Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

After rallying 76% from the IPO price to US$ 35.21 per ADS during the first four months, <a href="https://www.smartkarma.com/entities/miniso-group-holdings" target="_blank" data-smartkarma-citation="entities:29673:1" rel="noopener">MINISO Group Holdings (MNSO US)</a> is currently trading 7.5% below the IPO price, primarily due to the negativity created by Beijing’s anti-monopoly and data security probes and efforts to clampdown domestic companies from listing their shares in overseas markets.
Considering the nature of Miniso’s business operations, we think it is unlikely that Miniso will face targeted regulatory action from the Chinese government, and therefore, we think the current dip in the share price presents an opportunity to own a high-quality company with long- term earnings growth potential.

After rallying 76% from the IPO price to US$ 35.21 per ADS during the first four months, MINISO Group Holdings (MNSO US) is currently trading 7.5% below the IPO price, primarily due to the negativity created by Beijing’s anti-monopoly and data security probes and efforts to clampdown domestic companies from listing their shares in overseas markets.
Considering the nature of Miniso’s business operations, we think it is unlikely that Miniso will face targeted regulatory action from the Chinese government, and therefore, we think the current dip in the share price presents an opportunity to own a high-quality company with long- term earnings growth potential.

Miniso Slides 47% Amidst Beijing’s Clampdown on ADRs: Large Upside Possible Once the Dust Settles

<a href="https://www.smartkarma.com/entities/miniso-group-holdings" target="_blank" data-smartkarma-citation="entities:29673:1" rel="noopener">MINISO Group Holdings (MNSO US)</a>’s share price has been under pressure over the last two months with the lock-up period for the shares held by directors, executive officers and the pre-IPO investors scheduled to end on 13th April 2021. The dip in share price, leading up to the lock-up expiry has us quite interested on the long side and we would consider accumulating more shares at the current price levels.

MINISO Group Holdings (MNSO US)’s share price has been under pressure over the last two months with the lock-up period for the shares held by directors, executive officers and the pre-IPO investors scheduled to end on 13th April 2021. The dip in share price, leading up to the lock-up expiry has us quite interested on the long side and we would consider accumulating more shares at the current price levels.

MINISO’s Impending Lock-Up Expiry: A Chance to Accumulate More Shares

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Pop Mart International Group L / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/pop-mart-international-group-limited" target="_blank" data-smartkarma-citation="entities:29016:1" rel="noopener">POP MART (POP HK)</a> is the largest and fastest-growing pop toy company in China, as measured by revenue in 2019 and revenue growth from 2017 to 2019, respectively, according to Frost &amp; Sullivan. “Pop Mart” has become the most popular pop toy brand in China. Pop Mart has filed its PHIP and is pre-marketing to raise $200-300 million through a Hong Kong IPO, according to press reports. <div class="content-highlight">In <a href="https://www.smartkarma.com/insights/pop-mart-international-ipo-initiation-state-of-play" target="_blank" data-smartkarma-citation="insights:42200" rel="noopener">Pop Mart International IPO Initiation: State of Play</a>, we stated that setting aside the short-term negative impact due to COVID-19, Pop Mart presents a unique opportunity to gain exposure to China’s pop toy retailing market. The 1H20 results disclosed in the PHIP demonstrate that Pop Mart has navigated a tough trading environment by delivering creditable growth and margin. With the impact of the COVID-19 outbreak gradually receding in China, Pop Mart has strong fundamentals to ride a recovery in demand for pop toys. Overall, we continue to believe that Pop Mart’s fundamentals are attractive.</div>

POP MART (POP HK) is the largest and fastest-growing pop toy company in China, as measured by revenue in 2019 and revenue growth from 2017 to 2019, respectively, according to Frost &amp; Sullivan. “Pop Mart” has become the most popular pop toy brand in China. Pop Mart has filed its PHIP and is pre-marketing to raise $200-300 million through a Hong Kong IPO, according to press reports. In Pop Mart International IPO Initiation: State of Play, we stated that setting aside the short-term negative impact due to COVID-19, Pop Mart presents a unique opportunity to gain exposure to China’s pop toy retailing market. The 1H20 results disclosed in the PHIP demonstrate that Pop Mart has navigated a tough trading environment by delivering creditable growth and margin. With the impact of the COVID-19 outbreak gradually receding in China, Pop Mart has strong fundamentals to ride a recovery in demand for pop toys. Overall, we continue to believe that Pop Mart’s fundamentals are attractive.

