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China’s Miniso Shares Fall as Short Seller Questions Business

Miniso said it generates high margins without the operating expenses and complexity which drag down profitability at traditional retailers. But Blue Orca alleged that “narrative is a lie”.

Miniso logo
The logo of Chinese low-cost lifestyle and consumer products retailer Miniso is pictured in Tokyo. File photo: Reuters.


Shares of Chinese retailer Miniso fell more than 10% in Hong Kong after a short-seller report said the company faked its franchise network and its chairman had siphoned off hundreds of millions of dollars.

The group’s New York stock declined more than 15% on Tuesday after the release of the critical analysis by Blue Orca Capital. Miniso denied the allegations in what it said was a misleading report.

But analysts called on the company to dispel doubts about the company’s size and financial health.

“Management will need to explain the discrepancies between company announcements and data from [Chinese corporate data provider] qcc.com quoted in the short sell report,” Anne Ling, a Jefferies analyst, said.

The report by Blue Orca Capital said Miniso presents its value proposition to investors as operating “an asset-light, high-margin independent franchise model”.

Miniso claims that 5,000 independent franchise stores sell stuffed animals, plush toys and knick-knacks. “Supposedly, this enables the company to expand quickly while minimising upfront capital costs,” Blue Orca said.

It also allows Miniso to generate high margins without the operating expenses and complexity which drag down profitability at traditional retailers, Blue Orca said.

“We think that this foundational narrative is a lie.”

Blue Orca said it believed hundreds of stores are secretly owned and operated by executives or individuals closely connected to the chairman.

Miniso, Blue Orca said, set up a British Virgin Islands joint venture (JV) with its chairman to build a massive Chinese headquarters.

“Despite only holding a 20% interest in the JV, Miniso contributed all of the initial 346 million yuan deposit to purchase the land.”

Less than a year later, Miniso bought out the chairman’s 80% interest in the JV. “In our opinion, this transaction is a naked transfer of shareholder money to the chairman.”

Miniso began trading in Hong Kong on July 13.


  • George Russell




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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.


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