November 16, 2025 11:13 PM GMT Pop Mart | Asia Pacific M Update Fun Bites: Labubu Goes Hollywood Key Takeaways Timely news to ease negative narrative on Labubu: We think market has underestimated Pop Mart's proactive measures in driving IP popularity. Beyond new product launches, its engagement in entertainment - such as theme parks, movies, and celebrity collaboration - are effective measures to sustain its IP lifecycle, in our view. If this movie deal comes to fruition, potential upside for consumer reach ...

Core Viewpoint - The company, Hangzhou Tongshifu Cultural Creative (Group) Co., Ltd., known as "Tongshifu," has achieved nearly 600 million yuan in revenue from copper cultural products and is now pursuing an IPO in Hong Kong after an unsuccessful attempt to list on the A-share market in 2024 [1][13]. Company Overview - Tongshifu has been deeply engaged in the copper cultural product sector for over a decade and ranks first in the Chinese market with a market share of approximately 35.0% in total revenue and 44.1% in online revenue as of December 31, 2024 [1][3]. - The company's main brand, "Tongshifu," has generated significant revenue from copper cultural products, contributing 4.80 billion yuan, 4.88 billion yuan, 5.51 billion yuan, and 2.93 billion yuan from 2022 to the first half of 2025, accounting for over 90% of total revenue [1][6]. Market Position - The copper cultural product market in China is highly concentrated, with the top three players holding over 71.9% of the market share. Tongshifu leads with a market share of 35.0% [3][4]. - The second-largest competitor, speculated to be Hangzhou Zhubingren Copper Art Co., Ltd., achieved revenues of 4.85 billion yuan and 6.20 billion yuan in 2023 and 2024, respectively [4]. Revenue and Profitability - From 2022 to 2024, Tongshifu's revenues were approximately 5.03 billion yuan, 5.06 billion yuan, and 5.71 billion yuan, with net profits fluctuating from 570 million yuan in 2022 to 440 million yuan in 2023, and then increasing to 790 million yuan in 2024 [11]. - The company reported a revenue of 3.08 billion yuan and a net profit of 300 million yuan in the first half of 2025 [11]. Product Categories and Sales Channels - The core product category is copper cultural products, which contributed 95.4%, 96.3%, 96.6%, and 94.9% of total revenue from 2022 to the first half of 2025 [6][9]. - Online sales dominate the revenue stream, with online direct sales accounting for approximately 70% of total revenue during the same period [10][11]. Consumer Base and Branding - The target audience primarily consists of middle-aged men, leading to the nickname "the Bubble Mart for middle-aged consumers." Loyal customers are referred to as "Tongfen," and the company organizes an annual "Tongfen Festival" to engage them [1][15]. - The company has developed a range of sub-brands, including plastic trendy toys and silver cultural products, although these currently contribute less than 5% of total revenue [8][9]. Investment and Shareholding - The company has attracted significant investment from notable entities, including Xiaomi Group and Shunwei Capital, with Xiaomi-related holdings totaling approximately 22.95% [13][14]. - The founder, Yu Guang, remains the largest single shareholder with a 26.27% stake [13]. Industry Outlook - The domestic copper cultural product market is projected to grow from 1.1 billion yuan in 2019 to 1.6 billion yuan in 2024, with a compound annual growth rate of 7.7% expected from 2024 to 2029, reaching 2.3 billion yuan by 2029 [16].

