Zhongmin Baihui Retail Group Ltd.

All figures RMB'000 unless stated. FY2022 is an 18-month period and is not comparable with 12-month years; annualised FY2022 revenue (×12/18) is approximately RMB1,073,071k.

Five-period headline summary

Sources: FY2023 AR five-year highlights (FY2022); FY2024 results (FY2023 restated, FY2024); FY2026 results (FY2025, FY2026). Basic and diluted EPS are identical (no dilutive instruments). FY2022 dividend shown as 0 because no dividend was paid in FY2023 per the statement of changes in equity in the FY2024 results.

Income statement detail (four comparable 12-month years)

Method: EBIT = result before share of JVs/associates + finance costs − interest income. EBITDA = EBIT + depreciation of PPE and right-of-use assets. Because rent is capitalised under SFRS(I) 16, EBITDA excludes most store rent and overstates cash operating profit; lease cash outflows are shown in 6.5.

Margins and growth

FY2023 growth shown as 0 (no comparable 12-month prior period). Revenue CAGR FY2023–FY2026: −1.7% a year. Against annualised FY2022 revenue, the four-year CAGR to FY2026 is approximately −3.8% a year (indicative only).

Half-year progression

Source: FY2026 results, paragraph 18. 1H FY2026 profit halved on the absence of a prior-period lease de-recognition gain and gross-margin pressure from gold and Maotai; 2H FY2026 profit more than doubled on equity-accounted income (Wuxi) and lower tax.

Balance sheet

Notes: Goodwill is not separately reported; intangible assets are flat at RMB3.8 million. Net debt = total borrowings − (cash + fixed deposits + restricted cash). Restricted cash is pledged against borrowings; excluding it, FY2026 net debt would be RMB13.5 million. At 30 June 2024, borrowings included RMB42.0 million of bonds issued by the Company (unsecured) and RMB168.2 million of secured bank borrowings. At 30 June 2026, bank borrowings of RMB97.2 million were secured by fixed deposits, a Group-owned store and a right-of-use asset owned by a shareholder (FY2026 results, Note 12). FY2025 deferred tax balances were reclassified between assets and liabilities in the audited accounts.

Cash flow

FY2023 net operating cash flow was RMB89.2 million (FY2023 AR, CEO statement). FY2024 investing inflow also included RMB4.75 million of capital distributions from the Changsha associate and RMB40.3 million of fixed-deposit withdrawals. FY2026 repayments include a RMB41.98 million bond redemption.

Ratios

Method: ROIC = [PAT + (finance costs − interest income) × (1 − 25%)] ÷ (equity + borrowings + lease liabilities − cash, fixed deposits and restricted cash), year-end. DIO and DPO use cost of sales. DPO is inflated because trade and other payables include amounts owed to concessionaires and prepaid-card advance receipts, so the negative cash conversion cycle reflects the concession and prepaid-card model rather than supplier terms alone.

Commentary on trends, inflections and drivers

Revenue. Revenue has moved in a narrow band (RMB920–984 million) since FY2023 and has fallen in each of the last two years. The FY2024 uptick (+1.7%) was driven by gold and Maotai sales, not traffic. FY2025 (−3.3%) reflected fewer operating stores and a 17.7% fall in concession commission. FY2026 (−3.3%) saw declines in all four streams: rental income fell 14.2% partly on reduced leasable area, concession commission fell 7.7%, and direct sales fell 2.6% as lower gold (−RMB6.1M) and other product sales (−RMB28.3M) outweighed higher Maotai sales (+RMB12.9M). Gross sales proceeds have fallen 10.4% from FY2023 to FY2026, a better indicator of shrinking store throughput.

Gross margin. The FY2024 peak (23.6%) came from improved gold margins. The FY2026 trough (21.4%) reflects lower gold and Maotai margins and a shift in mix away from high-margin commission and rental streams. The direct-sales margin has ranged between 11.3% and 13.3%.

Operating costs. Management has cut selling and administrative costs from RMB305.7 million (FY2023) to RMB282.2 million (FY2026), mainly via staff costs (FY2026: −RMB7.1M selling, −RMB6.8M administrative) and utilities. This has not kept pace with the RMB19.3 million gross-profit decline since FY2023. FY2026 selling costs included RMB11.2 million of higher advertising and promotion spending.

Core operating result. Excluding equity-accounted income, the consolidated business has been around break-even: +RMB1.9M (FY2023), −RMB0.5M (FY2024), +RMB16.9M (FY2025, flattered by a RMB19.7M lease-derecognition gain), −RMB4.1M (FY2026, after a RMB13.8M lease-modification gain and RMB11.9M one-off promotional service income). Without these items, the core Fujian business would have shown larger losses in FY2025 and FY2026.

Earnings quality. Profit growth since FY2023 is explained almost entirely by the outlet vehicles: equity income rose from RMB16.3M to RMB54.6M. Wuxi swung from a RMB24.3M entity-level loss in its first year (FY2023) to a RMB22.3M share of profit in FY2026 once accumulated unrecognised losses were absorbed. Tax is low because equity income is recognised net of investee tax and the consolidated business has limited taxable profit.

