"It's right that everyone can't understand it, and if they all understand it, I won't have a chance."
On the evening of the 23rd, a big melon suddenly appeared in the capital market - MINISO invested 6.27 billion yuan and won the position of the major shareholder of Yonghui Supermarket.
Why buy a supermarket that seems unrelated to your business?
In the conference call, Ye Guofu, chairman of MINISO, could not hide his excitement and said:
This is a "once-in-a-20-year opportunity".
What kind of opportunity did MINISO make such a big investment?
Many people think that when MINISO bought Yonghui, it was a small store and a big store.
But from the perspective of the capital market, it is completely the opposite.
In terms of market capitalization, today's market value of MINISO is close to twice that of Yonghui.
In terms of the number of stores, MINISO has more than 7,000 stores worldwide, including more than 2,700 overseas stores, and the expansion rate of new stores is also more than 100 per month, continuing to take root in urban centers around the world.
At present, the number of Yonghui supermarkets is 844, of which only half are boutiques, and the number of newly opened stores is far less than the number of closed stores.
In terms of performance, MINISO's financial report for the first half of 2024 is outstanding among listed companies in China - revenue jumped 25% in the first half of the year, and gross profit margin reached 43.7%, continuing to refresh historical records.
Both the gross profit margin and the number of net new stores are higher than those of global brands such as MUJI.
Therefore, MINISO buys Yonghui not as a "snake swallowing an elephant", but as "rich and rich".
So, why did MINISO buy Yonghui, whose performance has been declining for so many years?
Chairman Ye Guofu's understanding is:
He is optimistic about the promotion of the Fat Donglai model to the whole country.
In the second quarter of this year, Yonghui Supermarket and Fat Donglai have in-depth cooperation, and some stores have come out of the haze of business, and the customer flow and revenue have increased significantly (Xi'an store, Fuzhou store, etc.).
And when Ye Guofu was shopping in Fat Donglai, he was also deeply planted by the Fat Donglai model.
For example, when his sweet potatoes have been stored for a long time, the waiter also took the initiative to change them to new ones, and even provided photo services.
Ye Guofu therefore believes that:
Fat Donglai is a better retail model than Costco, Sam's and other United States models.
The outbreak of MINISO's performance is inseparable from the collection and production of high-quality products, and the Fat Donglai model also attaches importance to products and services.
This goes back to the essence of retail: good products, good services.
And now, after Fat Donglai's model adjustment, Yonghui also has the ability to adjust and change by himself.
"I hope you will be patient, I hope you believe in my vision, I am a person who not only looks at the retail industry in China, but also in the world, I will do wrong elsewhere, but in this part of retail, I will definitely not do wrong."
In Ye Guofu's view, China's offline supermarkets are facing a structural opportunity that occurs once in 20 years.
He believes that there are only two ways to go in the future of retail: low-cost retail and specialty retail.
MINISO is specialty retail, and Sam's and Costco are also specialty retail.
In the past three years, Sam's and Costco have continued to expand in China, with the former's annual sales reaching 80 billion, and MINISO has also continued to explode during this period.
This shows that the growth trend of specialty retail is emerging.
When Ye Guofu inspected United States, he also found that there was such an offline supermarket in the United States, Trader Joe's:
It doesn't do online business, doesn't advertise promotions, doesn't build a membership system, but its sales are staggering — about $1,750 per square foot of merchandise sales, much higher than Costco and Sam's, popular with United States consumers, and a featured service.
And the Fat Donglai model is better than Trader Joe's - it attaches great importance to product power.
At the same time, there is no membership threshold, and more attention is paid to caring for customers and employees.
Therefore, Ye Guofu made up his mind to invest in Yonghui: it was not that offline retail was not working, but that the business model of traditional retail and traditional supermarkets was problematic.
And what can upgrade/save traditional retail is precisely Fat Donglai.
But the problem is that Yu Donglai will definitely not sell Fat Donglai, nor will he let Fat Donglai expand on a large scale.
Then buying Yonghui at this time is the best time.
"Don't look at the past, look at the future, look at the past, no one will be optimistic about Chinese supermarkets. The reason why I have not done it in the past and only do it now is because I see a new future, a new model, a new prospect. - Ye Guofu
Where's the timing? Fortunately, Yonghui's share price has fallen to the bottom.
