Core Viewpoint - The article discusses the evolving consumer behavior in China, contrasting it with Japan's "lost three decades," emphasizing a trend towards selective consumption upgrades rather than a decline in consumption quality [1][2]. Group 1: Consumer Behavior Trends - The Chinese online consumption brand index (CBI) reached 62.65 in Q3 2025, showing a 4.4% increase year-on-year and a 0.92% increase compared to the same quarter in 2024, indicating a stable growth in consumer preference for high-quality brands [2][4]. - The CBI reflects the proportion of consumers purchasing high-quality branded goods, suggesting that consumers are not entering a "consumption menopause" but are instead actively seeking quality [3][4]. - The trend of "selective consumption upgrade" is evident, where consumers pursue cost-effectiveness for necessities while being willing to pay a premium for emotional and experiential products [5][6]. Group 2: Brand Performance and Market Dynamics - Brands like DJI and Pop Mart have shown significant growth, with DJI entering the top ten for the first time, indicating a shift towards innovative products that create new demand rather than relying on price competition [7][16]. - The CBI report highlights that brands achieving high scores are not necessarily those known for low prices but those that create unique experiences and emotional value for consumers [7][18]. - The report indicates a seasonal pattern in consumer behavior, with higher CBI scores during promotional periods, but the third quarter's performance reflects a solid foundation for brands in non-promotional times [12][14]. Group 3: Platform Strategies and Market Evolution - E-commerce platforms like Taobao are shifting their focus towards supporting quality brands and original merchants, moving away from price wars to fostering product quality and service [24][25]. - The growth in the CBI index is attributed to a strategic shift in platform policies that encourage brands to enhance their value proposition rather than compete solely on price [25][26]. - The article emphasizes that a market balanced between daily sales and promotional periods is more resilient, indicating that brands are building long-term value rather than relying on short-term sales spikes [26][28].

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the China IP retail and toy industry, specifically highlighting companies such as Pop Mart, Miniso, and Bloks [7][8][9]. Pop Mart - **Sales Performance**: Pop Mart's online sales growth in China decelerated in December due to disciplined supply release, but an acceleration in supply was noted in January, which is expected to support growth [11][12]. - **New Product Launches**: The "Have a Good Run" plush toy series launched in January sold out quickly with a disciplined volume release of approximately 30,000 units on Tmall and Douyin [10][11]. - **Secondary Market Performance**: The secondary market price performance for non-secret SKUs showed mixed results, with premiums ranging from -30% to +50% [10][11]. - **US Market Trends**: In the US, credit card sales growth decelerated to approximately 300% in December from 500% in November, indicating a slowdown in growth [21][30]. Miniso - **Sales Growth**: Miniso's sales growth in Q4 is on track with management's expectations, showing solid performance in both China and the US. The company anticipates a positive outlook for the Chinese New Year (CNY) and Q1 2026 due to enhanced holiday operations and a relatively low base [8][27]. - **Product Launches**: New products under the Want Want IP were launched in late December, targeting the New Year season [10][11]. - **US Credit Card Sales**: Miniso's US credit card sales growth was approximately 75% in December, up from 60% in November, indicating strong holiday performance [27][29]. Bloks - **Product Launches**: Bloks accelerated new product launches in December, introducing over 30 product series, including new series for existing large IPs like Transformers and Kamen Rider [15][19]. - **Sales Performance**: Initial performance of new products, such as Kamen Rider's Legend version, has been positive, achieving over 10,000 sales volume on Tmall [15][19]. Market Trends and Outlook - **US Retail Sales**: The US holiday retail sales growth was reported at 3.9% from November 1 to December 21, showing slight improvement compared to the previous year [20]. - **Consumer Sentiment**: Easing comparisons and tax refund tailwinds are expected to support discretionary demand in the upcoming months [20]. - **Secondary Market Trends**: The secondary market prices for various IPs have shown stabilization, although some products continue to experience price declines due to increased supply [10][26]. Additional Insights - **Management's Outlook**: Both Pop Mart and Miniso management expressed a positive outlook for the upcoming CNY and Q1 2026, citing solid performance and operational preparations [10][27]. - **Risks**: There are concerns regarding the potential underestimation of revenue estimates for Pop Mart in North America due to changes in presale dynamics [47]. This summary encapsulates the key points from the conference call, providing insights into the performance and outlook of the companies within the China IP retail and toy industry.