Core Viewpoint - The company, Hangzhou Tongshifu Cultural Creative (Group) Co., Ltd., known as "Tongshifu," has achieved nearly 600 million yuan in revenue from copper cultural products and is now pursuing an IPO in Hong Kong after an unsuccessful attempt to list on the A-share market in 2024 [1][10]. Company Overview - Tongshifu has been deeply engaged in the copper cultural product sector for over a decade, ranking first in the Chinese market with a market share of approximately 35.0% in total revenue and 44.1% in online revenue as of December 31, 2024 [1][2]. - The company's main brand, "Tongshifu," has generated significant revenue from copper cultural products, contributing 4.80 billion yuan, 4.88 billion yuan, 5.51 billion yuan, and 2.93 billion yuan from 2022 to the first half of 2025, accounting for over 90% of total revenue during these periods [1][5]. Market Position - The copper cultural product market in China is highly concentrated, with the top three players holding over 71.9% of the market share. Tongshifu leads with a market share of 35.0% [2]. - The second-largest competitor, speculated to be Hangzhou Zhubingren Copper Art Co., Ltd., has a market share of 31.8% and reported revenues of 4.85 billion yuan and 6.20 billion yuan for 2023 and 2024, respectively [3]. Revenue and Profitability - From 2022 to 2024, Tongshifu's revenues were approximately 5.03 billion yuan, 5.06 billion yuan, and 5.71 billion yuan, with net profits fluctuating from 570 million yuan in 2022 to 440 million yuan in 2023, and then increasing to 790 million yuan in 2024 [9]. - The average selling price of copper cultural products has decreased over the same period, attributed to a shift in consumer preference towards lower-priced small-sized SKUs [6][7]. Product Diversification - The company is expanding its product range beyond copper cultural products to include plastic trendy toys, silver cultural products, and gold cultural products, although these sub-brands currently contribute less than 5% of total revenue [7]. - Notable product lines include the copper gourd series and the Great Sage series, generating approximately 130 million yuan and 108 million yuan, respectively [8]. Sales Channels - Online sales are a significant revenue source for Tongshifu, with direct online sales contributing 3.55 billion yuan, 3.54 billion yuan, 4.03 billion yuan, and 2.15 billion yuan from 2022 to the first half of 2025, maintaining around 70% of total revenue [9]. Investment and Shareholding - The company has attracted investments from notable entities, including Xiaomi Group and Shunwei Capital, with Xiaomi holding a 9.56% stake and Shunwei Capital holding 13.39% [10][11]. - The founder, Yu Guang, remains the largest shareholder with a 26.27% stake [11]. Industry Outlook - The market for copper cultural products is projected to grow from 1.1 billion yuan in 2019 to 1.6 billion yuan in 2024, with a compound annual growth rate of 7.7% expected from 2024 to 2029, although the total market size is anticipated to reach only 2.3 billion yuan by 2029, indicating limited growth potential for capital investment [14].

Core Insights - TOP TOY has submitted its listing application to the Hong Kong Stock Exchange, marking a significant step for the brand under the ownership of Miniso, which recently acquired Yonghui Supermarket [1] - The founder of Miniso, Ye Guofu, expresses strong confidence in the retail sector, indicating a strategic vision for expanding TOP TOY alongside its other retail ventures [1] - TOP TOY aims to position itself closer to the success of Pop Mart, despite following a different business model, by enhancing its own IP portfolio and expanding overseas [1][4] Business Model Analysis - The collectible toy industry features three primary business models: licensed IP, proprietary IP, and third-party IP [2] - TOP TOY incorporates all three models but is increasing its focus on proprietary IP ahead of its IPO [3] - By 2025, TOP TOY's proprietary IP is expected to contribute 5%-10% of total revenue, compared to Pop Mart's 90% [4] Financial Performance Comparison - In the first half of 2025, Pop Mart reported a profit of approximately 4.6 billion, while TOP TOY's profit was only 180 million, highlighting a significant disparity in revenue scale and profit margins [6] - Pop Mart's gross margin stands at 70.3%, more than double that of TOP TOY, indicating a challenge for TOP TOY in achieving similar profitability [9] Strategic Initiatives - TOP TOY's strategy includes reducing reliance on third-party IP and increasing proprietary product development to enhance profit margins [13] - The company has successfully launched its proprietary IP "Nuomi Er," achieving sales of 50 million within a year and a half, aiming to replicate the success of Pop Mart's Molly [13][21] - TOP TOY is also focusing on expanding its online sales, which currently account for only 8.5% of total sales, compared to Pop Mart's 35.5% [14] Global Expansion Plans - TOP TOY has initiated a global strategy to establish 1,000 overseas stores within five years, leveraging its existing retail network for market penetration [18][19] - The company plans to utilize its extensive offline presence, including nearly 300 brand stores and over 8,000 stores from Miniso and Yonghui, to gather consumer data and refine its IP selection process [19][22] Competitive Landscape - TOP TOY is currently perceived as following Pop Mart's lead rather than innovating, as evidenced by its recent product adaptations [20] - The company recognizes the importance of capital in acquiring successful IPs, with plans to leverage its market position for future growth [21] - The ability to effectively market and distribute IPs through its extensive channels is seen as a critical advantage for TOP TOY [22][23]

