Miniso Shares Decline on Plans to Acquire Stake in Yonghui Superstores, Reports Reuters

HONG KONG (Reuters) – Shares of Miniso Group Holding saw a dramatic decline of up to 39.2%, dropping to HK$20 ($2.57) on Tuesday. This plunge followed the company’s announcement regarding an investment in struggling Chinese supermarket operator Yonghui Superstores.

The lifestyle products retailer’s stock hit its lowest point since December 2022, marking its largest single-day percentage drop since its market debut in July 2022.

By the end of the trading day, Miniso’s shares closed down 23.9% at HK$25.05, the lowest closing price since January 2023. This made it the second biggest percentage loser on the Hong Kong exchange, while the benchmark index rose by 4.1%.

On the U.S. stock market, Miniso’s shares fell by 16.6% on Monday.

The company revealed plans to acquire a 29.4% stake in Yonghui, valued at 6.3 billion yuan ($893.1 million), purchasing shares from DFI Retail Group and JD.com at a price of 2.35 yuan ($0.33) each, which is a 3.1% premium over Yonghui’s closing price from September 20.

Nomura, which has given Miniso a "buy" rating, expressed concerns that the unexpected acquisition introduces significant uncertainties without immediate synergies, suggesting that the move could be overly ambitious.

In contrast, shares of Yonghui, listed in Shanghai, surged 10.2% to reach 2.48 yuan, the highest level since August 12.

Yonghui has experienced three consecutive years of net losses, largely due to the rising costs associated with closing stores.

CMB International expressed skepticism in a research note, questioning the timing and scale of the acquisition. They highlighted concerns about Miniso using over 95% of its cash to invest in a company that has not been profitable for the last three years, especially amid an uncertain macroeconomic environment.