Market Overview - On October 17, the Hang Seng Index fell by 2.48%, with southbound trading totaling HKD 153.005 billion, comprising HKD 79.654 billion in buying and HKD 73.351 billion in selling, resulting in a net buying amount of HKD 6.303 billion [1] Southbound Trading Details - Southbound trading through the Stock Connect (Shenzhen) recorded a total transaction amount of HKD 58.715 billion, with buying at HKD 29.681 billion and selling at HKD 29.034 billion, leading to a net buying of HKD 0.647 billion [1] - Southbound trading through the Stock Connect (Shanghai) had a total transaction amount of HKD 94.290 billion, with buying at HKD 49.973 billion and selling at HKD 44.317 billion, resulting in a net buying of HKD 5.656 billion [1] Active Stocks - Alibaba-W had the highest transaction amount among southbound stocks at HKD 137.12 billion, with a net selling of HKD 21.53 billion and a closing price drop of 4.22% [1] - Other notable stocks included SMIC with a transaction amount of HKD 98.39 billion and a net selling of HKD 15.78 billion, and Xiaomi Group-W with a transaction amount of HKD 58.48 billion and a net buying of HKD 4.14 billion [2] Continuous Net Buying - Two stocks, Xiaomi Group-W and Pop Mart, have seen continuous net buying for over three days, with Xiaomi Group-W leading at a total net buying of HKD 74.03 billion over 10 days, followed by Pop Mart with HKD 14.68 billion over 4 days [2]

Market Overview - On October 17, the Hang Seng Index fell by 2.48%, closing at 25,247.10 points, while southbound funds through the Stock Connect recorded a net purchase of 6.303 billion HKD [1][3] - The total trading volume for the Stock Connect on the same day was 153.005 billion HKD, with a net buying amount of 6.303 billion HKD [1][3] Trading Activity - In the Shanghai Stock Connect, the trading volume was 94.290 billion HKD with a net purchase of 5.656 billion HKD; in the Shenzhen Stock Connect, the trading volume was 58.715 billion HKD with a net purchase of 0.647 billion HKD [1][3] - The most actively traded stock in the Shanghai Stock Connect was Alibaba-W, with a trading amount of 8.411 billion HKD, followed by SMIC and Xiaomi Group-W, with trading amounts of 5.454 billion HKD and 3.257 billion HKD, respectively [1][2] Stock Performance - In terms of net buying, Meituan-W led with a net purchase of 648 million HKD, despite its closing price dropping by 4.30% [1][2] - Alibaba-W experienced the highest net selling amount of 1.112 billion HKD, with a closing price decline of 4.22% [1][2] - In the Shenzhen Stock Connect, Alibaba-W also topped the trading volume with 5.302 billion HKD, while SMIC and Xiaomi Group-W followed with 4.385 billion HKD and 2.591 billion HKD, respectively [2]

Core Viewpoint - Pop Mart has seen a continuous net buying from southbound funds for four consecutive days, with a total net buying amount of 1.468 billion HKD and a cumulative stock price increase of 5.52% [2] Group 1: Trading Activity - On October 17, the total trading volume of active stocks through the Hong Kong Stock Connect reached 53.476 billion HKD, with a net selling amount of 1.678 billion HKD [2] - Pop Mart's trading volume through the Hong Kong Stock Connect on October 17 was 2.695 billion HKD, with a net buying amount of 394 million HKD [2] Group 2: Stock Performance - Pop Mart has experienced a cumulative net buying amount of 1.468 billion HKD over the past four days, during which its stock price has risen by 5.52% [2]

Core Insights - The stock price of Pop Mart has been declining since reaching a peak market value of HKD 440 billion two months ago, currently stabilizing around HKD 350 billion, raising questions about the sustainability of the blind box business [1][11][13] Company Performance - Pop Mart reported its best half-year performance since inception in August 2023, with revenue of HKD 13.88 billion, a year-on-year increase of 204.4%, and a net profit of HKD 4.574 billion, up 396.5% [11] - The LABUBU series, part of THE MONSTERS franchise, contributed HKD 4.814 billion in revenue, increasing its share of total revenue from 13.7% in 2024 to 34.7% [11] - Following the strong performance, Pop Mart's stock price surged to approximately HKD 340, pushing its market value above HKD 440 billion [11] Market Dynamics - Despite the initial success, Pop Mart's stock price experienced a significant correction, dropping over 25% from its peak by mid-September 2023 [11][13] - The company faced challenges with its jewelry brand popop, which saw lackluster sales compared to its toy products, and a decline in the secondary market prices for LABUBU collectibles [13] Brand and IP Development - The LABUBU character gained global popularity after being featured by BLACKPINK member Lisa on social media in April 2024, leading to a surge in demand [9] - The company has expanded its international presence, particularly in Southeast Asia, where LABUBU has garnered a substantial fan base [7][9] Future Outlook - The current stock price adjustment may be a minor setback in the broader context of industry development, with potential for future growth if Pop Mart continues to innovate and develop strong IP [15]

