategy. Microsoft has become an unparalleled union leader in the IP field of global acquisition. In the future, we will use the products and capabilities of the past mass-produced products to fully supplement the free IP, which will provide a greater value and potential. Microsoft is an artist and foreign artist IP that has a potential in the global scope. . . . . . We will continue to promote the signing and exhibition of the world's top mid-range mid-range mid-range mid-range mid-range mid-range mid-range mid-range Taiwan China China China China China China China In the global layout, it has a global network of this wide range and quality. In operation, Mingcheng Luxury will also play a full-fledged advantage. From signing artists to design and development, to production, to operation and sales products, each of us is deeply engaged in the function operation and maximizing the potential of AP. This also proves that Mingcheng Luxury is an extremely diversified resource. This is also the reason why to realize the key to the development of cross-border supercars. Microsoft's investment in the free IP field is definitely not a short-term business plan, but a long-term choice based on the trend of the times. In 2020, I first explained the concept of consumer consumption, and the IP is the most important body of consumer consumption. This can successfully implement the IP series, not only bring us better product sales and stronger brand exposure, but also allow us to work globally fully appreciate the potential of IP consumption and the value of the brand. I believe that with the further deepening of IP and large-scale businesses in the future, we will create more marketing and sales mechanisms. At present, the Chinese IP market is also in rapid development, but this is just the beginning. The future development space is still very wide. Looking back at the global development process, from Disney in the United States, HANA, to Japan's WANDAI, 3DU, Ren Tiancheng, In the future, China will also implement its own powerful and practical platform-based IP enterprises. This will be the key system for the rise of a great country, and it will also be an essential cultural asset. In this market full of opportunities, the unique advantage of all-terrain penetration, global deployment, and all-train operation will definitely take the lead in the IP market in China. The goal of the future is to make the IP as strong as possible, not only in China, but also around the world. By deepening the co-operation with global heads to ensure the overall sustainable and stable growth, through the construction of free IP, the differentiation of high-explosive and repeatable sustainable growth, this is the key factor that we are confident in the future growth. Mingtao Youping's new strategic vision is to become the world's leading AP design retail company. According to the channel network, we are currently the world's largest AP product retailer. In 2025, we are expected to generate more than 3.8 billion in sales and more than 2.1 billion in revenue. We are already leading in channel layout, supply chain, product design, and marketing. Next, we will gradually supplement I believe that our vision can be achieved. In the first half of 2025, we have already returned 10.7 billion RMB to shareholders through repurchase and financing. In the first half of the year, the net profit was 84% after adjustment. In the future, the company still insists on reducing the net profit by 50% every year. At the same time, we will continue to carry out repurchase in a dynamic manner to bring back the expected return of shareholders. This is the end of my presentation.

Next, I would like to introduce the financial situation of the second quarter and the first half of the company. Okay, thank you, Mr. Ye. Welcome to today's meeting. Next, I will lead you to review the financial data. First of all, income. Q2, the overall total income of the group reached 49.7 billion yuan, which is 23% of the same increase. This exceeds the upper limit of 18% to 21% of my previous guidance. According to various brands, the income of Mingchuan luxury brands in Q2 is 45.6 billion yuan, which is 20% of the total growth. Mingchuan's income in China is 26.2 billion yuan, which is 14% of the total growth. It was accelerated in the last quarter and exceeded the growth of the low double-digit value that we previously guided. Mingchuan's overseas income is 19.4 billion yuan, which is 29% of the total growth, which is in line with our previous expectations. TopToy's Q2 revenue is 4 billion, with an increase of 87%. It continues to maintain a high-speed growth, exceeding the previous 70% to 80% increase. Looking back at the first half of 2025, the group's overall revenue reached 93.9 billion, with an increase of 21%. In the second half of the year, we are confident that the revenue will continue to accelerate. We don't recommend it. In terms of the structure of the income region, in the first half of 2025, China's domestic income accounted for 62% of the total income. In the same period of 2024, it accounted for 65%. In overseas, it accounted for 38% of the total income. In the same period of 2024, it accounted for 35%. It increased by 3%. In terms of the performance of the same electricity, In Q1 of 2025, the decline of copper electricity is on a much smaller basis than before. In Q2, the performance of domestic famous copper electricity continues to improve. Because last year, Q2 had the high-tech number of Chikawa and Hobao hot sales. Although there is such a high-tech number, we still achieved a positive growth in copper electricity in Q2. In the first half of 2025, the decline of copper electricity sales and the decline of copper electricity sales This performance has been greatly improved and improved. This is due to our continuous channel upgrade, product result optimization, product update, and improvement of operation movements. Since entering Q3, we have seen that the same power supply of domestic private companies has accelerated further in the second quarter. So far, the same power supply of domestic private companies has turned positive from January to August 20th. Looking forward to the second half of the year, we can