Pop Mart International IPO: Creditable Performance in Tough Times

Asia Consumer Research, Investory

Devi Subhakesan

Asia Consumer Research

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

In this note, we reiterate why investors with a focus on fundamentals should avoid <a href="https://www.smartkarma.com/entities/miniso-group-holdings" target="_blank" data-smartkarma-citation="entities:29673:1" rel="noopener">MINISO Group Holdings (MNSO US)</a>. Miniso's business model lacks the competitive edge or a long term sustainable growth potential to justify its stock valuations. The stock is currently trading marginally above its October 15th listing price of US$20. It's cheaply sourced, cute looking, low-value variety discretionary products has neither a strong customer base nor a clear brand identity. We highlight that offline-based discount retailers of discretionary products, like Miniso, that were upended by the pandemic but has limited prospects to pivot online, are not COVID-recovery plays. Expect sales to slow down versus pre-COVID levels, both in terms of same-store sales and store network expansion. In our earlier report <a href="https://www.smartkarma.com/insights/miniso-mnso-us-impulse-shopper-s-paradise-not-a-sustainable-growth-model" target="_blank" data-smartkarma-citation="insights:44050" rel="noopener">Miniso (MNSO US): Impulse Shopper's Paradise. Not a Sustainable Growth Model.</a> we discussed why we find Miniso's business model not appealing and how it lacked a competitive advantage. Unsurprisingly, competitors with very similar products and sales strategies are already in the market.

In this note, we reiterate why investors with a focus on fundamentals should avoid MINISO Group Holdings (MNSO US). Miniso's business model lacks the competitive edge or a long term sustainable growth potential to justify its stock valuations. The stock is currently trading marginally above its October 15th listing price of US$20. It's cheaply sourced, cute looking, low-value variety discretionary products has neither a strong customer base nor a clear brand identity. We highlight that offline-based discount retailers of discretionary products, like Miniso, that were upended by the pandemic but has limited prospects to pivot online, are not COVID-recovery plays. Expect sales to slow down versus pre-COVID levels, both in terms of same-store sales and store network expansion. In our earlier report Miniso (MNSO US): Impulse Shopper's Paradise. Not a Sustainable Growth Model. we discussed why we find Miniso's business model not appealing and how it lacked a competitive advantage. Unsurprisingly, competitors with very similar products and sales strategies are already in the market.

Miniso (MNSO US): Cute and Cheap Is Not a Competitive Edge. Not for LT Keep.

The Chinese variety retailer, <a href="https://www.smartkarma.com/entities/miniso-group-holdings" target="_blank" data-smartkarma-citation="entities:29673:1" rel="noopener">MINISO Group Holdings (MNSO US)</a> raised $608 million in a U.S. initial public offering on 15th October 2020. The company sold 30.4m ADS at $20.00 apiece after marketing them at $16.50 - $18.50 per ADS.Miniso opened trading at $24.40 per ADS, up 22% from the IPO price and closed the first trading day at $20.88 per ADS. Miniso shares rallied again on Friday and closed the week at $23.18 per ADS.Previously we discussed the company, its business model and financials in <a href="https://www.smartkarma.com/insights/miniso-ipo-long-term-growth-prospects-secured-by-a-sustainable-competitive-advantage" target="_blank" rel="noopener">MINISO IPO: Long Term Growth Prospects Secured By a Sustainable Competitive Advantage</a> and <a href="https://www.smartkarma.com/insights/miniso-ipo-as-appealing-as-miniso-products" target="_blank" rel="noopener">MINISO IPO: As Appealing As MINISO Products</a>, about valuation in <a href="https://www.smartkarma.com/insights/miniso-valuation-valued-like-miniso-merchandise-bang-for-the-buck" target="_blank" rel="noopener">MINISO Valuation: Valued Like MINISO Merchandise - Bang for the Buck</a> and <a href="https://www.smartkarma.com/insights/miniso-deserves-more-than-the-ipo-valuation" target="_blank" rel="noopener">MINISO Deserves More Than The IPO Valuation</a>.

The Chinese variety retailer, MINISO Group Holdings (MNSO US) raised $608 million in a U.S. initial public offering on 15th October 2020. The company sold 30.4m ADS at $20.00 apiece after marketing them at $16.50 - $18.50 per ADS.Miniso opened trading at $24.40 per ADS, up 22% from the IPO price and closed the first trading day at $20.88 per ADS. Miniso shares rallied again on Friday and closed the week at $23.18 per ADS.Previously we discussed the company, its business model and financials in MINISO IPO: Long Term Growth Prospects Secured By a Sustainable Competitive Advantage and MINISO IPO: As Appealing As MINISO Products, about valuation in MINISO Valuation: Valued Like MINISO Merchandise - Bang for the Buck and MINISO Deserves More Than The IPO Valuation.

MINISO IPO Trading Update: More Upside Left, But Wait For Better Pricing Or Momentum

China

Hainan Island Construction Co Ltd.  is a property development company. The Company also operates regional malls and hotels.

Guangzhou Friendship Group Co., Ltd operates supermarkets and department stores in Guangzhou, China.  The Company sells a variety of consumer products, including apparel, food and beverages, electronics, jewelry, cosmetics, and electric appliances.  Guangzhou Friendship also leases real estate properties.

Guangzhou Friendship Group Co, Ltd. (000987 CH)

Wangfujing Group Co., Ltd. owns and operates department stores in Beijing, Guangzhou, Chengdu, Wuhan, and other cities in China.  The Company also develops residential real estate.

