Investing should focus on Golden麒麟 analyst research reports, which are authoritative, professional, timely, and comprehensive, helping you uncover potential thematic opportunities! //// A loss of 21 billion yuan, closure of 381 stores, and a liability-to-asset ratio nearing 90% - the cost of Yonghui's year-long "Fat Reform" is staggering. Market skepticism is rampant, while the company's founder has already cashed out through share reductions. In 2025, the retail industry presented a picture of stark contrasts. On one side is the epitome of "small but beautiful": Pangdonglai, entrenched in Henan, created an industry myth with just 13 stores achieving over 20 billion yuan in sales and zero debt. On the other side is the predicament of "big but precarious": the former霸主 Yonghui Superstores, in its fervent effort to emulate Pangdonglai (the "Fat Reform"), reported losses exceeding 2.1 billion yuan and closed 381 stores, with its liability-to-asset ratio approaching 90%, marking the fifth consecutive year of losses. A "blitzkrieg" attempting to replicate 20 years of another's expertise in just 20 months ultimately devolved into a costly quagmire. The market cannot help but watch and wonder: can the promised 2-3 year escape from the "survival line" truly be delivered? In reality, the founding brothers are already preparing to get off the bus. The more it reforms, the more it loses. Yonghui Superstores' path of "Fat Reform" is being doused with the cold water of reality. On January 26, according to Jiemian News, the Yonghui Superstore at Beijing Hongkun Plaza was closed, with "Suspended Business" barriers erected at the escalator entrance, and the underground elevator access chained shut. This store, operational for over a decade, had only completed its "Fat Reform" in March 2025 and had been reopened for less than a year. The suspension is also entangled with a dispute involving tens of millions in unpaid fees. According to He News, Hongkun Plaza claimed that since the store's renovation was completed, Yonghui had not paid any rent, property management fees, utilities, etc., with accumulated arrears exceeding 16 million yuan. Yonghui responded that the suspension was caused by the property owner unilaterally cutting off water and heating and blocking customer access, and that some of the alleged arrears lacked contractual basis; the company had suspended rent payments as required by the court to protect creditors' interests.
This is not the first Yonghui store undergoing "Fat Reform" to experience operational turbulence. Last September, a store in Fuzhou that had been renovated and operational for just over four months also announced closure. At the time, Yonghui cited "service function migration" as the explanation, but market doubts about its renovation model grew. On January 20, Yonghui Superstores released its 2025 annual performance forecast, anticipating a net profit attributable to shareholders of -2.14 billion yuan, a 45.6% widening of the loss compared to the previous year. Calculating from 2021, Yonghui Superstores has now incurred losses for five consecutive years, with cumulative losses reaching a staggering 11.641 billion yuan; the 2025 loss even exceeded the combined losses of the previous two years. Yonghui views this as a necessary cost of strategic transformation, while external observers widely interpret it as the "reform bill" Yonghui is paying for its future. In an attempt to replicate the Pangdonglai model, Yonghui went all-out on adjustments and renovations in 2025, deeply renovating 315 stores while simultaneously closing 381 stores that did not align with its strategic positioning. The number of store closures in a single year hit a recent high. Every step of the renovation burns through real money. First, there are asset scrapping losses. Yonghui stated that the impact of store renovations on company profit mainly includes asset scrapping losses related to the renovations, loss of operating revenue during suspension for decoration, one-time start-up costs, etc. Among these, asset scrapping and one-time investments totaled approximately 910 million yuan. Second, there is the loss of gross profit margin due to stores being closed for renovation. Yonghui estimated this project resulted in a loss of about 300 million yuan for the full year 2025. In other words, Yonghui Superstores' losses directly attributable to the "Fat Reform" in 2025 exceeded 1.2 billion yuan. It's likely Yonghui never anticipated the "cost" of learning from Pangdonglai would be so high. In its heyday, Yonghui was once the undisputed leader in China's supermarket industry. Over a seven-year period starting in 2015, it expanded at an unprecedented pace, opening over 700 new stores across the country, pushing its total store count to a historical peak of 1,067 stores. Doubling in size in seven years – Yonghui Superstores almost recreated itself through accelerated expansion, even reaching the Qinghai-Tibet Plateau and entering Tibet and Qinghai, regions where many peers hesitated to venture. Yet, just two years later, Yonghui had closed over 500 stores, directly shrinking its scale back to the level of seven years prior. 2 to 3 Years to Escape the "Survival Line"? After 21 months of "Fat Reform," this transformation report card presents a complex picture. At the operational data level, some renovated stores do show positive changes. Relevant announcements indicate that from January to September 2025, the 31 stores renovated by Yonghui Superstores in 2024 achieved cumulative sales of 4.662 billion yuan, a 71% year-on-year increase; cumulative store-level profit reached 104 million yuan, a 112% year-on-year increase. Furthermore, Yonghui Superstores revealed that stores that have completed renovations show significant improvements in operational efficiency. According to financial reports, from January to September 2025, Yonghui stores that had been renovated for at least 6 months achieved a monthly average sales per square meter of 3,295 yuan/sq.m., significantly higher than the baseline efficiency of 2,800 yuan/sq.m., and their gross margin steadily increased to 22.1%, both markedly better than pre-renovation baseline levels.