now tell you very confidently that the same power supply of domestic private companies will definitely achieve positive growth throughout the year. The ability of Mingchuan Oil to quickly achieve the return of copper electricity sales in the competitive Chinese offline market once again proves that our business model has a strong willpower. It also proves that our organization has a strong execution power. Our organization has the energy and learning ability. We have systematized some mature copper electricity growth experience. We started with Q2 and exported part of it to overseas markets. In line with the local In the current situation, overseas markets are fully learning the strategy of China's telecommunications improvement, which has already achieved initial results. In Q2, we saw overseas private telecommunications drop from a medium-high number last quarter to Q2, which is already a low number. Among them, overseas European markets and North American markets' telecommunications have all achieved a medium-high number growth. This has undoubtedly strengthened our confidence in global business growth. In terms of door-to-door growth, our domestic Q2 has turned around the trend of Q1 entry-level stores. In Q2, we achieved a close growth of 30 door-to-door stores. This is more optimistic than what we expected before. We are talking about the progress of brand upgrade channels. Our channel upgrade can be traced to the first big store we opened in Beijing, Guangzhou, in Q3 of Q2. From that time on, we began to discuss how to build a big store and how to operate it. how to improve the door-to-door model, and so on. The iconic event of the upgrade of the channel is that in 2024, Q3, MINISO LAND opened in Donggu, Nanjing, Shanghai. Then in Q2 this year, MINISO SPACE opened in Nanjing, Germany. Our channel upgrade has reached its climax. So far, I am very happy to share with you that the number of our major stores has reached 5% of the number of domestic door-to-door stores. In the first half of the year, has contributed to China's double-digit sales. And this ratio is still rising. For example, in this year's Q2, the top 30 stores are all Minseland and QiJianDian. More importantly, we have already initially formed a seven-storied power station. Mingchao's products will no longer rely on a small store to beat the world, but through the Minseland series, QiJianDian series, ChangguiDian series, and KuaiShanDian, to meet the needs of different business environments. In the whole year of 2025, Mingchang's number of stores in China will continue to grow. Currently, we expect that the number of stores will be between 100 and 150. In terms of structure, we will focus on QiJian and MinSoulLand stores. There will also be regular stores, but regular stores will continue to decline. Mingchang is a single-brand brand. In China, This year, it is expected to achieve a sales volume of more than 160 billion yuan. It is already a very large consumer brand. In 2025, our goal is to achieve double-digit growth year-on-year under the premise that we will not increase the number of stores. This is behind the fact that our Kobi Tongdian will continue to grow healthily, and our new store is of very high quality. There are 94 new overseas Q2 stores, and the store network is steadily expanding. By the end of the first half of the year, the number of overseas stores has increased by 189. The overseas market space is still very large, so we are still planning to add more than 500 stores throughout the year. However, we will be more cautious in evaluating and expanding the branch stores. We previously predicted that about 40% of overseas stores this year would be branch stores. Now we have adjusted to about 35%. This means that in the coming years, we will have a more reasonable capital expenditure and the team will have more energy to focus on the performance improvement of existing stores, and to make full use of the peak of performance in the second half of the year. Next is the interest rate. In terms of interest rate, Q2 increased by 0.4% compared to the same period last year, reaching 44.3%. In the first half of 2025, it was also 44.3%. Compared to the same period last year, it increased by 0.6%. In addition to the increase in overseas revenue of the group that we just mentioned, the effective development of our IP strategy also makes the net profit of overseas business units still increase steadily. The optimization of the product structure of TopToy and TT brands has also stretched the net profit of TT brands. In the future, net profit may be affected by changes in product structure, such as change in product structure, and interference in business organization. However, the increase in overseas revenue and increase in IP sales, We still have room for improvement. Our profit margin is still moving upwards. But we will be more cautious in dealing with profit margin issues. As you know, with our brand's upgrade, the promotion and globalization of our IP strategy, our company's profit margin has increased from 27% in the first half of 2021 to 44% at present. We have also reminded you in the previous phone calls we will pay more attention to balance the price-to-price ratio of our products. On the line of non-IT products, we have to insist on the positioning of the price-to-price ratio of famous products. So, since this year, we have made reasonable adjustments to some categories in domestic and overseas. We have achieved better sales performance and increased the company's profit margin. So, next, we will continue to make similar adjustments under the premise of maintaining a relatively stable overall profit margin. In terms of cost, Q2 total cost increased by 38%, with 43% increase in sales cost and 19% increase in management cost. The sales cost rate is 23%, which is 3% higher than the same period last year. The same increase in sales cost has to do with our investment in Zhiyin Inn. The cost of investment in Zhiyin Inn includes 56.3% increase in labor, rent, and discount sales. Last quarter, the same increase was 71.4%. Therefore, the direct cost of direct cost of direct cost of direct cost of direct cost of direct cost of direct cost of direct cost of direct cost of direct cost