HONG KONG (Reuters) -Shares of Miniso Group Holding plunged as much as 39.2% to HK$20 ($2.57) on Tuesday after the company said it would take a stake in embattled Chinese supermarket operator Yonghui Superstores.
The lifestyle products retailer’s shares plunged to their lowest level since December 2022 in their biggest one-day percentage drop since their debut in July 2022.
The stock ended down 23.9% at HK$25.05, its lowest close since January 2023, and was the second biggest percentage loser on the Hong Kong bourse. The benchmark Hang Seng Index rose by 4.1%.
Miniso’s U.S.-listed shares fell 16.6% on Monday.
Miniso said it would take a 29.4% stake in Yonghui for 6.3 billion yuan ($893.1 million), buying shares from units of Singapore-listed DFI Retail Group and Chinese e-commerce giant JD.com at 2.35 yuan ($0.33) apiece, or a 3.1% premium to Yonghui’s closing price on Sept. 20.
Nomura, which has a “buy” rating on Miniso, said the sudden acquisition of Yonghui brings notable uncertainties with no immediate synergy and the bold move may be too aggressive.
Shares of Yonghui listed in Shanghai jumped 10.2% to 2.48 yuan, the highest since Aug. 12.
Yonghui has logged three years of net losses, reflecting mounting costs of closing stores.
“We are slightly doubtful about the timing and the scale,” CMB International wrote in a research note. “Using up 95%+ of its cash to buy an asset that is not profitable in the past 3 years does not look attractive at all financially, especially when the macro environment is still rather unclear.”
($1 = 7.7891 Hong Kong dollars)
($1 = 7.0569 Chinese yuan renminbi)
(Reporting by Hong Kong newsroom; Editing by Christian Schmollinger and Stephen Coates)
Uma Rajagopal has been managing the posting of content for multiple platforms since 2021, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune. Her role ensures that content is published accurately and efficiently across these diverse publications.