At a critical time when the market focused on the situation of Chinese brands going overseas, Mingchuang Premium (NYSE: MNSO, HKEX: 09896) lived up to expectations and handed over an extremely excellent “report card” for the 2024 quarterly report. This outstanding student in the consumer sector has once again advanced with creative exploration of the global market and brand renewal, setting the development tone for strong growth amidst “consumption headwinds,” and is most intuitively reflected in his performance.
On May 14, Mingchuang Premium announced financial results for the first quarter of 2024. This quarter, Mingchuang Premium continued its high-quality development trend. Overall revenue increased steadily. Many business indicators such as gross profit margin and net new stores all reached record highs, and the results of upgrading the global brand strategy were remarkable.
What is invaluable is that on top of last year's high performance base, the fundamentals of Mingchuang Premium will continue to advance rapidly in 2024. As mentioned earlier, the revenue of Mingchuang Premium increased 26% year-on-year to 3.72 billion yuan in the first quarter of this year, breaking the record high for the first quarter.
While the scale is growing steadily, the company's profit performance is also strong. According to the data, Mingchuang Premium's non-IFRS (non-IFRS) adjusted net profit margin for the first quarter during the Q1 period was 16.6%; adjusted net profit was 620 million yuan, an increase of 28% over the previous year.
It is worth mentioning that the rapid increase in revenue of Mingchuang Premium stems from a 19.3% year-on-year increase in the average number of stores at the group level and an increase of about 9% in same-store sales, which confirms the high quality of core business development. At the same time, benefiting from the increased share of direct sales in overseas revenue and TOPTOY's gross margin optimization, the company's gross margin for the quarter was 43.4%, an increase of 4.1 percentage points over the previous year, once again reaching a record high.
Using Mingchuang Premium's quarterly report as an observation window, the company's high growth in all aspects of business and profit during the period may have “spoiled” that the company's annual performance will once again soar above the high base of 2023. Looking back at the first quarter, the steady progress of Mingchuang Premium's globalization strategy and the comprehensive upgrade of the “superbrand” strategy began to play a huge leading role.
Overseas markets, which are full of room for imagination, are providing a steady stream of growth momentum for the growth of Mingchuang Premium products. In the first quarter, Mingchuang Premium's overseas revenue reached 1,222 billion yuan, an increase of 53% year on year. Among them, the revenue growth rate of the overseas direct sales market was as high as 92% year on year, and it has achieved a year-on-year increase of more than 80% for 4 consecutive quarters. Direct market revenue accounts for about 58% of overseas revenue, fully verifying the success and necessity of the global strategy.
Meanwhile, the pace of Mingchuang Premium's global store opening is further accelerating: by the end of the first quarter of 2024, the number of Mingchuang Premium stores worldwide reached 6,630, of which 4,034 stores were located in mainland China, achieving a net increase of 108 stores at the end of March, nearly double the number of net new stores in the same period last year; the number of stores located in overseas markets was 2,596, which achieved a net increase of 109 stores at the end of March.
Among them, “super stores” have contributed greatly to the benchmarking role: with their unique IP consumption scenario experience, “super stores” have become an important engine for brand performance growth. In the domestic market, on March 18, the two new flagship stores of Mingchuang Premium Beijing and Heshenghui both exceeded 400 square meters. They continued the innovative expression of “Super IP” + “Super Store” in space design, further deepening the brand's positioning as a “Global IP Co-branded Collection Store” and bringing consumers an immersive shopping experience.
With the outstanding performance of “super stores” in domestic business, Mingchuang Premium has accelerated its global layout, and the market performance of major overseas stores has also become the main driving force for overseas revenue. In May 2023, Mingchuang Premium opened its first global flagship store in Times Square in New York, USA, becoming “the first Chinese brand to enter Times Square in New York, USA”. The sales volume of the store exceeded 550,000 yuan on the first day of opening, and monthly revenue reached a new high of global store monthly revenue with a record of nearly 10 million yuan. This quarter, Mingchuang Premium has successively opened IP joint collection stores in markets such as Malaysia and Vietnam, and continues to focus on cultivating high-potential stores.
