GUANGZHOU - MINISO Group Holding Limited (NYSE: MNSO; HKEX: 9896), a global value retailer, announced Monday its plans to acquire a 29.4% stake in Yonghui Superstores Co., Ltd., a prominent retail chain in China. The transaction, valued at approximately RMB6.3 billion, will make MINISO the largest single shareholder of Yonghui.
Yonghui, which has been listed on the Shanghai Stock Exchange (stock code: 601933) since 2010, operates around 850 supermarkets across China, specializing in fresh produce and daily necessities. The company has consistently been ranked second in sales scale among China's top 100 supermarkets in recent years and reported revenue of around RMB78.6 billion in 2023.
The share purchase agreements involve Guangdong Juncai International Trading Co., Ltd., a wholly-owned subsidiary of MINISO, and several shareholders, including The Dairy Farm Company, Limited, a member of the Jardine Matheson Group, along with entities indirectly wholly-owned by JD (NASDAQ:JD).com, Inc. (NASDAQ: JD; HKEX: 9618 and 89618).
The agreed per share price of RMB2.35 represents a 3.1% premium over Yonghui's closing price on the Shanghai Stock Exchange as of September 20, 2024. MINISO plans to fund the acquisition through internal financial resources and external financing. The transaction is expected to close in the first half of 2025, pending customary closing conditions, including antitrust clearance and approvals from regulatory bodies and MINISO's shareholders.
Guofu Ye, Chairman and CEO of MINISO, expressed confidence in the growth potential and long-term value this deal brings to shareholders. He anticipates that the collaboration will enable both companies to share resources, enhance economies of scale, optimize costs, and create consumer value. Furthermore, Ye reaffirmed the company's commitment to growing its core business at a compound annual growth rate of at least 20% over the next five years, not accounting for the potential impact of this transaction.
The acquisition is expected to diversify MINISO's business and mitigate cyclical risks by expanding into the essential goods sector. This information is based on a press release statement, and as the completion of the transaction is still subject to various conditions, shareholders and potential investors are advised to exercise caution when dealing in the securities of the company.
InvestingPro Insights
As MINISO Group Holding Limited (NYSE: MNSO; HKEX: 9896) makes a strategic move to acquire a significant stake in Yonghui Superstores, the company's financial health and market performance come into the spotlight. The InvestingPro data indicates that MINISO has a market capitalization of $5.09 billion, reflecting its substantial size in the retail sector. The company's P/E ratio stands at a balanced 15.93, suggesting that its stock is reasonably valued in relation to its earnings. Additionally, MINISO has demonstrated robust revenue growth, with an impressive 39.43% increase over the last twelve months as of Q2 2024.
One key InvestingPro Tip for MINISO is its notable cash position, holding more cash than debt, which could provide a solid foundation for financing the acquisition and future expansions. Moreover, the company has a track record of raising its dividend for 4 consecutive years, signaling a commitment to returning value to shareholders.
Investors may also take interest in MINISO's recent performance, with a significant return over the last week, and analysts predicting the company will be profitable this year. These factors, combined with the company's status as a prominent player in the Broadline Retail industry, could suggest a positive outlook for MINISO post-acquisition. For more in-depth analysis and additional InvestingPro Tips, there are 10 more tips available on InvestingPro's platform, which can be accessed at https://www.investing.com/pro/MNSO.
The strategic acquisition of Yonghui could potentially strengthen MINISO's market position and diversify its business, aligning with the company's growth objectives. As MINISO navigates this significant expansion, investors and stakeholders will be watching closely to see how this move will influence the company's financial trajectory and market performance.
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