Miniso (NYSE: MNSO) Downgraded to 'Hold' Amid Profitability Concerns

• HSBC downgraded Miniso (NYSE: MNSO) to a 'Hold' rating, setting a new price target of $10.80, suggesting limited upside for the retail sector stock.
• Despite robust revenue growth of 22.4% year-over-year to RMB 11.5 billion, the company's shares fell 4.4% post-earnings, reflecting investor concerns over profitability and rising expenses.
• While gross profit increased by 22.5%, adjusted net profit saw a slight decrease of 1.7% to RMB 1.22 billion, contrasting with a strong 45.5% increase in operating cash flow to RMB 1.48 billion.

On August 31, 2026, HSBC analyst Lina Yan downgraded Miniso to a 'Hold' rating from its previous 'Buy' status. Miniso is a Chinese retail chain known for its trendy and affordable lifestyle products. The new price target is set at $10.80. At the time, Miniso's stock price was $10.33, suggesting a potential upside of only 4.55%.

This rating change reflects recent investor sentiment. Following its latest earnings report, Miniso's shares fell by 4.4%, as highlighted by Forbes. The drop occurred despite the company reporting higher overall revenue and profit. This suggests that investors have concerns about the company's profit margins and increasing expenses, which may limit future stock price growth.

The company's financial results show strong top-line performance. Group revenue for the first half of 2026 grew by 22.4% year-over-year to RMB 11.5 billion. This growth was largely driven by a 26.2% revenue increase in mainland China, which is the company's fastest first-half growth rate in three years.

Despite strong revenue, other metrics point to potential issues. While gross profit increased by 22.5%, adjusted net profit, which excludes items like foreign exchange impact, saw a slight decrease of 1.7% to RMB 1.22 billion. This detail supports the concerns over profitability that likely influenced the stock's downgrade.

Management states its focus is on long-term strategy over short-term results. This includes opening larger stores and developing its own product brands. The company's operating cash flow remains strong, with a significant 45.5% year-over-year increase to RMB 1.48 billion, showing healthy cash generation from its core business activities.