Cash flow. FY2026 operating cash flow (RMB143.3M) was exceptional: RMB56.5M came from inventory release (mainly Maotai), RMB13.7M from prepayments, and RMB7.9M from payables (prepaid-card receipts). Cash conversion of equity income was weak in FY2026 (RMB5.4M dividends received against RMB54.6M share of results) versus FY2025 (RMB42.0M against RMB33.7M). After lease payments, free cash flow was negative in FY2024 and FY2025.

Balance sheet. The Group de-levered materially in FY2026: borrowings fell from RMB221.2M to RMB97.2M (bond redeemed, bank loans repaid using operating cash and RMB50M of released restricted cash), and lease liabilities fell RMB85.9M through repayments and modifications. Equity has risen 47% since FY2023. The persistent net current liability position (−RMB8.9M) is structural to a concession/prepaid-card model but leaves little buffer, and all borrowings are due within one year. Receivables from JVs and associates (RMB260.0M) are the largest single asset class and nearly equal to equity.

Management guidance

No quantitative guidance. FY2026 commentary: focus on management and development of the three large malls and on improving Fujian store performance, against modest Chinese consumption growth.

Consensus expectations

None available.

Bull case

1. Mall earnings compounding. Wuxi has moved past its accumulated-loss phase (RMB22.3M share in FY2026) and Changsha continues to grow (RMB34.6M). With Shanxi ramping up, equity income could exceed RMB60M without new capital.

2. De-risked balance sheet. Borrowings are down 56% in one year, the bond is repaid, and net cash excluding leases is RMB36.5M; payout capacity has improved.

3. Low valuation on reported earnings. At S$0.39, the shares trade at ~7.9x FY2026 earnings and ~1.5x book; if JV cash distributions normalise towards FY2025 levels (RMB42.0M), the dividend could rise from its flat 1.0 S cent.

Bear case

1. Core business in decline. The Fujian chain was loss-making before equity income in FY2026 even after lease gains and a one-off RMB11.9M income item; revenue has fallen two years running.

2. Earnings quality and cash. RMB54.6M of equity income produced RMB5.4M of dividends in FY2026, while RMB260.0M remains lent to JVs and associates; value depends on partners and mall-level cash flows not visible in group accounts.

3. Governance and disclosure discount. Founder control, family employment, recurring related-party transactions, a restatement, IPT misclassification and SGX queries argue for a persistent discount; liquidity is minimal.

Catalysts and monitorables (next 12 months)

• FY2026 Annual Report (expected ~Oct–Nov 2026): audited figures, free-float statement, remuneration, store count, auditor, IPT details, any adjustments versus unaudited results.

• Mall KPIs: occupancy, tenant sales, VIP members for Changsha, Wuxi and Shanxi; Shanxi time to break-even.

• Cash repatriation: dividends from Changsha associate; repayment of RMB207.5M Wuxi-related JV receivable.

• Status of Xiamen Wucun and Quanzhou Quanxiu stores after lease expiry.

• Gold and Maotai margins and inventory levels in HY2027 (results expected ~Feb 2027).

• Use of Utalk subsidiaries.

• Any new mall-management mandates or further store exits.

• SGX regulatory interactions and IPT volumes under the new mandate.

Analyst verdict

Zhongmin Baihui has become two companies in one set of accounts. The consolidated Fujian department-store and supermarket chain is a mature, shrinking business: revenue has slipped to RMB919.7 million, gross margin has compressed to 21.4%, and the operation lost RMB4.1 million before equity income in FY2026 despite cost cuts, a lease-modification gain and a one-off promotional income. On its own it would justify little more than a liquidation-style valuation.

The second business — asset-light management of large outlet malls with developer and operator partners — is where the value has migrated. The Changsha and Wuxi vehicles delivered RMB56.9 million in FY2026, more than the Group's entire pre-tax profit, and Shanxi adds a third mall from January 2026. The structure, in which operating entities pay no rent for the malls, gives high operating leverage to occupancy and tenant sales, and the current KPIs (100% and 96% occupancy, 2.5 million VIP members) are sound.

The investment question is whether these earnings reach minority shareholders. In FY2026 only RMB5.4 million came back as dividends, while RMB260 million remains lent to JVs and associates — almost the entire book equity. Combined with founder control, family appointments, an expanding related-party mandate, a restatement and repeated SGX queries, these issues justify a significant governance and liquidity discount even at roughly 8x earnings.

The FY2026 de-leveraging is a genuine improvement and removes near-term financial stress. A re-rating would require evidence of sustained cash distributions from the malls, stabilisation of the Fujian estate, and cleaner disclosure — including a clear free-float position and the purpose of new subsidiaries. Until then, the shares are best viewed as a thinly traded, deep-value holding-company situation whose reported earnings materially overstate cash available to minority shareholders.