HONG KONG, Sept 24 Reuters Shares of Miniso Group Holding plunged as much as 39.2 to HK20 2.57 on Tuesday after the company said it would take a stake in embattled Chinese supermarket operator Yonghui Superstores.
The lifestyle products retailer39;s shares dived to the lowest since December 2022, on track for the biggest oneday percentage drop since its debut in July 2022, and was the top percentage loser on the Hong Kong bourse. That compared to a 3.3 rise in the benchmark Hang Seng Index.
Company39;s U.S.listed stock fell 16.6 on Monday.
Miniso said it would take up a 29.4 stake in Yonghui for 6.3 billion yuan 893.1 million and will buy the shares from units of Singaporelisted DFI Retail Group and Chinese ecommerce giant JD.com at 2.35 yuan 0.33 apiece, or a 3.1 premium to Yonghui39;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 the costs of closing stores.
We are sightly 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.
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