Due to consecutive losses, Yonghui's share price has fallen for three years, the price-to-book ratio is as low as 3.1 times, and the shareholding ratio of the top ten shareholders/outstanding shareholders has fallen to 59%, and many major shareholders have cashed out.
Although the market research report is still bearish on Yonghui, the stock price has landed.
In addition, Yonghui's recent rectification is also saving the declining trend.
With measures such as the adjustment and reform of stores and the closure of stores with poor performance, Ye Guofu is very confident in Yonghui's future profit prospects.
The shot at this time is also in line with Buffett's style of picking up "cigarette butt stocks".
On the other end, there is a large amount of money lying on the account of MINISO.
Judging from the quarterly report, the company's book cash is close to 7 billion, and in terms of profitability and hematopoietic ability, the net profit margin of MINISO has reached 16.0%.
In addition, MINISO Group also announced the distribution of interim cash dividends, totaling up to 620 million yuan.
In other words, MINISO is not short of money and has confidence in the company's operation.
The acquisition of Yonghui is not a decision made by Ye Guofu to pat his head, but a choice for long-term research.
In the United States, he traveled to several cities to think about the future of retail.
Before acquiring Yonghui, he also visited Yonghui's renovated stores many times to help Fat Donglai, and found that several of Yonghui's renovated stores had doubled their revenue and foot traffic.
Coupled with Yonghui's own good operating foundation, Yip believes that its business will be reborn in the next few years.
Moreover, the current corporate culture and entrepreneurial philosophy of MINISO and Yonghui are also consistent.
The mission of MINISO is: to be happy.
After the adjustment and reform of Yonghui Supermarket, it also demonstrates the humanistic care of Fat Donglai everywhere, reflecting the business philosophy of "people-oriented, customer first".
This coincides with the corporate culture of MINISO.
From the perspective of word-of-mouth and image, buying Yonghui is also in line with MINISO's style of adhering to long-termism.
Ideals are always full, and whether they can be integrated well is a matter of another dimension.
After buying Yonghui, Ye Guofu will definitely push Yonghui, and also use Yonghui's advantages to expand the advantages of MINISO itself.
For MINISO, Yonghui's effective coverage in the top 1,000 shopping malls in the country is not enough, and Yonghui, which has been operating for more than 20 years, occupies a good location and location.
If MINISO stores can be opened in the existing area of Yonghui, it will be a real benefit for MINISO in terms of brand exposure and customer flow revenue.
For Yonghui, MINISO's empowerment ability is also very strong.
On the one hand, Yonghui's own brand accounts for only single digits, and the gross profit margin is low and the differentiation is not strong.
MINISO has been deeply involved in its own brand and daily necessities industry for many years, with thousands of product development teams and more than 1,400 suppliers.
On the other hand, MINISO's IP strategy and super store model are also key factors driving the company's growth.
If we can help Yonghui add more special IP products and build benchmark stores, we may be able to give birth to more Internet celebrity hits.
Moreover, these two companies are also specialized in offline, and they have too much experience and resources to communicate with each other in product selection and operation.
Taking advantage of the supply chain advantages of MINISO, Yonghui leverages the scale of Yonghui's channels, and uses quantity to control prices, so as to achieve strong alliances and complementary resources to a greater extent.
Especially in the strategic direction of going overseas, MINISO has taken the lead in going overseas, with more than 2,700 overseas stores, and has a strong ability to replicate the experience and path of going overseas.
If it can help Yonghui go to sea, it may be able to drive a lot of growth.
Therefore, with the acquisition of Yonghui, MINISO can fully achieve the effect of 1+1>2.
In the current offline retail, which is undergoing great changes, create a new benchmark and seek new models.
In fact, no matter whether the result of this acquisition is successful or not, it will not have much impact on MINISO itself.
On the contrary, this just shows Ye Guofu's very bold transformation ideas.
Times are advancing, and so is the way out for retail.
The only constant is change.
In 2020, Ye Guofu proposed that "interest consumption" will become the concept that will dominate the future consumption trend, and through accurate insight into "interest consumption", product innovation is empowered through IP co-branding, and a series of popular products have been created.
It has successfully unlocked the explosive growth of MINISO and led the transformation and upgrading of the consumer market of physical retail.
Value can only be realized if value is provided.
It's not that the retail industry is not working, but that the retail stores that are unwilling to change are not working.
The development of China's retail industry requires such innovation and exploration.