Core Viewpoint - The report from First Shanghai highlights that Pop Mart (09992) has exceeded expectations in Q3 revenue performance and has a strong outlook for Q4, leading to an upward revision of profit forecasts for 2025-2027 to 132.9 billion, 197.8 billion, and 252.0 billion respectively, with a target price of 400.0 HKD, indicating a potential upside of 75.3% from the current stock price, and a buy rating [1] Group 1: Domestic Performance - The domestic online business has shown remarkable performance, with offline revenue in Q3 growing by 130-135%, attributed to improved store experience and operational efficiency, maintaining an average store efficiency above double [1] - The online channel has performed exceptionally well, with a year-on-year growth of 300%-305%, driven by effective conversion from live e-commerce, deep operation of private traffic, and recognition of some Q2 pre-sale orders in Q3 [1] Group 2: Overseas Growth - The overseas business continues to experience explosive growth, with the Americas being the main growth engine; Q3 overseas revenue grew significantly, with the Asia-Pacific region (excluding China) increasing by 170%-175%, the Americas by 1265%-1270%, and Europe and other regions by 735%-740% [2] - The company is rapidly expanding its market presence by opening new stores, with the number of overseas stores reaching 140 as of August 20, 2025, and expected to reach 200 by the end of the year [2] - Future plans include exploring emerging markets in the Middle East, Central Europe, and Central South America, while also establishing flagship stores in key global cities such as Paris, Sydney, Milan, and New York [2] Group 3: Product Innovation - The market demand for new products remains strong, with the Halloween-themed "Why So Serious" plush series selling out quickly, and several regular items commanding multiple times their original price [3] - The "Starry Person" product has seen a rapid increase in market heat and consumer recognition, with a secondary market premium of 99%, second only to LABUBU's 215% [3] - Collaborations with popular media, such as the SKULLPANDA series linked to the show "Wednesday," have effectively boosted brand awareness and engagement in the North American market [3] Group 4: Q4 Outlook - The Q4 outlook is promising, with the domestic market anticipating major e-commerce events like "Double Eleven" and "Double Twelve," while overseas markets will benefit from traditional holiday shopping seasons including Halloween, Thanksgiving, and Christmas [4] - The company plans to launch several holiday-themed new products and restock popular items, which is expected to reignite consumer purchasing enthusiasm and support Q4 performance [4]

Investment Rating - The report maintains a "Buy" rating for Pop Mart (9992.HK) [5][12] Core Views - The company reported a significant revenue growth of 245-250% year-on-year for Q3 2025, with China revenue increasing by 185-190% and overseas revenue by 365-370% [5][10] - The upcoming Q4 is expected to be a strong sales season due to events like Halloween, Black Friday, and Christmas, which will drive demand for gifts and trendy toys [10][11] - The company is expanding its international presence and new product lines, aiming for overseas revenue to exceed 50% of total revenue by 2025 [11][12] Summary by Sections Company Overview - The company is expected to accelerate growth, with Q2 2025 revenue growth estimated at 241% and Q3 2025 at 245-250% [7][10] - In China, Q3 2025 revenue growth is projected at 185-190%, with online sales growing by 300-305% [8][9] International Market Performance - Overseas revenue growth for Q3 2025 is expected to be 365-370%, with a slight deceleration compared to previous quarters [8][9] - Specific regional growth includes Asia-Pacific at 170-175%, the Americas at 1265-1270%, and Europe at 735-740% [9] Future Outlook - The company plans to open 100 stores overseas in 2025, with a focus on the U.S. and European markets [11] - New product categories are being introduced, and the company aims to maintain a streamlined SKU strategy [11] Financial Projections - Revenue growth rates are projected at 172% for 2025, 38% for 2026, and 36% for 2027, with net profit growth rates of 251%, 42%, and 39% respectively [12][15] - Earnings per share (EPS) are expected to be 8.16, 11.59, and 16.16 CNY for 2025, 2026, and 2027 [12][15]

