The company, which has accumulated losses exceeding 12 billion yuan over five years, is finally seeing a glimmer of profitability.
According to its preliminary earnings report, for the first half of 2026, Yonghui Superstores Co.,Ltd. (ASX: 601933) expects net profit attributable to shareholders to reach 250 million yuan, with adjusted net profit after non-recurring items of approximately 30 million yuan. This marks a potential turnaround from losses of -240 million yuan and -800 million yuan in the same period of 2025. The company attributed the improvement to a higher sales contribution from its own-brand products, which boosted the comprehensive gross margin by 1.6 percentage points, while the expense ratio decreased by 1.8 percentage points year-on-year.
However, the capital market's reaction has been tepid. Following the announcement on the evening of July 14th, the company's stock price rose less than 4% over the next two trading days before reversing course. On July 17th alone, the stock fell 4.7%. At the latest closing price before publication, the share price was 3.12 yuan, representing only a modest 2.0% increase from before the announcement. The company's latest market capitalization is approximately 27.578 billion yuan, having lost nearly 15 billion yuan this year and fallen about 60% from its 2020 peak.
Potential Return to Losses in Q2 Raises Questions on Store Revamp
A closer look at the preliminary earnings report reveals that the 250 million yuan profit figure contains significant qualifications.
On one hand, Yonghui Superstores Co.,Ltd. (ASX: 601933) reported a strong first-quarter 2026 net profit attributable to shareholders of 287 million yuan, with an adjusted figure of about 247 million yuan. This implies the company actually fell into a loss-making position in the second quarter, with estimated net losses of 37 million yuan and 217 million yuan on the reported and adjusted bases, respectively. The fact that profitability lasted only one quarter before turning negative again suggests the core retail business continues to struggle.
On the other hand, during the first half of 2026, the company recognized a fair value gain of 89 million yuan due to a rise in the share price of its U.S.-listed investment, Advantage Solutions Inc. This one-time gain accounted for approximately 35.6% of the period's net profit. In other words, over one-third of the reported profit stemmed from financial market fluctuations, not from an improvement in supermarket operations.
This "high first, low second quarter" profit structure exposes the fragility of the company's fundamentals. Supported by the peak Spring Festival consumption season, the company managed to show a paper profit in Q1. However, as consumer sentiment weakened in Q2, even with the inclusion of some fair value gains, losses quickly re-emerged, indicating the highly anticipated store renovation initiative may not be delivering the expected results.
The "Pang Donglai-style" store revamp has been the central narrative of Yonghui Superstores Co.,Ltd.'s (ASX: 601933) transformation since its announcement in 2024. According to the plan, the company aims to complete renovations for all existing stores by 2026, marking the final stage of this initiative. The earnings preview shows that as of June 30, 2026, the company had renovated 331 stores, representing about 84.4% of the total store count at the end of Q1.
However, it remains uncertain whether the benefits from renovated stores can offset the revenue gap caused by store closures. Historical financial reports show that from 2024 to Q1 2026, the company closed 232, 381, and 13 stores respectively. The total store count shrank drastically from 1,000 at the end of 2023 to 392, a reduction of about 60% in just over two years. Concurrently, the company's revenue declined year-on-year by 14.1%, 20.8%, and 23.5% respectively, showing a widening trend. Although revenue from renovated stores grew 16.6% year-on-year in Q1, the company's total revenue has essentially fallen back to levels seen in 2016.
It is worth noting that Pang Donglai's success is deeply rooted in regional markets like Xuchang, relying on founder Yu Donglai's personal brand, a culture of exceptional service, and meticulous operations, all of which are highly non-standardized. As a national supermarket chain, Yonghui Superstores Co.,Ltd. (ASX: 601933) faces significant challenges in attempting to "mass replicate" this model across hundreds of stores in terms of supply chain, staff training, and management scope.
Among the 331 renovated stores, it is unclear how many have achieved the true "Pang Donglai-style" sales per square meter and labor efficiency. However, judging by the reality of declining overall Q1 revenue and a substantial adjusted loss in Q2, the profitability quality of most renovated stores is not optimistic and they may still be in a磨合 or struggling phase.
3.1 Billion Yuan Fundraising Remains in Limbo as Major Shareholder Faces Its Own Challenges
While the ultimate effectiveness of the store revamp remains unclear, the tangible costs for Yonghui Superstores Co.,Ltd. (ASX: 601933) are substantial.
In 2025 alone, asset impairment losses and one-time investments related to renovating 284 stores amounted to 880 million yuan, with an estimated gross profit loss of about 300 million yuan due to store closures for renovation. The closure of 381 stores deemed inconsistent with the company's future strategic positioning during the period also incurred significant expenses, mainly including asset impairment losses, employee severance compensation, and lease-related违约赔偿.
With a weak core retail business and high renovation costs, the company's cash flow is under severe strain. As of March 31, 2026, the company's cash and cash equivalents stood at only 2.619 billion yuan, a decrease of nearly 700 million yuan from the end of 2025 and almost halved year-on-year. Meanwhile, its short-term borrowings reached 3.653 billion yuan, accounting for approximately 21.0% of current liabilities. The cash-to-short-term debt ratio is about 0.72, and the current ratio is as low as 0.55, highlighting significant short-term debt pressure.
To alleviate the strained situation, the company first announced a plan in July 2025 for a private placement of A-shares to specific investors, aiming to raise up to 3.992 billion yuan, with 3.213 billion yuan earmarked for store upgrades. However, in a revised plan two months later, the target fundraising amount was quietly reduced to 3.114 billion yuan, with the allocation for store upgrades shrinking to 2.449 billion yuan.
The company formally submitted the offering prospectus in October 2025 and responded multiple times to regulatory inquiries, but the private placement has yet to be completed. Announcements indicate the plan's validity period is 12 months from the date of shareholder approval (September 18, 2025). It is now highly impractical to expect regulatory approval, registration, pricing, and subscription to be completed within the less than two months remaining.
According to a regulatory inquiry response letter from May 2026, the company estimated a total funding gap of 4.373 billion yuan from Q2 2026 to 2028. If this fundraising effort fails, the company could face a severe liquidity crisis, directly impacting subsequent store renovations and daily operations, potentially leading to further deterioration in performance.
Interestingly, MINISO, which made a high-profile investment in Yonghui Superstores Co.,Ltd. (ASX: 601933) in 2024, shows no signs of participating in this private placement. Announcements state that upon completion of the offering, the shareholder structure will change, but it is not expected to alter the status of having no controlling shareholder or actual controller. MINISO currently holds a 29.4% stake in Yonghui through Guangdong Juncai International Trade Co., Ltd., precisely at the edge of the 30% control threshold.
The statement that control will not change essentially reflects, from a legal standpoint, MINISO's non-participation in the subscription. Beyond the offering price being significantly higher than the price at which MINISO acquired its Yonghui stake, MINISO's own financial condition appears unable to support another capital injection.
MINISO's earnings report shows that for Q1 2026, its revenue grew 28.5% year-on-year, but adjusted net profit after excluding foreign exchange effects was 633 million yuan, only an 8.1% increase from the same period in 2025. During the period, the company's selling and distribution expenses surged 44.0% year-on-year, with spending on promotion and advertising, logistics, and licensing fees increasing by 73.7%, 43.5%, and 42.0% respectively compared to Q1 2025, all significantly outpacing revenue growth. Furthermore, MINISO is advancing a 2 billion Hong Kong dollar share buyback plan and expanding in overseas markets, indicating its own financial pressures are substantial.
Comments