Core Insights - The article highlights the top short-selling ratios and amounts for various companies, indicating significant market sentiment against these stocks [1][2]. Short-Selling Ratios - AIA Group Limited (友邦保险-R) has the highest short-selling ratio at 100.00% [2]. - China Resources Beer (华润啤酒-R) follows with a short-selling ratio of 93.73% [2]. - Great Wall Motor (长城汽车-R) has a short-selling ratio of 91.63% [2]. Short-Selling Amounts - Xiaomi Group (小米集团-W) leads in short-selling amount with 2.532 billion [2]. - Alibaba Group (阿里巴巴-W) has a short-selling amount of 2.493 billion [2]. - Tencent Holdings (腾讯控股) reports a short-selling amount of 1.976 billion [2]. Deviation Values - China Ping An (中国平安-R) has the highest deviation value at 44.83%, indicating a significant difference from its average short-selling ratio [2]. - Hong Kong Exchanges and Clearing (香港交易所-R) has a deviation value of 44.09% [2]. - AIA Group Limited (友邦保险-R) shows a deviation value of 41.14% [2].

Group 1 - The core viewpoint of the article is that while the investment value of Pop Mart is recognized, there are concerns regarding the long-term sustainability of its core demand [2][3] - Investor Duan Yongping acknowledges Pop Mart's impressive business performance and its successful creation of popular IPs like Labubu and Starry People, targeting young female consumers [3] - The blind box model employed by Pop Mart is attractive due to its gambling-like nature, encouraging repeat purchases as consumers seek desired items from a selection of 12 blind boxes [3] Group 2 - Duan Yongping expresses skepticism about the long-term necessity of Pop Mart's products, questioning the potential decline in demand over time [3] - He compares Pop Mart's products to luxury and art items, suggesting that their demand is based on emotional consumption, which is difficult to quantify and subject to trend changes [3] - Concerns are raised about the limitations of the blind box model, indicating that not all products can successfully adopt this approach, hinting at the dependency of Pop Mart's success on its IP and blind box strategy [3] Group 3 - Regulatory scrutiny has increased around the blind box model due to concerns over inducing excessive consumption, leading to tighter industry regulations [3] - The lifecycle of IPs is unpredictable, and while Pop Mart has developed a multi-IP strategy, its ability to continuously create new hits remains uncertain [3] - Duan Yongping emphasizes the need for Pop Mart to demonstrate its capability to navigate through "trend cycles" to become a long-term quality investment [3]

Core Viewpoint - Pop Mart has denied rumors of developing a mobile phone, stating that it will collaborate with a well-known mobile brand for an IP co-branded product targeting young consumers [1]. Group 1: Product Development and Collaborations - Pop Mart has no plans to develop a mobile phone but will launch an IP co-branded product with a popular mobile brand [1]. - The upcoming product is expected to combine elements of trendy toys with smart device functionalities, aimed at young consumers [1]. - Pop Mart's jewelry brand, POPOP, is set to officially open in September 2025, featuring products themed around its popular IP BabyMolly [1]. Group 2: Financial Performance - In Q3 2025, Pop Mart reported a 245% to 250% year-on-year increase in overall revenue, with China revenue growing by 185% to 190% and overseas revenue increasing by 365% to 370% [1]. - Revenue from offline channels in China grew by 130% to 135%, while online channels saw a growth of 300% to 305% [1]. - In the first half of 2025, the IP THE MONSTERS, including Labubu, generated revenue of 4.81 billion yuan, marking a 668% year-on-year increase and accounting for 34.7% of total revenue [2]. Group 3: Market Performance - As of January 12, Pop Mart's stock price decreased by 0.2%, trading at 196.6 HKD per share [3].

Core Viewpoint - The discussion around Pop Mart highlights a mix of admiration for its business model and skepticism about its long-term sustainability, emphasizing the importance of understanding consumer demand for its products [2][5]. Group 1: Company Insights - The company Pop Mart is recognized for its ability to create products with emotional value, which is seen as a significant achievement rather than mere luck [2][5]. - There is uncertainty regarding the future demand for Pop Mart's products, with concerns that consumer interest may wane in the coming years [2][5]. Group 2: Investment Perspective - The investment potential in Pop Mart is contingent on the belief that consumer demand will remain strong over time, which could lead to continued business growth [2][5]. - An investment decision should consider whether one would be willing to buy the company at its market value, which encourages a long-term perspective on the investment [2][5].

