BOCOM INTL: Maintains Buy rating on MNSO (09896), lowers target price to HK$45.50

BOCOM INTL released a research report stating that it maintains a buy rating for MNSO (09896). Considering the structural impact of changes in business composition on profit margins, the firm has lowered its profit forecast for 2026-27 by 7-10%, still based on a 16x expected P/E ratio for 2026, consequently adjusting the target price to 45.50 Hong Kong dollars (previously 48.7 Hong Kong dollars). BOCOM INTL's main points are as follows: Annual performance meets expectations, steady growth in domestic and overseas business In 2025, the company's revenue increased by 26.2% year-on-year to 21.44 billion yuan, and adjusted operating profit increased by 7.9% year-on-year to 3.67 billion yuan, in line with the company's previous performance guidance; adjusted net profit increased by 6.5% year-on-year to 2.9 billion yuan. The company continues to deepen globalization, IP collaborations, and flagship store strategies to enhance growth quality and brand momentum. The company expects high double-digit year-on-year growth in group revenue in 2026, with accelerated growth in adjusted operating profit and net profit compared to 2025. Steady growth in mainland China business driving store upgrades and product innovation In 2025, MNSO's revenue from mainland China operations increased by 16.8% year-on-year, with same-store sales improving sequentially throughout the year (double-digit growth in same-store sales year-on-year in 4Q25), ultimately achieving mid-single-digit year-on-year growth for the full year. In 2025, the company added 182 new stores in mainland China, totaling 4,568, with the new MINISOLAND store type strengthening channel upgrade momentum. In terms of IP, the company has 30-40 proprietary IPs in reserve, aiming to continuously enhance sales contribution through store image upgrades and experiential IP promotions. The synergistic effect of the flagship store strategy and IP matrix effectively drives traffic and average spending. Looking ahead to 2026, the company will continue to promote store upgrades, with same-store sales expected to continue to improve year-on-year. Advancing overseas business expansion, strong performance in direct markets In 2025, MNSO's overseas business revenue increased by 29.3% year-on-year, with a slight decrease in same-store sales year-on-year; overseas stores increased by 465 to 3,583, with direct-operated stores increasing by 197 to 700. In the North American market, revenue increased by 68% year-on-year, with mid-single-digit growth in same-store sales for the full year; after optimizing store operations, cost control, and adjusting product strategies to focus on high turnover and high-margin items, there is believed to be room for further improvement in the profit margin of direct-operated stores in the United States. Looking ahead to 2026, the trend in the US market in January and February is positive, with optimization of SKU structure and focus on high turnover and high-margin items expected to improve the operating profit margin year-on-year for the full year; in the Southeast Asian market, the focus will be on Thailand, Malaysia, Indonesia, and the Philippines, replicating the China Paradise store model to drive same-store improvement.