This is an acquisition that investors cannot understand, but the acquirer's boss does not care. He said, 'If you don't understand, it's right.'.
On the evening of September 23rd, in response to the official announcement of the investment in Yonghui Supermarket (601933. SH), Ye Guofu, founder, chairman, and CEO of Miniso (09896. HK; MNSO. US), left a message on the WeChat Moments of Miniso CFO Zhang Jingjing, saying, "If everyone can't understand it, then it's right. If everyone can understand it, I won't have a chance." Miniso announced that it will acquire 29.4% of Yonghui Supermarket's equity for 6.27 billion yuan that evening.
If the transaction is completed, Miniso will become the largest shareholder of Yonghui Supermarket.
Message from Ye Guofu on the CFO's WeChat Moments of Miniso Source: Interviewee
Mingchuang Youpin acquisition, JD.com significantly reduces holdings
Yonghui's ownership change is expected to be completed in the first half of next year
Miniso is fully prepared for this acquisition. After the announcement of the acquisition, a conference call was immediately held. At the meeting, Ye Guofu prepared "3 questions of concern to everyone":
Why invest in Yonghui?
Chinese offline supermarkets are facing a once-in-20-year structural opportunity. Yonghui, with the help of Pang Dong's adjustment, will return to the essence of retail and will surely achieve success.
How can Miniso strategically collaborate with Yonghui after investing?
Firstly, there is channel upgrading. Yonghui, as a leading brand, helps Miniso to acquire stores together in shopping centers, and then collaborates with the supply chain. Ye Guofu emphasized that Yonghui Supermarket will not become a sales channel for Miniso, but will use Miniso's supply chain to leverage Yonghui's channels, adjust prices based on quantity, and complement resources.
How does investing in Yonghui help create shareholder value for Miniso?
Yonghui's business is at a turning point, and Ye Guofu believes that Yonghui is an undervalued investment target in the market and may become one of the growth engines for Miniso's profits. As a leading offline fresh food retail supermarket, Yonghui's essential goods track can make Miniso Group's offline retail layout more complete, and also help the group diversify its cyclical business risks.
Zhang Jingjing said in a conference call that after the acquisition of 29.4% equity of Yonghui Supermarket, Miniso will become the largest shareholder of Yonghui Supermarket. "However, we do not expect to control a majority of the board of directors, so we will not be the controlling shareholder or actual controller of Yonghui Supermarket, nor will we merge financial statements. This is a judgment made based on the current situation. The transaction is expected to be completed in the first half of 2025
In addition, regarding whether the company can cover the transaction amount, Zhang Jingjing also said, "The company currently has nearly 7 billion yuan in cash on paper and almost no interest bearing liabilities. In the future, it is expected to obtain low-cost financing of 60% of the transaction consideration from external channels such as banks
However, Red Star Capital noticed that just as Miniso announced its bullish view on Yonghui Supermarket, Beijing JD Century Trading Co., Ltd. reduced its holdings of nearly 90 million shares in Yonghui Supermarket in three installments within less than two months.
Ye Guofu values the "Fat East Coming Model"
Industry: Miniso has stronger capabilities than RT Mart, Alibaba
Miniso acquires Yonghui Supermarket, and Ye Guofu repeatedly mentions Yonghui Supermarket's teacher - Fat Donglai.
During the conference call, he mentioned Fat Donglai at least seven times and stated that he believed the Fat Donglai model was the only way out for Chinese supermarkets. He explained that retail business emphasizes the "three realities": on-site, real, and physical. Therefore, he strongly recommends that everyone visit Pangdonglai in Henan, or visit nearby Yonghui Supermarket stores that Pangdonglai has helped adjust and improve, in order to better understand the original intention of this investment.
Ye Guofu's strong recognition stems from his belief that Pangdonglai is the retail enterprise with the highest salary and the best benefits in China, and it is also the retail enterprise with the highest land and personnel efficiency in China.
He also cited data from Pangdonglai's assistance in the renovation of Yonghui Supermarket: After 19 days of closure and renovation, Yonghui's first store, Zhengzhou Xinwan Plaza store, had a first day sales revenue of 1.88 million yuan, nearly 14 times the daily average sales revenue before the renovation, and nearly 13000 foot traffic, 5.3 times the daily average foot traffic before the renovation; After 18 days of closure and renovation, Yonghui Fuzhou Park Road store's sales exceeded 1.1 million yuan on the first day of reopening, nearly 6 times the daily average sales before the renovation. The daily average customer flow was nearly 14000, 6.5 times the daily average customer flow before the renovation; Yonghui Xi'an Zhongmao Plaza store has resumed business for two days, with an average daily sales revenue of 1.6 million yuan and an average daily customer flow of over 14000 people.
Regarding Ye Guofu's above statement, Bao Yuezhong, a long-time practitioner in the retail industry, told Red Star Capital Bureau that he did not understand this acquisition. He explained that the high level effect and high human effect of Pangdonglai are not so meaningful in practice, because it is difficult to replicate the Pangdonglai model at present. It is difficult to become a replicable retail business model like Carrefour, Wal Mart, 711, etc., because it only opens stores in Xuchang, Henan and other cities.
He pointed out that from the perspective of the few stores that Pangdong helped Yonghui Supermarket adjust, they are all quite special. In the shopping center, theoretically, there is no shortage of customers and they can quickly convert. For Yonghui's nationwide stores, he believes it is impossible to adjust according to the Donglai model. So, it believes that if Ye Guofu decides to acquire Yonghui Supermarket, it is because of the data of these stores, which the retail industry cannot understand.
What Yonghui Supermarket needs more in this acquisition is a systematic solution to address the industry's decline. He believes that Miniso's capabilities will not be stronger than those of companies such as RT Mart and Alibaba.
Multiple supermarket acquisitions in recent years
[align center] There are still no successful cases to date
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