Regarding the future, Yonghui Superstores expresses cautious optimism. In its announcement, Yonghui Superstores wrote that the company believes the 315 stores that have completed renovations will all enter a stable operating state in 2026, expected to make a substantial positive contribution to revenue and profit in the new year. Vice President Wang Shoucheng previously proposed a clear timeline: starting from May 6, 2024, it would take 2 to 3 years to escape the "survival line," 3 to 5 years to win back customer trust, and 5 to 10 years to become a supermarket "that people mention with pride and happiness." Third-party research institutions have also noted positive signals during the transformation. Kaiyuan Securities pointed out in a research report that Yonghui's push for direct sourcing from the source in its supply chain is beginning to show results, such as a 195% year-on-year increase in sales of swimming crabs in the third quarter of 2025, indicating its product strength is improving. However, there remains a gap between ideal and reality. "The quality is richer, but the prices have gone up too," remarked an office worker shopping at the renovated Guangzhou Liying store while comparing prices on a fresh produce platform on their phone. An elderly shopper nearby was more direct: "There are more and more vegetables in packaging. They look nice but aren't economical." Market competition continues to intensify. While Yonghui was undergoing its renovations, Hema (Freshippo) achieved revenue growth exceeding 40% in 2025 and accelerated its expansion into 40 new cities, with its Hema Shengxian NB format opening over 200 new stores; hard discount stores like Aldi also steadily expanded eastward into Jiangsu Province, having opened over 80 stores in China to date. On the other hand, traditional peers remain under pressure. Zhongbai Group's revenue fell nearly 20% in the first three quarters of 2025, with a loss of 325 million yuan, and it recently planned to close 30 hypermarkets; during the same period, Sun Art Retail's revenue also fell 12.01% year-on-year, with a loss of 123 million yuan. Yonghui Superstores' survival space is being squeezed from both sides, yet the countdown set by Wang Shoucheng for "escaping the survival line in 2 to 3 years" is ticking away second by second. Founder Reduces Stake, Ye Guofu Continues to Bet The capital market initially greeted Yonghui's "Fat Reform" with fervent anticipation. In the fourth quarter of 2024, Yonghui's stock price once doubled, achieving a cumulative increase of 110% since the transformation began, with its market capitalization growing by approximately 23 billion yuan. However, continuously declining performance and financial data gradually eroded this optimism, and the stock price trended downward.
Besides the consecutive annual losses, the net cash flow from operating activities for Yonghui Superstores dropped from 4.569 billion yuan in 2023 to 1.14 billion yuan in the first three quarters of 2025. Monetary funds decreased from 5.839 billion yuan at the end of 2023 to 3.358 billion yuan as of the end of September 2025. Meanwhile, the liability side remains under pressure. As of the end of September 2025, Yonghui Superstores' comprehensive liability-to-asset ratio reached 88.96%, facing 3.884 billion yuan in short-term borrowings, 500 million yuan in long-term borrowings, 5.682 billion yuan in notes and accounts payable, among other obligations. In fact, according to Tonghuashun iFinD data, Yonghui Superstores' liability-to-asset ratio has remained persistently high, hovering near 90% from 2022 to 2024. Funding pressure directly impacts the renovation progress. Currently, Yonghui still has approximately 85 stores that have not yet started renovations or closures. Continuing the push requires substantial financial support. However, its financing process recently encountered setbacks. A nearly 4 billion yuan private placement plan announced in July 2025 was adjusted two months later to a "scaled-down" version of 3.114 billion yuan. Within this, the funds raised allocated for store upgrades were reduced from 3.213 billion yuan to 2.405 billion yuan, and the number of stores planned for renovation decreased from 298 to 216. According to Yonghui Superstores' projections, the estimated post-tax static investment payback period for the store upgrade project is 4.84 years (including a 2-year construction period), and the overall funding gap from Q4 2025 to 2027 is 3.552 billion yuan. The market is watching to see how Yonghui will balance financial pressure against strategic investment. Amidst this scrutiny, the choices of some key investors have already become clear. On November 11, Yonghui Superstores announced that Chairman Zhang Xuansong and parties acting in concert intended to reduce their holdings of company shares by no more than 90.75 million shares in total, representing 1% of the company's total shares, through centralized bidding. Based on the closing price of 4.74 yuan per share on the announcement date, this reduction plan was expected to realize approximately 430 million yuan. Just four days before this reduction plan was announced, Vice President Luo Wenxia had completed a share sale, selling 108,700 shares at 4.59 yuan per share, for a total of approximately 498,900 yuan. After this reduction, Luo Wenxia's shareholding ratio was only 0.0036%. Even earlier, on July 3, Beijing Jingdong Century Trade Co., Ltd. also reduced its holdings by 114 million shares, with a total reduction value exceeding 600 million yuan. The buyer at that time, MINISO founder Ye Guofu, was making an even bigger gamble. Some perspectives suggest that although Yonghui Superstores has shrunk 25% from its peak, Ye Guofu still holds a floating profit of 6 billion yuan: based on Yonghui's closing price of 4.41 yuan per share on January 27, Ye Guofu, who bought in at 2.35 yuan per share, has nearly doubled his money on paper.
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