Group 1: Company Performance - The stock price of Lao Pu Huang Jin (06181) has shown strong performance, closing at 803.5 HKD, surpassing the upper Bollinger Band around 770 HKD, with some investors optimistic about a potential rise to 900 HKD [2] - China Southern Airlines (01055) has also demonstrated robust stock movement, closing at 4.4 HKD, with a peak at 4.52 HKD, and some investors speculating it could reach 6 HKD [5] - Geely Automobile (00175) has seen its stock price rise to 19.25 HKD, but there are concerns about a potential pullback due to resistance at 20 HKD [8] - New Oriental (09901) has experienced a significant surge, closing at 45.7 HKD, breaking through the upper Bollinger Band, indicating strong momentum [12] - Pop Mart (09992) has shown impressive growth, closing at 288.2 HKD, with a notable increase in trading volume and an RSI indicator above 80 [14] Group 2: Derivative Products Analysis - For Lao Pu Huang Jin, there is limited choice in call options, with only one product available at an exercise price of around 838 HKD, which has a leverage of 3.5 times and an implied volatility of 73% [3] - In the case of China Southern Airlines, there is only one call option available expiring in January 2026, making it difficult to assess its terms, thus suggesting investors should monitor the stock's performance before making decisions [5] - Geely Automobile has two in-the-money products with exercise prices of 18.8 HKD and 18.9 HKD, both expiring in December 2025, with one showing better terms than the other [9] - For Pop Mart, there are six call options with exercise prices around 300 HKD, with significant differences in terms such as leverage and implied volatility, highlighting the importance of comparing products [15][16]

Core Viewpoint - The Hong Kong stock market has seen a decline in new consumption concept stocks, with several companies experiencing significant drops in their stock prices [1][2]. Group 1: Stock Performance - Wei Long Mei Wei (卫龙美味) fell by 6.72%, with a latest price of 12.220 and a market capitalization of 29.709 billion [2]. - Bluestone (布鲁可) decreased by 5.91%, priced at 97.950, with a total market value of 24.37 billion [2]. - Naixue's Tea (奈雪的茶) dropped by 5.65%, trading at 1.170, and has a market cap of 1.995 billion [2]. - Hu Shang A Yi (沪上阿姨) saw a decline of 5.57%, with a price of 111.900 and a market capitalization of 11.772 billion [2]. - Miniso (名创优品) decreased by 5.51%, priced at 41.880, with a total market value of 51.164 billion [2]. - Pop Mart (泡泡玛特) fell by 5.14%, trading at 273.400, with a market cap of 367.161 billion [2]. - XPeng Motors (小鹏汽车-W) decreased by 4.77%, with a latest price of 78.850 and a market capitalization of 150.328 billion [2]. - Mixue Group (密雪集团) dropped by 4.68%, priced at 423.400, with a market cap of 160.731 billion [2]. - Gu Ming (古茗) saw a decline of 4.66%, trading at 24.120, with a total market value of 57.362 billion [2]. - Shangmei Co., Ltd. (上美股份) decreased by 4.74%, with a price of 95.550 and a market capitalization of 38.039 billion [2].

