Yonghui Superstores Co Ltd Financial Update

Company Overview

Yonghui Superstores Co Ltd, a consumer staples company listed on the Shanghai Stock Exchange, operates supermarket franchises including hypermarkets, marketplaces, and supermarkets. As of August 20, 2025, the company’s close price was 4.93 CNH, with a market capitalization of 43.02 billion CNH. The company’s 52-week high was 7.87 CNH on December 15, 2024, and its 52-week low was 2.15 CNH on August 25, 2024. The price-to-earnings ratio stood at -21.854.

Financial Performance

In the first half of 2025, Yonghui Superstores reported a significant decline in both revenue and profit. The company’s total business revenue was 299.48 billion CNH, marking a 20.73% decrease from the previous year. The net profit attributable to shareholders was -2.41 billion CNH, a 187.38% drop from the 2.75 billion CNH profit in the same period the previous year. The second quarter alone saw a loss of 3.88 billion CNH, erasing the modest profit from the first quarter and exposing structural weaknesses during the strategic transformation period.

Strategic Challenges

The company’s financial downturn is attributed to strategic overreach, particularly its attempt to emulate the “Fat Dragon” model in a “quality retail” transformation. This strategy involved simultaneous large-scale closures and adjustments of stores, leading to resource allocation imbalances. The closure of unprofitable stores created short-term revenue gaps, while newly transformed stores were still in the market development phase. This shift in operational dynamics severely impacted the company’s core business.

Supply Chain Issues

The supply chain reform further exacerbated the crisis. A drastic reduction of suppliers by 50% aimed at improving product transparency disrupted the established supply chain ecosystem. The development of proprietary brands and customized products lagged behind channel adjustments, resulting in a gap in product offerings. Consumers struggled to find a balance between quality and price in the transformed stores. Additionally, the transition to self-manufacturing in categories like bakery and cooked food led to high losses due to insufficient operational capabilities.

Debt and Restructuring

As of June 30, 2025, Yonghui Superstores’ debt-to-asset ratio was 88.21%. The company is currently pursuing a rights issue to raise up to 40 billion CNH, intended for store renovations and debt repayment. During the first half of 2025, the company closed 227 stores and opened 124 transformed stores.

Shareholder Concerns

The company’s largest shareholder, Guangdong Juncai International Trade Co., Ltd., has pledged 18.68 billion shares, representing 70% of its total holdings and 20.58% of the total shares, pushing the company’s pledged ratio close to the 30% warning line.

Conclusion

Yonghui Superstores is navigating a challenging period of strategic transformation, marked by significant financial losses, operational restructuring, and supply chain disruptions. The company’s efforts to revitalize its business model and manage its debt obligations will be critical in determining its future trajectory.