On Tuesday, JPMorgan initiated coverage on Miniso (NYSE:MNSO), a global retailer specializing in lifestyle products, with an Overweight rating and a price target of $30.00. The company, known for its blind boxes, plush toys, fragrances, and travel accessories, operates 6,561 stores worldwide.
Miniso has been recognized for its successful decade-long partnership with global intellectual property (IP) owners, positioning it as a leader in China's rapidly growing, high-margin IP merchandise market. The retailer has plans to boost its IP sales contribution from 30% in 2023 to 50% by 2028.
The company's growth strategy includes an aggressive push for overseas expansion, particularly focusing on the US and European markets. Forecasts suggest that Miniso's earnings from international operations will increase from 26% in 2023 to 42% by 2026.
JPMorgan's price target is based on a discounted cash flow (DCF) analysis, which values Miniso at 18 times its projected 2025 earnings per share (P/E) and at 0.8 times its 2024 price/earnings to growth (PEG) ratio. This valuation reflects a 27% three-year compound annual growth rate (CAGR) in earnings. The analysis also compares Miniso's valuation with that of PopMart, which is currently not covered by JPMorgan but trades at 22 times P/E and 0.8 times PEG.
The Overweight rating suggests that JPMorgan sees Miniso's stock as a better value than the average stock in the analyst's coverage universe, and the firm expects it to outperform the market over the next 6-12 months.
InvestingPro Insights
As Miniso (NYSE:MNSO) continues to capture the attention of investors with its aggressive expansion and partnership strategies, InvestingPro data and tips provide a deeper dive into the company's financial health and market performance. With a market capitalization of $7.17 billion USD and a promising revenue growth of 51.35% in the last twelve months as of Q4 2023, Miniso's financial trajectory appears robust. The company's P/E ratio stands at 20.92, reflecting investor confidence in its earnings potential. Moreover, a substantial gross profit margin of 42.46% underscores the company's ability to translate sales into profits effectively.
InvestingPro Tips highlight that Miniso holds more cash than debt on its balance sheet, suggesting a strong liquidity position. Additionally, the company's consistent dividend growth, with dividends raised for three consecutive years, provides an attractive proposition for income-seeking investors. This financial stability is further reinforced by the fact that Miniso's cash flows can sufficiently cover interest payments, assuring stakeholders of its capability to manage debt obligations.
For readers interested in a comprehensive analysis and additional insights, InvestingPro offers more tips on Miniso, which can be accessed at https://www.investing.com/pro/MNSO. With a total of 9 additional tips available, investors can use the coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking valuable information to inform their investment decisions.
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