Core Insights - The new "Vacation Mode On" series from CRYBABY, a popular IP under Pop Mart, was released and sold out immediately after its launch, marking the first new release in five months [1] - The series includes 6 regular items and 1 hidden item, priced at 129 yuan per blind box and 774 yuan for a full box [1] - The hidden item "Mermaid's Tears" saw its resale price rise from 129 yuan to 999 yuan, reflecting a premium of 6.7 times, which is lower than the 14 times premium seen with the previous CRYBABY series [1] Sales Performance - CRYBABY has become the fastest-growing IP for Pop Mart and the quickest to reach the 1 billion sales club [1] - In overseas markets, CRYBABY is now the second most popular IP, trailing only behind LABUBU [1] - According to Pop Mart's financial report, CRYBABY's sales are projected to reach 1.165 billion yuan in 2024, representing a 15-fold year-on-year increase, with a 2.5-fold increase expected in the first half of 2025 [1]

Summary of Pop Mart International Group Conference Call Company Overview - **Company**: Pop Mart International Group (9992.HK) - **Industry**: Consumer Goods, specifically in the collectibles and toys sector - **Market Cap**: Approximately US$39.443 billion as of October 28, 2025 - **Stock Rating**: Overweight with a price target of HK$382.00, representing a 67% upside from the current price of HK$228.20 [7][9] Key Points and Arguments Sales Performance and Strategy - **Sales Growth Outlook**: The company is optimistic about sales growth into 2026, indicating that it has not fully utilized its growth levers in 2025 [2][4] - **Seasonal Demand**: Consumer demand for IP collectibles is expected to be strong in 4Q, with a robust new product pipeline prepared [4][9] - **Pre-order Impact**: Pre-orders of Labubu plush products significantly boosted 3Q sales, but limited pre-orders in 4Q may restrict supply, potentially offsetting seasonal demand [4][5][9] Product Management - **Product Lifecycle Management**: The company acknowledges that pre-orders may not align with its product lifecycle management strategy, as flooding the market can lead to IP exhaustion [5][9] - **Shift to In-stock Sales**: Management intends to return to in-stock sales to better manage product lifecycle and enhance recurring customer growth [9][10] Market Dynamics - **US Market Expansion**: Pop Mart views its US operations as still in early stages, with plans to open more high-traffic flagship stores in 2026-27 [13][14] - **Sales Mix**: The offline sales mix in the US is diversifying, with higher sales per store compared to other regions [13][14] Product Launches and Consumer Engagement - **New Product Launches**: New products are seen as critical growth drivers, with a focus on reducing supply of older products to prepare for new launches [10][21] - **Consumer Engagement Initiatives**: The company has engaged consumers through pop-up stores and outdoor IP-themed installations, particularly in the US [15][16] Supply Chain and Capacity Constraints - **Supply Chain Challenges**: The company faced capacity constraints affecting timely replenishment of Halloween products and Twinkle Twinkle collections [18][19][21] - **Future Capacity Plans**: Management expects suppliers to have more capacity in the coming year, which should alleviate current supply issues [19][21] Financial Guidance - **NPM Guidance**: The company maintains a 2025 Net Profit Margin (NPM) guidance of approximately 35%, with expectations for margin expansion driven by online growth in China [23][24] Risks and Considerations - **Upside Risks**: Faster overseas growth, successful product rollouts, and retention of momentum in China are potential upside risks [26] - **Downside Risks**: Weak macroeconomic conditions, uncertainties related to new products, and challenges in overseas expansion pose risks [26] Additional Important Insights - **Social Media Influence**: The unexpected virality of Labubu on social media is seen as a catalyst for growth in the US market, but monetizing this requires ongoing operational efforts [16][17] - **Latam Market Assessment**: The company is evaluating Latin America for market potential and supply chain development, which could improve US operations [22] This summary encapsulates the key insights from the conference call, highlighting Pop Mart's strategic focus on growth, product management, market dynamics, and financial outlook while addressing potential risks and challenges.

