Miniso (9896.HK)

[dreamybear]

Wonder why no buddies created a thread for the ubiquitous shops seen in our shopping malls .... interesting events happening. 

MINISO IPO Prospectus
https://www1.hkexnews.hk/listedco/listco...000039.pdf

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Miniso plunges 12pc after attack on business model
https://www.thestandard.com.hk/sections-...ness-model
"China's Miniso (9896) slumped about 12 percent in Hong Kong yesterday after US-based short-seller Blue Orca Capital alleged it lies about its core business model and that its chairman has siphoned hundreds of millions from the global retailer........"

Blue Orca Capital Short
https://static1.squarespace.com/static/5...NSO%29.pdf

MINISO Refutes Blue Orca's Short Seller Report
https://ir.miniso.com/2022-07-28-MINISO-...ler-Report

[Big Toe]

Chairman/ top execs siphoning money is quite common occurance in mainland whether it is listed or otherwise.Easier if it is a small-medium sized company. Sometimes someone finds out. Other times it maybe disguised as poor performance. Pandemic is a great excuse/ great time to report huge losses.

Besides reporting losses, there are many other elaborate/creative schemes that can be used to channel money away. I spent a few minutes reading the mini-so report. Seems it did not cover its tracks properly, there are those who ran away with the money more proficiently and are never caught.

This happens elsewhere in the world as well, just that the frequency seems to be higher in mainland.

[weijian]

Wonder why no buddies created a thread for the ubiquitous shops seen in our shopping malls .... interesting events happening. 

MINISO IPO Prospectus
https://www1.hkexnews.hk/listedco/listco...000039.pdf

-----------

Miniso plunges 12pc after attack on business model
https://www.thestandard.com.hk/sections-...ness-model
"China's Miniso (9896) slumped about 12 percent in Hong Kong yesterday after US-based short-seller Blue Orca Capital alleged it lies about its core business model and that its chairman has siphoned hundreds of millions from the global retailer........"

Blue Orca Capital Short
https://static1.squarespace.com/static/5...NSO%29.pdf

MINISO Refutes Blue Orca's Short Seller Report
https://ir.miniso.com/2022-07-28-MINISO-...ler-Report

I tried to read this as much as possible with independent mind (ie. remove all our conscious biases and let the reading respond to itself)

Besides the "Land Deals Involving the Company's Chairman" point which involves facts/documentation, the remaining 2 rebuts by Miniso are actually quite weak IMHO.

Once upon a time, my light bulb came up with d.o.g mentioned that rather than looking for incentives to lie, we need to invert and look for disincentives not to lie. If there isn't any disincentives, maybe this unknown unknown risk is not worth the return on brain damage.

On a separate note, just for discussion and understanding, Miniso stated the below:

"Company recognizes revenue, not when products are delivered to its MINISO Retail Partners, but only when products are sold by its MINISO Retail Partners to end-customers"

This is surely something new to me. These folks have close to 5000 thousand stores, reportedly owned and operated by independent people. Wouldn't that be a big hassle to get all their ledgers/accounts for your own reporting? Not to mention that it will be a growing problem as you get bigger and bigger. Granted that some of your retail partner could own multiple stores, assuming each of them owns 10 stores, you will still be dealing with like 500 (and 40% of them are overseas)

[Yoyo]

"Company recognizes revenue, not when products are delivered to its MINISO Retail Partners, but only when products are sold by its MINISO Retail Partners to end-customers" - This is known as consignment sales.

Consignment Sales
The consignors deliver the products to the consignees - the stock is known as consignment inventory.  Revenue is only recognised upon the eventual sales to endcustomer by the consignees.

Textbook definition is that the consignee will earn a commission upon the eventual sales.  But in reality, there are numerous way consignment may be recorded.  The consignee may booked a sales of the product, at the same time, a purchase upon the eventual sales to the endcustomer.  Technically, the risk of the inventory remains with the consignor, but may be discharge to the consignee via well defined business agreements (risk such as proper storage/theft/expiry).

The business owner (consignor) may consign its inventory (said books/magazines/medicines) to its customer A (consignee) which own 10 stores.  He will maintain a record to capture all deliveries and billings to that single customer A.  He may choose to keep track of the consignment inventory at each of these 10 stores of customer A, or simply oblige the customer to periodically report the consolidated inventory for bill purposes (may be multiple invoices or just a single invoice).  It depends on how is the business agreement are signed.

Consignment sales (local or overseas) are quite common, especially if the owner wish to reach a much wider pool of end-customers.