Zhongmin Baihui Retail Group (5SR) H1 2023 earnings summary

Executive summary

• HY 2023 revenue fell 4.7% YoY to RMB 488.5m; net loss narrowed to RMB 8.8m from RMB 18.3m, supported by lower operating expenses and improved JV/associate results.

• Revenue declined mainly because Lvcuo and Qingyang stores were closed in August 2022; no new stores opened during HY 2023.

Financial highlights

• Gross profit was RMB 107.4m, down 7.6% YoY; reported gross margin was 22%, relatively unchanged YoY.

• Other income rose to RMB 46.9m from RMB 45.4m, including a one-time RMB 10.5m gain on derecognition of the Lvcuo Store right-of-use asset.

• Selling expenses decreased 1.8% to RMB 106.3m; administrative expenses fell 8.2% to RMB 53.9m, partly reflecting non-recurrence of HY 2022 renovation costs.

• Finance costs increased to RMB 12.5m from RMB 8.8m, mainly due to higher borrowings.

Outlook and guidance

• Cautiously optimistic that China’s economic recovery and consumers returning to the market will support business improvement over time.

• No interim dividend was declared; resources are being conserved for business activities while operations remain loss-making.