Summary of the Conference Call for Pop Mart Company Overview - **Company**: Pop Mart - **Industry**: Toy and Collectibles Key Points and Arguments Stock Buyback and Market Confidence - Pop Mart initiated its first stock buyback since January 2024, indicating confidence in its operations and countering negative impacts from short-selling activities. The first buyback involved 1.4 million shares at a cost of HKD 250 million, and the second involved 500,000 shares at HKD 96.49 million [2][3] Market Sentiment and Short-Selling Reports - Bernstein's short-selling report claims that the U.S. market will weaken and all IPs are deteriorating. However, this argument is based on secondary market prices and search indices, which do not accurately reflect actual sales and consumer loyalty. The report also presents contradictory expectations for the Chinese and U.S. markets [2][4][5] Domestic Market Performance - The domestic channel and IP structure are superior to international counterparts, with healthy foot traffic in offline stores. Q4 store efficiency grew nearly 40% year-over-year. Successful IP operations include "Starry People," while "Labubu" relies more on chance factors [2][6] New Product Launches and Innovation - Recent product launches, such as the "Year of the Horse" plush toys and the "Biqi Knock Knock" series, have performed well. The company is exploring diverse operational strategies, showcasing its ability to innovate and adapt to market demands [2][7] Future Growth Prospects - The outlook for Pop Mart is optimistic, with strong growth in domestic channels and a successful introduction of new products. The company is diversifying its IP value, laying a solid foundation for future growth. The U.S. market, while still developing, shows initial positive results [2][8] IP Management Strategy - Pop Mart focuses on consumer feedback and membership data for product modifications in single IP operations. Examples include the third and fourth generation of "Labubu" products, demonstrating the company's capability in IP and product innovation [2][9] Second-Hand Market Dynamics - The second-hand market's price fluctuations are attributed to supply-demand adjustments. Despite a previous surge in prices, the current supply is sufficient, leading to a natural price decline. The second-hand transaction volume accounts for only 10%-15% of total releases, indicating that most inventory is absorbed by genuine demand [2][10] Importance of the Chinese Market - The Chinese market is expected to contribute 50%-60% of sales in 2026, supported by a healthy IP structure and a robust membership system. This market is crucial for the company's growth [2][11] U.S. Market Potential - Although the U.S. market accounted for less than 20% of sales in 2025, it remains significant. The company is implementing various measures to enhance market health, including introducing new IPs and expanding store numbers [2][12] Expansion in Other Regions - Pop Mart is also focusing on markets like Canada, the Middle East, and South America, with notable performance in Canada and stable results in Southeast Asia, Japan, and South Korea since 2024 [2][13] Future Product Categories - The company plans to expand into new categories such as building blocks, jewelry, and movable dolls (BJD) to further scale its business. These emerging categories are gaining consumer interest and are expected to become future growth drivers [2][14][15] Overall Confidence in Future Development - Considering the solid domestic foundation, ongoing international expansion, and healthy IP structure, Pop Mart is viewed as a long-term growth potential with a favorable investment profile [2][16] North American Market Adjustments - In North America, Pop Mart has made adjustments to its channel and product supply due to supply chain issues. The company is narrowing online supply while increasing offline availability to address consumer demand fluctuations [2][17] Performance of Specific IPs - The "Biqi" IP has not received significant resource allocation but is still being explored. The company responds quickly to successful trends to maximize exposure and effectiveness [2][18][19] Global Business Development - Pop Mart is expanding globally, with new stores in regions like the Philippines and Dubai. The company is also exploring opportunities in other Middle Eastern countries [2][20] Sales Growth Projections - For 2026, domestic market growth is projected at 20%-30%, while overseas growth is expected at 50%-60%. The overall target is a 30% growth rate, with specific IPs like "Labubu" and "Starry People" anticipated to achieve significant sales milestones [2][20]