Summary of Pop Mart (9992 HK) Conference Call Company Overview - **Company**: Pop Mart (9992 HK) - **Industry**: Specialty Retail - **Market Cap**: HKD 309,414 million (USD 39,821 million) [6][16] Key Points and Arguments Market Reaction and Investor Sentiment - Following a strong 3Q25 trade update, Pop Mart's share price decreased by 8%, while the HSI index increased by 9% [2][22] - Investor feedback indicates divided opinions on the company's performance, with bears referencing past pop-toy market collapses and bulls viewing Pop Mart as a growing IP-based platform [2][22] Resale Market Dynamics - The normalization of resale prices for Labubu is attributed to Pop Mart's efforts to reduce inflated prices in the resale market, contrasting with the bear narrative of demand manipulation [3][22] - Pop Mart's strategy involves increasing product supply directly to consumers and combating scalpers to restore price signals in the resale market [3][22] Growth Prospects - Pop Mart is seen as being in a growth phase, aiming to expand its IP products globally, with comparisons made to top global IP companies like Lego and Sanrio [4][22] - The company is expected to face challenges but is believed to have strong growth potential through direct-to-consumer (D2C) strategies and globalization [4][22] Financial Projections - **Target Price**: HKD 392.50, implying a 70% upside from the current price of HKD 230.40 [5][22] - **Valuation Metrics**: - 2025e P/E: 34.3x - 2026e P/E: 26.6x - WACC: 10.0% - Long-term growth rate: 3.0% [5][22] Financial Performance - **Revenue Growth**: - 2025e Revenue: CNY 40,824 million, with a year-on-year growth of 213% [12][21] - 2026e Revenue: CNY 53,335 million, with a year-on-year growth of 30.6% [12][21] - **Net Profit**: - 2025e Net Profit: CNY 13,835 million - 2026e Net Profit: CNY 17,859 million [12][21] Risks and Challenges - Major downside risks include a decline in member engagement, which could affect member growth and repeat purchases [5][22] - Other risks involve potential supply chain issues, excessive scalper markups, and competition from new market entrants [31][22] Additional Insights - The company launched 31 new plush toys in 2025 YTD, with only 19% based on the Labubu IP, indicating a diversification in product offerings [29][22] - The financial ratios indicate strong profitability, with a projected ROE of 93.5% in 2025e [7][12] Conclusion Pop Mart is positioned for significant growth in the specialty retail sector, leveraging its IP-based product strategy and D2C model. Despite recent share price declines, the long-term outlook remains positive, supported by strong revenue growth projections and a robust target price. However, the company must navigate various risks, including market sentiment and competitive pressures.

Summary of Conference Call on New Consumption Sector Industry Overview - The new consumption sector can be divided into two categories: - Category dividend type (e.g., IP toys, pets, high-end gold jewelry) - Channel efficiency transformation type (e.g., coffee, tea, hot pot ingredients, chain medical beauty) [1][2] Key Insights and Arguments - Investors are concerned about the sustainability of repurchase frequency and user expansion effects for category dividend companies, while questioning the long-term stable growth ability of channel efficiency transformation companies [1][2] - Pop Mart faces challenges such as slowing growth in the North American market and fluctuations in second-hand prices, leading to adjustments in online and offline sales ratios [1][4] - Optimism for the new consumption sector in 2026, with market expectations currently low; actual growth of 20%-50% could provide strong support [1][7] - Lao Pu Gold has raised prices three times, totaling approximately 50%, and expects prices to be a significant support in 2026, with low probability of significant user loss [1][12] - Chain brands like Luckin Coffee, Gu Ming Tea, and others benefit from supply chain, franchise systems, and digital membership operations, showing strong same-store growth sustainability [1][14] Additional Important Points - Investors' concerns stem from a lack of understanding of the demand cycles for new consumption companies, which complicates their growth expectations [2][3] - Digital membership operation capabilities are crucial for chain brands, leading to higher customer repurchase rates and lower customer acquisition costs [3][15] - Pop Mart's stock price decline is influenced by various factors, but if growth is achieved in 2026, the price-to-earnings ratio could drop below 20 times [3][19] - The North American market has shown a structural fundamental flaw with no significant acceleration since August 2025, and second-hand price fluctuations are viewed as a sign of weakening demand [5][19] - The company is adjusting its product and channel structure in North America, which may impact short-term sales data [6][21] - The experience-driven nature of the IP toy industry enhances consumer stickiness and supports long-term growth, despite recent weak data in North America [8][18] - Future growth for Pop Mart is expected from monetizing old IP through new categories and expanding overseas through a direct sales model [10][11] - The performance of some IPs in overseas markets may be linked to marketing strategies and operational adjustments rather than inherent product weaknesses [19][20]