Core Viewpoint - The decline in popularity of Labubu is not indicative of a deterioration in the company's fundamentals, as Bubble Mart is not solely an IP toy company but a platform for creating and commercializing various IPs [1] Group 1: Market Performance - Recent sales data from the U.S. market showed a significant slowdown in growth compared to Q3 2025, leading to concerns about Labubu's brand strength [2] - The slowdown in sales is attributed to the pre-sale of Labubu in July and August, which exhausted future market demand and strained the supply chain [2] - However, sales data for the first week of November indicates a return to higher growth rates, with expectations for continued strong sales during the Thanksgiving and Christmas seasons [2] Group 2: Growth Potential in North America and Europe - Despite impressive growth in the Americas, this region accounted for only 16.3% of the company's total revenue in the first half of 2025, with projections of around 20% for the full year [3] - The company has only 41 retail stores in North America compared to 443 in Greater China, indicating significant room for expansion [3] - The European market also shows potential, with only 3.4% of total revenue coming from this region and just 18 retail stores as of the end of the first half of 2025 [3] Group 3: Valuation and Stock Performance - Bubble Mart is recognized as a leader in the global trendy toy industry, with solid fundamentals and a high certainty of long-term growth [4] - The current stock price has fallen to 15 times the estimated P/E for 2026, suggesting a high value proposition [4] - Short-selling activity has decreased, indicating improving market sentiment, and the company is expected to see a rebound in stock price and valuation as growth certainty for 2026 increases [4]

Company Overview - The company participated in the CICC annual strategy meeting, discussing overseas markets, IP sustainability, and supply chain rhythm, reaffirming confidence in its business model and long-term growth potential, highlighting bottom-fishing opportunities [1] Market Growth - The North American market has shown consistent performance since 2025, with the company establishing a comprehensive channel system. Q3 pre-sales have increased online sales, while offline channels remain crucial for IP expression and experience delivery. Supply chain and logistics adjustments present challenges, but seasonal performance is expected to improve with more quality stores and local experience accumulation [1] IP Commercialization - The decline in secondary market prices does not necessarily indicate a peak in IP popularity. The price fluctuations are influenced by the release schedule, with current supply levels exceeding secondary market transaction volumes. The increased availability of popular products enhances consumer experience and indicates broader customer reach for core IPs, supporting future growth [2] IP Lifecycle Management - The recent drop in search interest for popular IPs raises concerns about their lifecycle. However, the lifecycle is driven by product and content, and evaluating it solely on search trends is overly simplistic. Continuous product releases, innovation, and collaborations provide ample growth opportunities, with the company's operational capabilities expected to drive further scale. Secondary IPs are also showing rapid growth, confirming the company's platform advantages [2] Profit Forecast and Valuation - The company has adjusted its net profit forecasts for 2025 and 2026 upwards by 3.3% and 4.6% to 137 billion and 177 billion respectively. The current stock price corresponds to 20x and 15x adjusted P/E for 2025 and 2026. The company maintains an outperform rating and a target price of 370 HKD, implying a 71% upside potential based on 33x and 26x adjusted P/E for 2025 and 2026 [3]

Core Insights - LABUBU's popularity has significantly increased the attention on Pop Mart, marking it as one of the most discussed companies in the capital market this year [1] - The founder, Wang Ning, emphasized the importance of maintaining focus and staying true to the company's original vision as it celebrates its 15th anniversary [1] Company Strategy - Wang Ning compared the company's current situation to a novice driver in an F1 race, highlighting the challenges of managing increased attention and expectations [1] - The company aims to align with global trends and opportunities while acknowledging the gap between its current status and world-class enterprises [1] - The management strategy is characterized by a cautious approach, prioritizing selective opportunities and maintaining a "say NO more than say YES" philosophy [1] Market Expansion - Recent insights from the executive team indicate positive performance in overseas markets, with stores in the US and Europe showing strong sales and diverse customer bases [1] - The company plans to adapt to local market preferences by exploring local aesthetics and product trends, enhancing user experience, and focusing on talent development [2]

