Summary of Key Points
Chenguang Co., Ltd. has once again allocated 500-100 million yuan for share repurchases, indicating its ample cash flow. Meanwhile, its new business venture, Jiumu Miscellaneous Store, which has opened over 860 stores (with an additional 100 per year), is still in the red. Jiumu represents Chenguang's strategy to counter the decline in its traditional stationery business and explore a younger, more upscale market segment. However, the company faces challenges such as conflicting brand positioning and fierce competition, and it needs to establish a distinct competitive advantage to achieve new growth.
I. Chenguang's Confidence in Repurchases: Plenty of Cash Available
This round of share repurchases is several times larger than the previous two (150 million yuan each time). Why does Chenguang have the confidence to do this? Simply put, it doesn't lack funds. As of the first quarter of 2026, the company holds nearly 7 billion yuan in cash and assets that can be quickly liquidated, while its debts amount to less than 500 million yuan—enough to repay all 14 creditors easily. Over the past 15 years, Chenguang has consistently generated positive operating cash flows from its stationery sales, with annual revenues exceeding 2 billion yuan in the last three years. It's like having a substantial savings account without any mortgage obligations, allowing the company to distribute dividends to shareholders and use funds for share repurchases to boost investor confidence, as well as to invest in new businesses like Jiumu Miscellaneous Store.
II. Jiumu Miscellaneous Store: Chenguang's New Frontier for Targeting Young Consumers
Jiumu is not a traditional stationery store (located near schools selling pens and notebooks); instead, it's a "culturally creative grocery shop" aimed at girls aged 15-29, offering stationery, blind boxes, plush toys, and accessories. Why this approach? Chenguang's traditional stationery business has been declining—revenues fell by 5% in 2025 and another 3% in the first quarter of 2026. In contrast, its new businesses (including Jiumu) are growing (9% in 2025). The strategic significance of Jiumu is twofold: it enables Chenguang to connect directly with younger consumers, understand their preferences, and collaborate with popular IPs for limited-time events, something traditional stores cannot achieve due to their reliance on distributors and campus locations.
III. Why Is Jiumu Still Losing Money? Rapid Expansion and Brand Positioning Dilemmas
Despite generating 1.5 billion yuan in revenue (a 9% increase) in 2025, Jiumu incurred a loss of over 84 million yuan. The reasons are twofold: first, the high costs associated with rapid expansion—rentals, renovations, and staffing expenses; second, the conflict in brand positioning. Stationery is Chenguang's core product, but younger consumers prefer trendy and fast-growing categories like blind boxes. If Jiumu focuses solely on stationery, it may be perceived as a "high-end version of a traditional stationery store." On the other hand, if it expands into trendy products, it competes with brands like Miniso and KKV, which specialize in these areas and have a significant market presence.
IV. Fierce Competition for Business Share in Malls
Jiumu faces intense competition from other stores in malls, such as Miniso, KKV, and KAYU, all of which use popular IPs to attract customers (displaying branded blind boxes and toys with anime posters). Many of Jiumu's products are purchased from third parties, making its offerings increasingly similar to those of its competitors. Consumers may wonder, "Why should I choose Jiumu instead of other stores?" Miniso, in particular, has over 8,500 stores (10 times more than Jiumu), resulting in lower costs and a wider range of popular products, giving it a significant advantage in non-stationery categories.
V. Chenguang's Patience, but Jiumu Needs to Stand Out
Chenguang has the financial resources to continue experimenting with new businesses like Jiumu. However, Jiumu must prove its profitability. Its current focus is on optimizing store operations (increasing revenue per square meter), focusing on core products, and adding exclusive IP partnerships (e.g., with Snoopy and Langlang Mountain). Using member data to select IPs can help avoid inventory buildup. While limited-time events and IP collaborations are helpful, Jiumu also needs to create unique selling points that encourage customers to visit specifically—perhaps by offering exclusive IP products or providing a distinctive shopping experience.
In conclusion, Chenguang has built a solid financial foundation through its traditional stationery business, and Jiumu represents its hope for transformation. To succeed, it must differentiate itself from its competitors. Patience is essential, but ultimately, differentiation will be the key to long-term success.