Core Insights - The product "PUCKY Knock Knock Series Electronic Wooden Fish" has generated significant consumer interest and social media buzz within a week of its launch, becoming a phenomenon similar to the Labubu IP [1] - The product combines traditional cultural elements with modern entertainment, catering to the emotional needs of young consumers in a high-pressure society [7] Market Performance - The hidden variant "Success" has seen its market price surge from the original price of 99 yuan to 396 yuan, representing a 300% premium; the regular variant "Wisdom" increased from 99 yuan to 209 yuan, a 100% premium [7] - The pricing strategy of 99 yuan per box and 594 yuan per set is perceived by fans as an entry ticket to emotional relief and psychological comfort rather than a financial burden [7] Industry Trends - The success of the electronic wooden fish reflects the rapid expansion of the "emotional economy," which is projected to exceed 2.3 trillion yuan in 2024 and surpass 4.5 trillion yuan by 2029, with a compound annual growth rate of over 15% [10] - The emotional economy focuses on fulfilling consumer emotional needs, differing from traditional consumption by emphasizing emotional experiences and psychological comfort rather than functional value [10] - Generation Z consumers prioritize "emotional price-performance ratio" over "cost-performance ratio," showing a willingness to pay a premium for emotional resonance, cultural identity, and self-expression [10]

Core Viewpoint - The 20th anniversary exhibition of the popular toy brand "Molly," created by designer Wang Xinming, is being held in Hong Kong, showcasing its development over the past two decades and celebrating its cultural impact through various city landmarks [2]. Group 1 - The exhibition theme is "A Star That Remains Unchanged," reflecting on the journey of "Molly" since its creation in 2006 [2]. - The exhibition is a collaboration between Pop Mart and the Hong Kong Tourism Board, aiming to enhance the city's cultural tourism through the "Molly" brand [2]. - The Hong Kong exhibition is the first global showcase for "Molly's" 20th anniversary, officially opening on January 24 [2]. Group 2 - The exhibition features a giant "Molly" art installation located in the West Kowloon Cultural District [2]. - Additional installations are set up at iconic locations such as Victoria Peak and the Sky Terrace [5]. - The exhibition includes displays of Wang Xinming's original sketches and recreations of his studio environment [13][15].

Group 1 - On January 23, 2026, Alibaba-W (09988), Pop Mart (09992), and Tencent Holdings (00700) ranked as the top three companies by trading volume in the Southbound Stock Connect, with transaction amounts of 4.748 billion, 2.660 billion, and 2.614 billion respectively [1] - In the Southbound Stock Connect for the Shenzhen-Hong Kong Stock Connect, Alibaba-W (09988), Tencent Holdings (00700), and Pop Mart (09992) also held the top three positions, with transaction amounts of 3.322 billion, 1.798 billion, and 1.370 billion respectively [1] Group 2 - In the Southbound Stock Connect, the top active trading companies included Alibaba-W (09988) with a net buy amount of -0.595 billion, Pop Mart (09992) with a net buy amount of +0.480 billion, and Tencent Holdings (00700) with a net buy amount of +0.396 billion [2] - In the Shenzhen-Hong Kong Stock Connect, Alibaba-W (09988) had a net buy amount of -0.895 billion, Tencent Holdings (00700) had a net buy amount of -0.156 billion, while Pop Mart (09992) recorded a net buy amount of +0.268 billion [2]

Core Viewpoint - The CEO of Pop Mart, Wang Ning, expressed frustration during a meeting regarding the delay in the introduction of new product bags, questioning the procurement process and accountability within the team [1][2]. Group 1 - Wang Ning inquired about the timeline for the new bags, highlighting that only a mini bag has been seen for a long time [1][2]. - He emphasized the need for accountability in the procurement process, questioning who is responsible for orders and why they have not participated in meetings [1][2]. - Wang Ning stated that he is proactive in addressing issues he observes, indicating a hands-on approach to design errors, such as color discrepancies in products [1][2].

Core Viewpoint - The founder of Pop Mart, Wang Ning, emphasizes that IP-based companies experience cyclical ups and downs, but they tend to be long-lasting due to the enduring nature of IPs that can evolve over time [1][2]. Group 1 - IP-based companies are characterized by experiencing multiple cycles of growth and decline [1][2]. - All IP-based companies globally are considered to have longevity, as once an IP is created, it can accumulate value over time [1][2]. - There is a belief that despite future cycles, IPs will continue to grow alongside successive generations [1][2].