From another perspective, the core factors driving Mingchuang Premium's high performance also include its comprehensive and differentiated IP product matrix, which is an important reason why Mingchuang Premium can boldly experiment with the “big store” strategy. Over the past few years, the company has been supported by strong product innovation capabilities and rich IP accumulation, enabling its stores to quickly achieve high conversion rates and seize the global consumer market with replicable superstore experience.
Financial reports show that Mingchuang Premium has extremely strong IP conversion capabilities. In the first quarter, the sales share of IP products reached 26%. Among them, domestic IP products account for about a quarter, and the share of overseas IP increased sharply to more than 40% over the same period last year. By 2028, the company expects the target share of IP sales to reach an astonishing 50%.
During the quarter, Mingchuang Premium IP's ability to empower innovative products was more tangible: Following world-renowned IP collaborations such as Disney, Sanrio, and Barbie, in March of this year, Mingchuang Premium launched a major IP partnership with the “Top” comic “Chiikawa” (domestic translation: Jiikawa) to launch its first domestic IP partnership to sell accessories, bags, dolls, etc., to create a sample of the increase in the quality of interested consumption.
Even under the restrictions of many conditions such as purchase restrictions and time limits, Chiikawa's pop-up stores performed very well. At Guangzhou's Zhengjia Plaza and Shenzhen's Bao'an Yifangcheng, you can see people queuing up every day; the first domestic joint Shanghai Jingda Joy City pop-up store also continues to spark an elephant consumption boom.
It is easy to see that Mingchuang Premium is using accurate insight and exploration of the potential interests of young people around the world to launch a series of “good-looking, fun, and easy to use” new products with interesting consumer characteristics. These self-operated products generally have higher profit margins and commercial value, and are also more in line with the company's strategic positioning of “using IP strategy as the starting point and strategic categories as the foundation”, forming an unreplicable brand advantage.
According to the Zhitong Finance App, it would be more accurate to position Mingchuang Premium as a “global IP co-branded collection store”. Through insight into consumer trends to seize user mentality, create a rich product matrix to promote consumption, and consolidate stickiness through community influence, it is expected that high-quality IP+ cost-effective + diversified products will gradually be transformed into a driving force for customer acquisition and commercial monetization, and its growth value is being focused on the market.
As far as market expectations for 2024 are concerned, domestic and foreign brokerage investment banks, including CICC, Fangzheng Securities, Guojin Securities, and Zheshang Securities, generally maintain their optimistic views on the future market of Mingchuang Premium Products.
A number of securities institutions' post-performance updates indicate that the company has both cost performance and consumer interest attributes, and has broad potential in overseas markets. It has grasped the focus of young people around the world who are interested in spending, upgraded its positioning to a new consumer brand representing a beautiful lifestyle and a high degree of globalization, setting the long-term growth trend for channel brands in the future.
Back from the perspective of the capital market, after consumption has gone through a historical stage of rapid progress and blooming everywhere, various sectors within China's consumer market have become more and more clearly divided in recent years. At a time when the market's investment preferences are changing, and new consumer companies, typified by the young consumer group of Gen Z, are becoming “favored” for active capital and institutional capital. Among these, interest consumption is undoubtedly the most eye-catching “gold” circuit. Unfortunately, due to market pessimism, the overall stock price performance of the consumer industry has been weak over the past year, and the market has not given sufficient valuation premiums to leading players.
As a leading consumer company of interest, Mingchuang Premium is undoubtedly the most promising individual stock brand on this track. According to Wind data, the market predicts that the net profit of Mingchuang Premium in 2024-2026 will reach 2,529 billion yuan, 3.135 billion yuan, and 3,799 billion yuan respectively. Based on the closing price on May 14, the corresponding PE is 21.36 times, 17.23 times, and 14.22 times, respectively. As Mingchuang Premium launches new IP products and “super stores” and “super IPs” join forces to open up space for the company's growth, it is foreseeable that it will continue to fulfill growth expectations. At that time, the company's stock price and valuation will eventually return in value.