Nomura: Miniso's profitability faces greater pressure, lowering the target price for US stocks by 3%.

On May 26, Nomura reported that the profit of MINISO (MNSO.N) in the first quarter of this year did not meet expectations, and the tone of the guidance for the whole year of 2025 weakened, and the business improvement has not yet appeared. Therefore, the target price of the group's U.S. stocks was lowered by 3%, from $23.2 to $22.5. Maintain BUY. According to the report, the weaker-than-expected profit in the first quarter was due to a 4 percentage point year-on-year decline in the group's operating margin, mainly due to the increase in the revenue contribution of the lower-margin overseas direct sales (DTC) business and the lower profit margin of DTC stores in Central America and China. According to the report, MINISO maintained its expectation that revenue growth in 2025 would be faster than in 2024, but also said that it would revisit it at the end of the second quarter of 2025, that is, adjusted earnings growth in 2025 will be faster than expected in 2024. Nomura sees this as a sign of greater pressure on the group's profitability and will be keeping a close eye on the record of slower earnings growth than revenue growth in the U.S., which has been the case for four quarters.