As we talked about before, we have more opportunities to invest in direct stores to ensure the success of our future business, especially in strategic overseas markets such as the United States. We believe that the company's early investment in direct stores will release the potential for sales in the second half of this year, and the ability to make a profit will also be at any time. As we talked about before, our investment in Yonghui started to have an impact on our financial statements. Our investment in Yonghui is based on the Settlement Act. Yonghui's impact on our net profit in this quarter is RMB1.19 billion. This project will be excluded from the financial statements for non-international financial statements. The vast majority of it comes from our 29.4% share price ratio, and the Q20 will be in the lowest part. In addition, about RMB 5 million comes from the consumption assessment related to the consumption cost. This part of the consumption cost is expected to be stable at around RMB 5 million in every quarter this year. Regarding profit and loss, we adjusted the profit and loss ratio to 17.2%, which is 0.6% higher than Q1. It dropped by 2.3% compared to last year. Compared to Q1, this drop is narrow and the trend is positive. Let's take a closer look at the reasons behind the drop and why I am confident in the trend of improved profitability. First, let's look at MINISO. Our core domestic joint business has a stable profitability. Some domestic new businesses, such as warehouses, e-commerce, The profit margin of these businesses is lower than that of traditional joint businesses, but the impact is controllable. The decline in the profit margin of overseas businesses is still due to structural changes in income. The income contribution of direct income has been increasing. After the sales boom in the second half of the year, we expect that the impact will weaken and the profit margin will increase. We believe that the profit margin of overseas direct income businesses itself has a lot of room for improvement than our goal. In the future, we want to maintain high growth while maintaining high growth to improve the efficiency of our business. Then there is the TT brand. The profit margin of this quarter has been greatly improved, but we have made some preemptive investments, such as in product development, overseas and IT. This is a very healthy business investment. In the medium term, about 20% of the operating efficiency is what we think is a very reasonable goal for the company. But in the process of growth, we need to give the new business plenty of space and time The net profit of Q2 is 6.9 billion. The net profit rate of Q2 is 13.9%. The EBITDA growth of Q2 is 14.7%. The EBITDA margin of Q2 is 23.1%. In terms of operating capital, our inventory cycle is stable and efficient. Up to 630, the total inventory cycle is 93 days. Last quarter was 102 days. There have been obvious improvements. From the distribution of brands and regions, The technology of Mingchuan overseas and TTE is relatively stable. The number of storage cycles of Mingchuan domestically is significantly shortened. In the supply section, we promote the structural control of SKU, strengthen the standardization of product types, and implement the dynamic storage and water monitoring mechanism to accurately match the supply and demand rhythm. In the storage management section, we established a whole chain of product life cycle tag system. Combining seasonal sales nodes and implementation of differentiated sales strategy, effectively improved the performance of long-term products. This has also set a solid foundation for the improvement of cash flow health and the release of operating capital efficiency. Until the first half of the year, our cash reserves were 74.7 billion, which is still stable. In the first half of the year, our net cash flow was 10.1 billion, of which Q1 was 2.6 billion, and Q2 was 7.5 billion. The cash flow capacity of our business has significantly improved in terms of return on interest. This is due to our improvement in the efficiency of operating capital. 我们的资本分配策略也将继续平衡 我们的快速增长和为我们股东 带来稳定和可预见的回报的承诺 今天我们同步宣布了 2025年中期股息 金额约为人民币6.4亿元 那么大约占了我们上半年调整后 净利润12.8个亿的50% 那么将会在9月份支付给各位股东 我们认为在目前的市场环境下 公司的股价已经严重地 显著第一期内在价值 In the first half of this year, we have repurchased stocks worth RMB 3.4 billion, accounting for nearly 1% of total circulation. This also means that the amount of repurchase in the first half of this year has exceeded the total amount of repurchase last year. This is also the highest amount of repurchase in the first half of the past year. So the repurchase stocks will all be cancelled. In the first half of this year, we have repurchased shares and already paid shares. The repayment of the payment to shareholders has reached RMB 10.7 billion. accounted for 84% of our net profit in the first half of the year, which was 55% in the same period last year. The Board of Directors has also agreed to take advantage of the return of 10% of the total shareholder shares granted at the annual meeting in June this year, and continue to return the shares through Hong Kong in the future, and return the shares to the public market through the 10B5-1 return plan. We believe that the return of shares is the best benefit for our company and shareholders as a whole. Finally, in the third quarter, we remain optimistic about the rapid growth of Yanxun. We expect that the company's income will increase by 25% to 28%, and it will obviously accelerate in the first half of the year. The company's copper chain is expected to increase in the first quarter, and the company's adjusted operating profit is expected to increase in the second quarter. The net profit rate of the new adjustment will continue to improve, and it will continue to shrink compared to the decline. Looking at the whole year of 2025, we expect that the group's revenue will increase by less than 25%, and the growth rate will increase gradually. This is higher than our previous expectation of less than 22.8% for the whole year of 2025. At the same time, we expect that the net profit of the new adjustment in 2025 will be between RMB36.5 billion and RMB38.5 billion. Thank you. That's the end of my presentation.