Core Insights - The influx of international tourists to Beijing's attractions has increased, with cultural heritage sites like the Forbidden City and the Great Wall remaining top destinations [1][3][4] - The Beijing Universal Resort has gained popularity among foreign visitors, showcasing a blend of international and local appeal [6][7] - The rise of the Pop Mart City Park, featuring popular IPs like LABUBU, has emerged as a significant attraction for young international tourists [12][13] Group 1: Tourist Preferences and Trends - International tourists are increasingly interested in deep cultural experiences rather than just sightseeing, seeking to understand the historical significance of sites like the Great Wall [4] - The popularity of night tours and unique cultural activities, such as intangible cultural heritage performances, is growing among inbound tourists [1][4] - The Forbidden City and the Great Wall continue to hold a central position in attracting global visitors, despite the emergence of new attractions [4] Group 2: Popular Attractions - The Forbidden City, Mutianyu Great Wall, and Badaling Great Wall are consistently ranked among the top attractions for inbound tourists [3] - The Beijing Universal Resort has been recognized as a top destination, appealing to both Western and Southeast Asian tourists [6][7] - Pop Mart City Park has rapidly climbed the ranks to become the sixth most popular attraction for inbound tourists, reflecting a shift towards modern and trendy experiences [12][13]

Core Insights - Pop Mart has officially opened its first store in the Middle East at Hamad International Airport in Doha, Qatar, marking its first 24/7 operational store globally [2] - The store features a design that incorporates Middle Eastern architectural elements and covers an area of approximately 100 square meters [2] - A travel-exclusive product line called "Starry People Wonderful Journey Series" has been launched, including items like card holders, U-shaped plush toys, and portable storage bags, along with a limited-edition blanket as a gift [2] - The COO of Pop Mart International Group highlighted the cultural richness and youthful consumer power of the Middle East, positioning the store as a space for cultural exchange and emotional connection [2] - As of now, Pop Mart has opened over 570 physical stores worldwide, with its IP products becoming increasingly popular as travel souvenirs among global tourists [2]

Core Insights - Pop Mart has opened its first 24-hour store in the Middle East at Hamad International Airport in Doha, Qatar, marking its first global store operating 24/7 [1] - The store features a design that incorporates Middle Eastern architectural elements and covers an area of approximately 100 square meters [1] - A travel-exclusive product line called "Starry People Wonderful Journey Series" has been launched, including items like card holders, U-shaped travel pillows, and portable storage bags, along with a limited-edition blanket as a gift [1] - The COO of Pop Mart International Group emphasized the cultural richness and youthful consumer base in the Middle East, positioning the store as a space for cultural exchange and emotional connection [1] - Pop Mart has over 570 physical stores globally, with its IP products becoming popular as travel souvenirs among tourists [1]

Core Viewpoint - Morgan Stanley has a positive outlook on Pop Mart's sales growth until 2026, indicating that the company has not fully unleashed its growth potential by 2025 [1] Group 1: Sales Growth and Strategy - The company is focusing on business quality and sustainable growth through tactical adjustments [1] - The pre-order drive for Labubu has led to better-than-expected performance in Q3 2025 [1] - The company has resumed its spot sales model to better manage product life cycles and promote repeat customer growth [1] Group 2: Future Expectations - Management anticipates strong sales performance in Q4 due to more festive occasions and a robust product reserve [1] - Offline sales in the U.S. continue to grow, supported by a diversified IP portfolio and high store efficiency [1] - The company plans to open more high-traffic flagship stores between 2026 and 2027 [1] Group 3: Online Sales and Product Launches - U.S. online sales may experience temporary impacts due to reduced pre-sale activities [1] - The introduction of new products from top IPs is expected to accelerate growth quickly [1]