Core Viewpoint - Pop Mart is launching a collaboration with Honor, a leading smartphone brand, to create a trendy toy-themed smartphone, which has generated significant interest in both the toy and tech communities [2][4]. Group 1: Collaboration Details - The collaboration is not a self-developed phone by Pop Mart but an IP co-branding partnership with Honor [2]. - The specific collaboration model between Honor and Pop Mart has not been disclosed yet, but it could range from lightweight branding to deep customization across the product lifecycle [4]. - Pop Mart is known for its "IP + blind box" model, successfully creating and operating several popular IPs, including MOLLY and SKULLPANDA, and has established three core business segments: consumer products, service experiences, and entertainment [4]. Group 2: Financial Performance - In the first half of 2025, Pop Mart reported revenue of 13.88 billion yuan, a year-on-year increase of 204.4%, and an adjusted net profit of 4.71 billion yuan, up 362.8% [5]. - The THE MONSTERS series, which includes the LABUBU IP, generated revenue of 4.81 billion yuan, marking a 668% increase and accounting for 34.7% of total revenue [5]. - Other IPs like MOLLY, SKULLPANDA, CRYBABY, and DIMOO also surpassed 1 billion yuan in revenue [5][6]. Group 3: Market Context - Honor, originally a sub-brand of Huawei, has become a leading smartphone brand in China, holding a market share of 19.5% in Q2 2022, 19.4% in Q3 2023, and 17.1% in Q1 2024 [6]. - The Chinese smartphone market is experiencing intense competition, with Honor facing challenges from brands like vivo, Apple, and Huawei, which have recently outperformed it in terms of shipment volumes [7][8]. - The overall smartphone market in China saw a slight decline in shipments, with a total of approximately 68.5 million units shipped in Q3 2025, down 0.5% year-on-year [8][9].

Group 1 - The core point of the article is the collaboration between HONOR and POP MART for an IP co-branding initiative, targeting the young and trendy market with the HONOR 500 series [1] Group 2 - The collaboration aims to leverage both brands' appeal to young consumers, enhancing product visibility and market reach [1] - The HONOR 500 series is positioned to attract a youthful demographic, aligning with current market trends in consumer electronics [1] - This partnership reflects a growing trend in the industry where tech companies collaborate with lifestyle brands to create unique product offerings [1]

Group 1 - The core point of the article is that Honor is collaborating with Pop Mart to launch the Honor 500 series as the first trendy toy phone, set to be unveiled on January 19 [1] - The collaboration involves comprehensive co-creation, including ID design, packaging, system themes, and exclusive accessories, rather than just simple graphics [1] - The special edition phone will feature a Molly theme, including dedicated icons, boot animations, and ringtones, along with a gift box containing the phone, a limited Molly figurine, a custom phone case, and stickers [1] Group 2 - In a highly competitive mid-range market, simply focusing on hardware specifications is no longer sufficient to attract consumers, making this collaboration a strategy to emphasize "emotional value" [2] - Previous successful collaborations in the industry, such as OnePlus's partnership with the game "Genshin Impact," have shown that limited edition phones can command high prices in the second-hand market, sometimes being referred to as "investment products" [2] - Other brands like Redmi and Realme have also engaged in successful IP collaborations, indicating a trend where such partnerships can lead to significant consumer demand and sales [2][3] Group 3 - Analysts note that IP collaborations have become a key strategy for mobile manufacturers seeking differentiation in the market [3] - However, there is a risk that if the collaboration lacks depth, such as simple logo overlays or color changes without meaningful customization, it may face criticism and potentially impact sales negatively [3]

Investment Rating - The report gives a "Buy" rating for Pop Mart (9992.HK) for the first time [1]. Core Views - Pop Mart is a leading cultural and entertainment company in China, focusing on IP incubation, consumer engagement, and the promotion of trendy toys [3]. - The company has established a comprehensive operational platform covering the entire trendy toy industry chain, leveraging its strong brand and designer partnerships [10]. Summary by Sections Company Overview - Pop Mart was founded in 2010 and has developed a robust platform around five key areas: global artist discovery, IP incubation, consumer engagement, trendy toy culture promotion, and related industry investment integration [3][10]. - The company has signed renowned designers and collaborated with global brands to create popular trendy toy products, building a strong fan base [10][14]. Horizontal Performance: IP Leadership in the Trendy Toy Market - The Chinese IP derivative and toy market is expected to grow significantly, with the market size projected to increase from RMB 99.4 billion in 2020 to RMB 174.2 billion by 2024, representing a compound annual growth rate (CAGR) of 15.1% [5][17]. - Pop Mart holds a market share of 11.5% in the trendy toy sector, positioning itself as a benchmark enterprise with strong global layout and IP operation capabilities [23]. Vertical Performance: Channel Growth Driving Revenue - The company has diversified its sales channels both domestically and internationally, utilizing offline retail stores, online platforms, and wholesale channels [35]. - In 2024, Pop Mart's revenue is expected to reach RMB 13.04 billion, a year-on-year increase of 106.9%, with a gross margin of 66.8% [35][58]. - The company has seen significant growth in its online sales, particularly through its blind box machines and e-commerce platforms like Douyin and Tmall [37][41]. Investment Recommendations - The report forecasts that Pop Mart's overall revenue will reach RMB 33.83 billion, RMB 47.92 billion, and RMB 61.83 billion in 2025, 2026, and 2027, respectively, with growth rates of 159.5%, 41.7%, and 29.0% [54][58]. - The net profit attributable to shareholders is projected to be RMB 7.95 billion, RMB 10.81 billion, and RMB 13.82 billion for the same years, reflecting year-on-year growth of 154.2%, 36.0%, and 27.9% [54][58].