1. Financial Performance Overview

MINISO delivered robust revenue growth in fiscal year 2025, with total revenue climbing to RMB 21.44 billion, up 26.2% from RMB 16.99 billion in 2024. Gross profit also surged to RMB 9.65 billion, reflecting strong topline expansion and improved cost management. However, investors should note a significant decline in profit metrics: operating profit remained flat at RMB 3.30 billion (2024: RMB 3.32 billion), while profit before taxation dropped sharply to RMB 1.91 billion from RMB 3.35 billion a year earlier. Net profit attributable to equity holders plummeted to RMB 1.21 billion (from RMB 2.64 billion), with diluted earnings per share at RMB 0.98, compared to RMB 2.10 in 2024.

• Adjusted net profit (excluding non-recurring and non-cash items) grew to RMB 2.90 billion (2024: RMB 2.72 billion), demonstrating underlying core earnings resilience despite headline profit pressure.
• Adjusted EBITDA rose to RMB 4.96 billion, up from RMB 4.33 billion.

Key reason for headline profit decline: A range of non-operating items impacted results, including equity-settled share-based payment expenses (RMB 367.9 million), interest expenses related to the new Equity Linked Securities and bank loans for the Yonghui Superstores acquisition (totaling RMB 278.97 million), and a substantial share of loss from Yonghui (RMB 812.7 million), as well as fair value changes in derivatives and redemption liabilities.

2. Capital Management and Shareholder Returns

• Dividends: For 2025, MINISO declared and paid total dividends of USD 0.1541 per share (final and interim combined), reflecting a strong commitment to shareholder returns.
• Share Buyback: A total of 41.07 million shares have been repurchased from 2021-2025, underlining management’s confidence in the company’s value and a focus on rewarding shareholders.
• Dividend Policy: As of March 31, 2026, MINISO’s board approved an amended policy to distribute around 50% of adjusted net profit as dividends annually, based on cash position and performance. This provides clarity and predictability for investors seeking income.

3. Strategic Investments and Financing

• Equity Linked Securities: In January 2025, MINISO issued US\$550 million of equity linked securities, listed on the SGX, with a seven-year maturity and an initial exercise price of US\$8.2822 per share, subsequently adjusted lower to US\$7.8525 due to dividend distributions. The securities are convertible, but settled wholly in cash, and include a call spread structure to defer dilution and optimize capital structure.
• Use of Proceeds: The net proceeds (US\$457 million) are earmarked for overseas store expansion, supply chain development, brand promotion, working capital, and further share buybacks.
• Yonghui Superstores Stake: MINISO’s acquisition and subsequent share of loss in Yonghui has negatively impacted reported profits. The company’s equity interests in investees (RMB 3.82 billion) are pledged for related borrowings, a common industry practice.

Balance Sheet Note: As of December 31, 2025, the gearing ratio stood at 66.9%, reflecting increased leverage from the new financing arrangements.

4. Financial Risks and Sensitivities

• Foreign Exchange: MINISO’s reporting currency is RMB, but significant revenues are in USD. FX fluctuations can materially impact reported results. For every 1% movement in USD, the effect on profit is approximately RMB 2.1 million. The company does not currently hedge FX risk with derivatives, which could expose returns to currency volatility.
• Interest Rate Sensitivity: A 100 basis point change in rates impacts profit by around RMB 57.5 million, given the company’s significant interest-bearing liabilities.

5. Key Risks and Price-Sensitive Factors for Shareholders

• Profit Volatility: Investors should closely monitor future reported profits, as they may continue to be affected by non-operating items such as equity investment results, changes in derivative fair values, and financing costs, which are not reflective of core retail operations.
• PRC Regulatory Environment: The annual report reiterates significant risks related to operating in China, including legal, regulatory, and policy changes. These could affect the company’s business model or valuation, especially if the Chinese government intervenes or imposes new controls on offshore listings or capital repatriation.
• HFCAA and US Listing Risk: The company faces potential delisting risk in the US if the PCAOB is unable to fully inspect its auditors. This could materially and adversely affect the value and liquidity of MINISO’s ADSs.
• Concentration of Control: A small number of controlling shareholders (notably founder Mr. Ye and associated entities) hold significant voting power, which could limit minority investor influence and affect corporate actions, including M&A or change-of-control scenarios.
• Share-based Payments Dilution: Ongoing share-based compensation and new share issuances under the 2020 Share Incentive Plan may dilute existing shareholders’ stakes over time.
• Potential Share Dilution: The call spread and equity linked securities are structured to defer dilution, but if exercised in the future, may lead to significant increases in share count and impact share value.

6. Governance and Other Notable Points

• Governance: MINISO maintains compliance with both HKEX and NYSE governance standards, with ongoing board independence and audit oversight.
• Change of Auditor: Ernst & Young has been appointed as the new auditor, replacing KPMG, effective after the June 2025 AGM, a move investors may wish to monitor for future audit opinions.
• No Material Litigation: The company was not involved in any material litigation during the reporting period.

7. Conclusion: Investment Implications

• Growth Trajectory: Strong topline and underlying earnings growth signal continued international expansion and brand health.
• Profit Recognition: Investors should look beyond headline profit volatility, focusing on adjusted metrics for core performance.
• Capital Returns: The commitment to high dividend payout and share buybacks is a positive for shareholder value.
• Risks: Elevated leverage, exposure to PRC regulatory changes, and the risk of US delisting are key downside risks that should not be ignored.
• Price-Sensitive Triggers: Any future policy shifts, regulatory interventions, material FX movements, or significant developments with the Yonghui investment or equity-linked securities could trigger share price volatility.