Reporter | Li Huilin
Guangzhou boss Ye Guofu made a big purchase of Yonghui.
On September 23rd, Miniso, which he founded, announced plans to spend approximately 6.3 billion yuan to acquire 29.4% of Yonghui Supermarket's shares. The transaction has been completed and will become its largest shareholder.
Yonghui has been losing money for three consecutive years, with a total loss of over 8 billion yuan. Currently, it is in a critical period of transformation, and its future is uncertain.
Ye Guofu himself stated that the reason for the acquisition was due to his optimism about the prospects of Yonghui's "restructuring". After the transformation of its three stores by Pangdonglai, significant improvements were made.
Ye believes that if Yonghui can turn things around, its shareholders will be greatly shocked. On September 24th, Miniso's Hong Kong stock plummeted by nearly 24%, with its market value evaporating by about 9 billion yuan.
If no one can understand it, then I won't have a chance, "he wrote on his social media account.
An investor in the consumer sector told 21CRBR reporters that it is relatively easy to successfully adjust and improve several stores, but it is very difficult to adjust and improve the performance of hundreds of Yonghui stores.
Bottom fishing and taking over
In terms of scale alone, the transaction led by Ye Guofu can be called a snake swallowing an elephant.
In 2023, Yonghui's revenue is nearly 80 billion yuan, with 850 chain supermarkets nationwide. Although there are many Miniso stores, its revenue is only 11.47 billion yuan, which is only 1/7 of Yonghui's.
The equity will be transferred by agreement.
Ye Jingyu's subsidiary "Juncai International" has taken over the equity of Yonghui held by Hong Kong's Jardine Matheson and JD.com.
At present, Yonghui's market value of about 20 billion yuan is at its lowest point in 10 years, with a drop of 80% at higher points. When JD.com invested in Yonghui, it offered 9 yuan per share, while Ye Guofu's offer was less than one-third.
Zhang Jingjing, CFO of Miniso, mentioned that this transaction has a low investment cost premium and a high safety margin.
The transaction will be completed in the first half of 2025, and Ye Guofu has no intention of directly operating Yonghui for the time being.
Officially, Miniso will not control the majority of seats on Yonghui's board of directors, become the controlling shareholder or actual controller, and will not consolidate financial statements.
This is a judgment made based on the current situation. In terms of control, Zhang Jingjing still left room for maneuver.
Having less debt and more money is Ye Guofu's confidence in making a move.
It is reported that the company currently has nearly 7 billion yuan in cash on its books and only 6.4 million yuan in interest bearing liabilities. It is expected to raise 3.8 billion yuan in low-cost financing through banks and other channels.
By this calculation, Miniso itself will also contribute 2.5 billion yuan in cash.
There is ample space on the balance sheet to complete this transaction, "Zhang Jingjing said, adding that this investment will increase the use of its debt side and optimize its capital structure.
Anyway, Ye Guofu's family background cannot be said to be solid.
As of the end of June, the net assets of Miniso were only around 9.7 billion yuan, and based solely on the transaction volume of 6.3 billion yuan, this investment accounted for two-thirds of the total assets.
In fact, Yihe has cleared its holdings of Yonghui and JD.com has significantly reduced its holdings, both of which have suffered heavy losses on paper. However, the financial resources of the two companies are much more abundant than those of Ye Guofu and will not be affected.
For Miniso, any mishaps can still jeopardize its financial stability.
Looking forward to turning over
I am extremely excited about the ongoing renovation project at Yonghui
Ye Guofu's confidence lies in his belief that Yonghui will undergo a complete transformation in the coming years as he continues down the current path.
He had a pessimistic outlook on the business of offline supermarkets, stating that "if community group buying continues for another year or two, supermarkets over 500 square meters are basically out of business
The one who changed his mind was Pang Donglai.
Ye is a loyal fan of Costco, and he has discovered that a better retail model than Costco is Fat Donglai, which he calls "the only way out for Chinese supermarkets".
This year, several Yonghui supermarkets, including Pangdonglai, have undergone comprehensive adjustments and transformations in their business strategies, product structure, store layout, environment, and employee benefits.
After visiting the renovated Yonghui store on site, Ye Guofu was deeply moved.
On the evening of the 23rd, he listed the performance changes of three regions and three stores. For example, the first day performance of the Zhengzhou store was 1.88 million yuan, which was 14 times higher than before the adjustment, and the daily average customer flow was 5.3 times higher than before the adjustment.
The successful adjustment of three stores fully demonstrates that the Fat Donglai model can be replicated
Ye himself said that as long as the Yonghui team insists on returning to the essence of retail through adjustments, there is a great chance of success.
On the harsh side, Yonghui's overall downward trend remains unchanged.
From January to June, its revenue was 37.8 billion yuan and net profit was 275 million yuan, both of which declined year-on-year and remained in a low profit state, with significant uncertainty in performance.
Especially at present, with weak consumer power, optimizing a supermarket with less favorable trends in a stock market is much more difficult
Consumer investors analyzed to 21CRBR reporters that Sam's and Fat Donglai only have 30-40 stores nationwide, and it is doubtful whether they can replicate the hundreds of stores in Yonghui; Moreover, there are numerous SKUs in large supermarkets, and Miniso itself lacks experience.
Meanwhile, the founders, Zhang Xuansong and Zhang Xuanning, still hold shares in Yonghui.
Under the complex equity structure, it will make the adjustment and reform more difficult, "the investor judged.
Collaborative development
After taking over Yonghui, Ye Guofu and his team's energy will still be focused on Miniso.
The stable operation of his main business is his true confidence in taking action.
From January to June 2024, Miniso's revenue reached 7.759 billion yuan, a year-on-year increase of 25%, with a net profit of 1.242 billion yuan. According to the Hurun Rich List, the wealth of Mr. and Mrs. Ye Guofu has reached 34 billion yuan.
As long as the situation continues, even if Yonghui's investment suffers losses, there can be no worries.
Currently, Ye Guofu is significantly expanding its territory.
According to the plan, from 2024 to 2028, Miniso will net an annual increase of 900 to 1100 stores, achieving a total of over 10000 stores. From January to June this year, 502 new stores have been added.
At the time of rapid progress, the fundamental market is also under pressure.
As of June 2024, the total number of stores in mainland China was 4115, accounting for 60% of the total stores, and the revenue reached 5.027 billion yuan, accounting for about 65%.
However, the same store GMV in mainland China is declining, dropping by 1.7% in the first half of the year, while the closure rate is increasing, rising to 3.6%. There are various reasons for this, such as lease expiration, rent increase, store profitability failure, and other considerations from partners.
The real challenge for Ye Guofu's team is to maintain stable operations in mainland China and achieve rapid results in overseas expansion, especially after investing a large amount of cash resources in Yonghui, the pressure will become even greater.
Ye also hopes that the two retail leaders can form a synergistic effect.
For example, at the channel level, Yonghui occupies many good positions nationwide. If the adjustment is successful, it will become an important brand for commercial real estate to attract customer flow, and the two can jointly acquire stores.
At the supply chain level, Yonghui will be able to complete the puzzle of fresh produce and other tracks with Miniso products.
At the same time, 1/4 of Yonghui's sales come from daily necessities, mostly third-party brands. Miniso can assist Yonghui in developing its own products and increasing its gross profit margin based on its own brand resources and experience.
This will be a huge incremental market
Ye Guofu hopes that everyone can be patient and trust my vision.