MINISO (9896 HK)'s (Possible) TOP TOY Spin-Off Is Priced In

• Three months ago, local media reported that Chinese lifestyle retailer MINISO Group Holding (9896 HK) was considering spinning off its collectible toy unit TOP TOY on the Hong Kong exchange.

• Reportedly, MINISO could raise ~US$300mn from an IPO. MINISO has now confirmed that a spin-off is being contemplated; although a proposal is only at a preliminary stage.

• TOP TOY has been a growth engine. But its contribution to the group is still ~6%. Applying a holding company discount, post spin-off, MINISO's upside appears limited.

The Trade:

• The spin-off plan is preliminary in nature.

• A spin-off makes sense: TOP TOY’s has been a standout in MINISO’s portfolio, and a separate listing would enable MINIDO to focus on its lifestyle goods.

• However, I see MINISO trading at a 21% discount to NAV. Before any holding company discount. I question how much juice is left in the trade.

This insight is labelled bearish as I'm not bearish here.

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The NEW News

• MINISO has confirmed that it is:

making preliminary assessment on the possibility of a potential spin-off listing of its pop toy business operated under the brand “TOP TOY”

• That's it.

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On TOP TOY

• This division has been going gangbusters.

• But so has MINISO's core-branded stores.

• As at 31 Dec 2024, TOP TOY stores (directly operated + stores operated by partners [which comprise the majority]) expanded 87% yoy to 276, up from 148 in FY23.

  • As a comparison, MINISO stores increased 17% yoy to 7,504 from 6,416 in FY23.

• TOP TOY's segment revenue and EBITDA was RMB997mn and RMB178mn, respectively, up 84% and 274% yoy.

  • As a comparison, MINISO segment revenue and EBITDA was RMB16bn and RMB3.9bn, respectively, up 47% and 55% yoy.

• The upshot: MINISO stores are growing; TOP TOY's are growing faster. But remain a small % of the overall group.