Group 1 - Southbound funds recorded a net sell of HKD 1.601 billion in Hong Kong stocks today [1] - The net purchases included Pop Mart at HKD 747 million, Xiaomi Group at HKD 608 million, and Tencent Holdings at HKD 240 million [1] - The net sales included Alibaba at HKD 1.49 billion, China Mobile at HKD 621 million, Longi Green Energy at HKD 138 million, and Goldwind at HKD 123 million [1] Group 2 - Southbound funds have continuously net bought Xiaomi for 6 days, totaling HKD 3.07384 billion [1] - Southbound funds have continuously net sold China Mobile for 15 days, totaling HKD 11.71603 billion [1]

Core Viewpoint - The Hong Kong stock market experienced significant net selling from northbound capital, totaling HKD 16.01 billion on January 23, with notable net selling in Alibaba, China Mobile, and Changfei Optical Fiber Cable, while Pop Mart, Xiaomi, and Tencent saw net buying [1][2]. Group 1: Northbound Capital Activity - Northbound capital recorded a net selling of HKD 16.01 billion, with HKD 5.6 billion from Shanghai Stock Connect and HKD 10.41 billion from Shenzhen Stock Connect [1]. - The most net bought stocks included Pop Mart (HKD 7.47 billion), Xiaomi (HKD 6.08 billion), and Tencent (HKD 2.4 billion) [4][5]. - The most net sold stocks were Alibaba (HKD 14.9 billion), China Mobile (HKD 6.22 billion), and Changfei Optical Fiber Cable (HKD 1.38 billion) [7][8]. Group 2: Individual Company Insights - Pop Mart (09992) reported a net buying of HKD 7.47 billion, driven by the successful launch of its Valentine's Day limited edition blind box and recent share buybacks totaling over HKD 300 million, indicating confidence in long-term growth [4]. - Xiaomi Group (01810) saw a net buying of HKD 6.08 billion, with plans to repurchase up to HKD 25 billion of its B shares, reflecting confidence in its business outlook [5]. - Tencent Holdings (00700) had a net buying of HKD 2.4 billion, supported by positive analyst reports highlighting resilience in its core business and AI developments [5]. - Alibaba (09988) faced a net selling of HKD 14.9 billion, as it prepares for the potential IPO of its AI chip subsidiary, T-Head, although the timeline remains uncertain [7]. - China Mobile (00941) experienced a net selling of HKD 6.22 billion, indicating market concerns [8].

Core Insights - The founder of Pop Mart, Wang Ning, shared his early entrepreneurial challenges, highlighting difficulties in hiring staff due to a competitive job market where employees had many options [1][3] - Wang recounted a specific incident during the Chinese New Year when employees collectively resigned after requesting early salary payments to buy gifts for their parents, leaving him to manage the store alone [1][3] - He emphasized that running a business requires not only intellectual effort but also significant physical and emotional stamina to endure the challenges over the years [1][3] Summary by Categories - **Entrepreneurial Challenges** - Wang Ning faced significant hiring challenges in the early days of Pop Mart, struggling to attract employees due to their abundance of job options [1][3] - **Employee Dynamics** - A notable incident occurred when employees requested early salary payments for the Chinese New Year and subsequently resigned en masse, leaving Wang to operate the store alone [1][3] - **Business Resilience** - Wang highlighted the necessity of both mental and physical resilience in entrepreneurship, indicating that sustaining a business requires strong emotional and physical endurance [1][3]

Core Viewpoint - The founder of Pop Mart, Wang Ning, encourages individuals to explore big cities despite potential challenges, emphasizing the value of the experience as akin to attending a "social university" [1][2]. Group 1 - Wang Ning believes that facing difficulties in big cities can provide valuable insights into urban life [1][2]. - He suggests that the experience gained from navigating a big city can enhance one's sense of worth and knowledge, likening it to a graduate-level education in social understanding [1][2].