Golden Eagle Retail Group Limited operates department stores in China. The Company's stores target mid-range and high-end market segments in China, and contain various functions and amenities such as dining, entertainment, beauty and personal care, cinemas, and preschool education in addition to their core function as an international department store.

Tianjin Quanye Bazaar (Group) Co., Ltd. owns and operates department stores and supermarkets, as well as sells general merchandise on a wholesale basis. Tianjin Quanye also provides storage and cargo delivery services, and invests in real estate and interior decoration businesses.

Xian International Medical Investment Co Ltd is principally engaged in the medical services industry.

Xian International Medical Invest (000516 CH)

Nanjing Xinjiekou Department Store Co. Ltd. operates department stores in Nanjing, Jiangsu.  Through its subsidiaries, the Company also develops real estate and manufactures pharmaceuticals.

Nanjing Xinjiekou Department S (600682 CH)

Beijing Urban-Rural Trade Centre Co. Ltd. operates department stores and supermarkets. The Company also provides food and entertainment services, as well as develops real estate.

Beijing Urban Rural Trade Centre Co. (600861 CH)

Chengdu Hongqi Chain Company Limited operates convenience stores chain. The Company's main products are food, alcoholic drinks and tobacco, and other daily necessities.

Chongqing Department Store Co., Ltd. operates retail stores in Chongqing.  The Company also operates a wholesale business.

Chongqing Department Store Co. (600729 CH)

Harvey Norman Holdings Limited is a holding company for companies and trusts in a third party franchise agreement. The franchises operate stores under the name "Harvey Norman Discounts," selling home wares and electrical goods. The Company also provides advisory and advertising to the franchises. In addition, the Company provides consumer finance and has property investments.

RYOHIN KEIKAKU CO., LTD. is a retailer and wholesaler of Mujirushi Ryohin brand products, which were originally a generic private-brand product.  The Company's product line includes knitwear, food, and household items

Ollie's Bargain Outlet Holdings, Inc. operates a chain of retail stores that offers brand name products at discounted and closeout prices. The Company provides products, including housewares, food, books and stationery, bed and bath, floor coverings, toys, and hardware.

Ollie'S Bargain Outlet Holdings (OLLI US)

Dillard's, Inc. operates retail department stores located primarily in the southwestern, southeastern, and midwestern United States. The Company offers name-brand and private-label merchandise, including fashion apparel and home furnishings.

Macy's, Inc. operates department stores in the United States.  The Company also operates direct mail catalog and electronic commerce subsidiaries. Macy's retail stores sell a wide range of merchandise, including men's, women's and children's apparel and accessories, cosmetics, home furnishings and other consumer goods.

Nordstrom, Inc. is a fashion retailer of apparel, shoes, and accessories for men, women, and children.  The Company operates through multiple retail channels, discount stores, boutiques, catalogs, and on the Internet. Nordstrom, Inc. also offers, through a subsidiary, private label card credit and debit cards.

B&M European Value Retail S.A. operates as a general merchandise discount retailer. The Company sells products ranging electronics to home goods.

Canadian Tire Corporation Limited is a family of businesses that includes a retail segment, a financial services division and CT REIT. The Company's retail business provides Canadians with products for life in Canada across its living, playing, fixing, automotive and seasonal categories. Canadian Tire Corporation's  retail products include casual, industrial and active wear.

PT GoTo Gojek Tokopedia Tbk operates as an e-commerce platform. The Company offers mobility, food delivery, logistics, e-commerce, and financial technology solutions. GoTo Gojek Tokopedia serves customers in Indonesia.

Central Retail Corp Ltd operates general merchandise stores. The Company offers electronics, sports, stationery, home improvement, and office products. Central Retail serves customers in Thailand.

MINISO Group Holding is a value retailer with a focus on offering products that are aesthetically pleasing, good-quality, and affordable.

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Miniso (MNSO US)

Miniso Slides 47% Amidst Beijing’s Clampdown on ADRs: Large Upside Possible Once the Dust Settles

It seems like Miniso is collateral damage in China’s crackdown on big tech companies, as the retailer poses no serious threat to the Chinese...

Oshadhi Kumarasiri

MINISO’s Impending Lock-Up Expiry: A Chance to Accumulate More Shares

We believe the pressure on share price immediately before the lock-up expiry is somewhat unwarranted and presents a good entry point to MINISO.

Oshadhi Kumarasiri

Pop Mart International IPO: Creditable Performance in Tough Times

Pop Mart has filed its PHIP and is pre-marketing a $200-300 million HK IPO. The 1H20 results show that Pop Mart has navigated a tough trading...

Arun George

Miniso (MNSO US): Cute and Cheap Is Not a Competitive Edge. Not for LT Keep.

We reiterate why investors with a focus on fundamentals should avoid MNSO US. Miniso's business model lacks a competitive edge or a sustainable...

Devi Subhakesan

MINISO IPO Trading Update: More Upside Left, But Wait For Better Pricing Or Momentum

Miniso raised $608 million in a U.S. initial public offering on 15th October 2020. The company sold 30.4m ADS at $20.00 apiece after marketing them...

Oshadhi Kumarasiri

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