At a glance
Zhongmin Baihui Retail Group Ltd, a department store and supermarket operator led by Co-Founder and Chief Executive Officer Chen Kaitong along with Executive Chairman Swee Keng Lee
The company reported a 16.7% surge in net profit after taxation to RMB 49.9 million, despite experiencing a 3.3% decline in total revenue to RMB 919.7 million
This financial performance occurred over the twelve-month period of FY2026, which included the launch of a new strategic large mall operation commencing in January 2026
Operations spanned China’s retail market, specifically within Fujian, Shanxi, Wuxi, and Changsha, impacting its public equity listing on the Singapore Exchange (SGX) under the ticker symbol 5SR
Traditional direct consumer sales faced macroeconomic headwinds and margin compression. However, high-performing strategic outlet partnerships successfully captured consumer demand that wholly owned physical stores struggled to reach
Management achieved profit growth through a 415.7% increase in joint venture results, aggressive balance sheet de-leveraging by reducing debt by RMB 124 million, and slashing internal administrative expenses
The Zhongmin Baihui Profit Paradox and the Strategic Pivot to Managed Retail
The FY2026 results for Zhongmin Baihui Retail Group present a compelling paradox for the modern retail investor. While total revenue dipped by 3.3% to RMB 919.7 million, the bottom line told a completely different story.
Net profit after taxation surged by 16.7%, reaching RMB 49.9 million. This divergence indicates a company in the midst of a significant structural shift. The Group is moving away from a pure reliance on traditional store sales toward a more complex model driven by high-performing strategic partnerships.
The Unseen Power of Joint Ventures and Associates
The primary engine of this year’s profit growth did not reside at the cash registers of the Group’s wholly owned department stores. Instead, earnings were fueled by a substantial increase in the share of results from joint ventures and associates. Together, these entities contributed a net profit of RMB 54.6 million.
The Wuxi Shi Yueshang Outlets performed exceptionally well, with its profit contribution jumping from RMB 4.0 million to RMB 22.3 million. Meanwhile, the Changsha Sasseur outlet mall remained a cornerstone of stability, contributing RMB 34.6 million.
The Group’s share of results from joint ventures saw a staggering increase of 415.7% during the financial year.
While this growth is impressive, it fundamentally alters the risk profile for shareholders. Relying on joint ventures means the company has less direct operational control compared to its wholly owned stores. However, the current results suggest that these managed outlet formats are successfully capturing demand that traditional retail footprints are struggling to reach.
Maotai Sales Provide a Vital Buffer for Direct Revenue
The direct sales segment faced significant headwinds as consumer preferences shifted and discretionary spending tightened. Gold sales declined by RMB 6.1 million, and general product sales saw a drop of RMB 28.3 million. In a modest economy where China’s GDP grew by 4.7%, these figures reflect a broader challenge for traditional retail goods.
The core retail health of the Group is also under pressure. The Gross Profit Margin fell from 23.2% to 21.4% during the period. This margin compression highlights the rising costs and competitive pricing environment currently facing physical retailers.
However, the Group found a vital cushion in high-demand “anchor” products. Sales of Maotai liquor increased by RMB 12.9 million, acting as a stabilizer for the direct sales category. Interestingly, overall inventories decreased by RMB 57.1 million, a move primarily driven by lower Maotai stock levels. This suggests a high turnover and efficient liquidation of this specific luxury product line.
A Massive Clean Up of the Balance Sheet
Management took aggressive steps to improve financial health by de-leveraging the balance sheet. Total loans and borrowings saw a net decrease of RMB 124 million over the twelve-month period. This was achieved through a disciplined approach to debt management and cash flow allocation.
The following table details the components of the debt reduction effort during FY2026.
| Category | Amount (RMB million) |
| Loan Repayments | (314.4) |
| New Loans Obtained | 193.0 |
| Unrealised Foreign Exchange Gain | 2.6 |
| Net Decrease in Borrowings | 124.0 |
This level of repayment is a positive signal for long-term stability despite the Group’s current net current liability position of RMB 8.9 million. By reducing interest-bearing debt, the company lowers future finance costs and creates more flexibility for its ongoing transition.
Driving Bottom Line Growth Through Cost Discipline
Profit growth was also supported by internal austerity measures. Administrative expenses fell by 7.1% to RMB 93.9 million. This was largely driven by lower staff costs, reduced bank charges, and the absence of the RMB 7.4 million in one-off write-offs that plagued the previous year.
Operating efficiency also improved through significant savings in utilities, which dropped by RMB 5.1 million. These internal wins were somewhat counter-balanced by a RMB 4.0 million bad debt expense. However, the overall trend points toward a much cleaner operational period than the prior year.
Selling and distribution expenses remained relatively flat. The Group strategically reinvested savings from staff costs into advertising and promotion, which saw a RMB 11.2 million increase. This indicates a proactive shift to prioritize customer acquisition even as the external environment remains challenging.
Navigating the Contraction of Physical Leasable Space
The physical retail footprint continues to undergo a necessary contraction. Rental income dropped by 14.2%, a direct result of a reduction in available leasable area. The Group is clearly moving away from underperforming formats that no longer align with consumer behavior.
A primary example of this shift was the cessation of operations at the Zhangzhou Port store. This exit resulted in a RMB 4.0 million write-off of renovation costs originally paid on behalf of the landlord. While such closures are painful in the short term, they are essential for removing unproductive assets from the portfolio.
The future of the company’s physical presence now rests on its “large mall” strategy. The new mall in Shanxi Province, which commenced operations in January 2026, represents the Group’s new direction. The bet is that these larger, managed formats will prove more resilient than older, smaller store models.
The Path Forward for Shareholders
Investors should view these results as the profile of a company in transition. The Net Asset Value per share has improved to 137.28 RMB cents, up from 116.77 RMB cents a year ago. Furthermore, the Board has recommended a final dividend of 1.0 Singapore cent per share, maintaining consistent returns for equity holders.
In the coming 12 months, shareholders should monitor three specific areas for continued growth. First is the performance of the newly opened Shanxi Province mall to see if it can reach profitability quickly. Second is the stability of the Fujian province stores, which are currently undergoing performance improvement efforts.
Finally, investors must watch the sustainability of the profit contributions from the Wuxi and Changsha outlets. As the Group evolves into a complex investment holding entity, these external partnerships will continue to dictate the company’s ability to generate value in a shifting retail landscape.
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