Core Viewpoint - UBS remains optimistic about Pop Mart's (09992) prospects due to the rising popularity of the Starry People series and the stabilization of second-hand market prices for the Labubu series after an initial supply-driven price drop [1] Group 1: Sales and Market Trends - The third quarter sales data update, Christmas-themed product releases, and new animation releases are expected to act as catalysts for growth [1] - High-frequency data, such as credit card spending tracking, is anticipated to enhance stock price momentum [1] Group 2: Investment Rating - UBS maintains a "Buy" rating for Pop Mart with a target price of HKD 432 [1]

Core Viewpoint - UBS remains optimistic about Pop Mart's (09992) prospects due to the rising popularity of the Starry People series and the stabilization of second-hand market prices for the Labubu series after an initial supply-driven price drop [1] Group 1: Sales and Market Trends - The third quarter sales data update, Christmas-themed product releases, and the upcoming animation will serve as catalysts for growth [1] - High-frequency data, such as credit card spending tracking, is expected to enhance stock price momentum [1] Group 2: Investment Rating - UBS maintains a "Buy" rating for Pop Mart with a target price of HKD 432 [1]

Core Viewpoint - UBS remains optimistic about Pop Mart's prospects due to the rising popularity of the Starry People series and the stabilization of the second-hand market prices for the Labubu series [1] Group 1: Sales and Market Trends - The bank anticipates that upcoming third-quarter sales data updates, the release of Christmas-themed products, and new animated works will act as catalysts for growth [1] - High-frequency data, such as credit card spending tracking, is expected to enhance the accuracy of market insights and drive stock price momentum [1] Group 2: Ratings and Price Targets - UBS maintains a "Buy" rating for Pop Mart, setting a target price of HKD 432 [1] - Following UBS's report, Pop Mart's stock rose nearly 7%, with JPMorgan raising its rating to "Overweight" and increasing its target price to HKD 320 [1]

Summary of Pop Mart Conference Call Company Overview - **Company**: Pop Mart - **Industry**: IP Merchandise Market in China Key Points and Arguments Rating Upgrade - **Upgrade to Overweight (OW)**: Rating upgraded from Neutral to Overweight with a new price target (PT) of HK$320, up from HK$300 [1][4][18] - **Recent Share Price Movement**: Share price declined 24% from HK$335.40 (August 26) to HK$254 (October 2), while the Hang Seng Index (HSI) gained 7% during the same period, indicating a conservative investor sentiment [1][19] Financial Forecasts - **Earnings Growth**: Forecasted sales and adjusted earnings growth of 165% and 276% year-over-year (yoy) in 2025, with 204% and 372% growth in 1H25 and 144% and 234% in 2H25, respectively [1][17] - **2026 Projections**: Expected growth of 28% in sales and 29% in adjusted earnings in 2026 [1] - **Valuation**: Trading at 20x 2026 P/E, considered attractive compared to other consumer names [1][22] Upcoming Catalysts - **Operational Results**: 3Q25 operational results expected in late October [1][11] - **Seasonal Sales**: Anticipated strong sales for Halloween and Christmas [1][11] - **New Releases**: Launch of "Labubu & Friends" animation in December and Labubu 4.0 in March/April 2026 [1][11] Sales Momentum - **Strong Demand for IPs**: Continued strong sales momentum for Labubu and Twinkle Twinkle, with Labubu 3.0 and Mini Labubu sold out despite a 10x increase in production capacity [1][8][22] - **Twinkle Twinkle's Performance**: New plush series "Why So Serious" sold out within minutes, indicating a growing fan base [1][8] Global Market Considerations - **US Market Importance**: Sales contribution from the Americas expected to rise from approximately 21% in 2025 to 28% in 2027 [1][29] - **Tariff Impact Preparedness**: Pop Mart has prepared inventory for the US shopping season and can adjust retail prices to offset potential tariff impacts [1][29][30] Supply Chain Strategy - **Global Supply Chain Expansion**: Plans to establish six manufacturing centers globally, with four in China and two elsewhere, to mitigate tariff risks [1][29] Financial Metrics - **Revenue Estimates**: Revised revenue estimates for 2025E at Rmb34.5 billion, 2026E at Rmb44.1 billion, and 2027E at Rmb53.5 billion, reflecting a 5-8% increase [1][26] - **Adjusted EPS Growth**: Adjusted EPS for 2025E raised to Rmb9.09 from Rmb8.66 [1][6] Investment Thesis - **Market Leadership**: Pop Mart is a leader in China's fast-growing IP merchandise market with a strong portfolio of over 100 IPs and a significant global presence [1][11][28] - **Diversified IP Portfolio**: Labubu expected to contribute 35% of 2027 sales, with a diversified portfolio minimizing business disruption risks [1][31] Conclusion - **Long-term Growth Potential**: Pop Mart's strong IP sourcing and monetization capabilities, along with its global expansion strategy, position it favorably for long-term growth in the consumer market [1][28]