Core Viewpoint - The report from Bernstein indicates a general slowdown in demand for Pop Mart in both China and overseas markets, warning that the company's Q4 performance may fall short of expectations, leading to a stock price drop of over 3% on November 12 [1] Group 1: Stock Performance - Since reaching a historical high of 339.8 HKD on August 25, Pop Mart's stock has been in a continuous decline, hitting a low of 203.6 HKD by November 7, representing a 40% drop and a market capitalization loss of 182.9 billion HKD [1] - The stock price decline is part of a broader trend among the "new consumption trio" in Hong Kong, which includes Pop Mart, Lao Pu Gold, and Mixue Group, all experiencing significant stock price corrections of around 40% [3][4] Group 2: Fund Holdings - In Q2, the number of public funds holding Pop Mart peaked at 311, with a total of 72.3 million shares. By Q3, this number dropped to 197 funds and 51.7 million shares, indicating a sell-off of 20.6 million shares, a 28.52% decrease in holdings [5][6] - Despite the overall reduction in holdings, the fund "Invesco Great Wall Quality Evergreen A" increased its position by 2.23 million shares in Q3, reflecting a belief in the company's future growth potential [8] Group 3: Comparison with Other Companies - Lao Pu Gold's stock also saw a significant decline, dropping from a high of 1108 HKD in July to a low of 592 HKD in November, a 46.57% decrease, with a market cap loss of 90.8 billion HKD [3] - Mixue Group's stock fell from a high of 618.5 HKD in June to a low of 371.6 HKD in October, a 39.91% drop, resulting in a market cap loss of 93.8 billion HKD [3] Group 4: Fund Manager Perspectives - Fund managers have differing views on Pop Mart's future. While some, like the manager of "Invesco Great Wall Quality Evergreen A," are increasing their positions, others, such as the manager of "Invesco Consumption Select 30 A," have significantly reduced their holdings due to concerns over market conditions and high baseline risks [8][14] - The overall trend indicates that while some funds are optimistic about future growth, many are opting to realize profits amid the stock's decline [8]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 286.9, representing a potential upside of 32.0% from the current price of HKD 217.4 [1][5][15]. Core Insights - The report emphasizes that the company is not solely reliant on the popularity of its Labubu IP, but rather operates as a platform for creating and commercializing multiple IPs. The ability to launch new successful IPs is seen as a key competitive advantage [5]. - Recent sales trends in the U.S. market have shown a recovery, with expectations for continued growth during the holiday season. The report suggests that the recent slowdown in sales was largely due to pre-sales in previous months [5]. - The company has significant growth potential in the North American and European markets, which currently represent a small portion of total revenue. The report highlights the potential for expansion through physical retail stores in these regions [5]. - The current valuation is considered attractive, with a P/E ratio of 15 times the estimated earnings for 2026, indicating high value for investors [5]. Financial Performance and Projections - The company is projected to achieve substantial revenue growth, with estimated revenues of RMB 38,003 million in 2025, reflecting a year-on-year increase of 191.5% [7][10]. - Net profit is expected to reach RMB 12,920 million in 2025, representing a significant increase of 313.4% compared to the previous year [7][10]. - The report outlines a steady improvement in profit margins, with gross profit margins projected to rise to 70.8% by 2025 [10][11]. Market Performance - The company's stock has experienced volatility, but recent data suggests a recovery in market sentiment, with short-selling activity decreasing [5]. - The report notes that the company's sales in the domestic market have shown impressive growth, with online sales increasing by 212% in the first half of 2025 [11]. Regional Revenue Breakdown - In the first half of 2025, the company reported a 440% increase in overseas revenue, with North America showing a staggering growth rate of 1,142% [11]. - The report indicates that the company has only a limited number of retail stores in North America and Europe, suggesting significant room for growth in these markets [5].

Core Viewpoint - The market's concerns regarding Pop Mart's growth sustainability and single IP risk are considered excessive, with the company's core value lying in its unparalleled IP incubation and operational capabilities [1][4]. Group 1: IP Strength and Growth - The flagship IP Labubu has strong vitality, with its 4.0 version postponed to 2026 due to high demand for Labubu 3.0, and Sony Pictures is reported to have acquired the film adaptation rights, potentially enhancing the IP's global recognition [4][8]. - The company is diversifying its growth engines by actively managing online pre-sale scales to ensure sustainable IP operations, with a successful IP matrix formed around Labubu, SKULLPANDA, and CRYBABY, effectively mitigating risks [4][9]. Group 2: Global Expansion and Market Performance - Pop Mart's global expansion is exceeding expectations, particularly in the U.S. and Japan, with plans to optimize operations and deepen local market channels [6][10]. - The company aims to operate over 60 stores in the U.S. by the end of 2025, with additional plans for Canada, Latin America, and the Middle East, emphasizing localized operations and partnerships [10]. Group 3: Financial Performance and Valuation - Financial projections indicate significant growth, with net profit expected to rise from 1.082 billion RMB in 2023 to 23.169 billion RMB by 2027, and diluted EPS increasing from 0.807 RMB to 17.370 RMB over the same period [7]. - Citi has set a target price of 415.00 HKD for Pop Mart, representing a potential upside of 91.8% from the closing price of 216.40 HKD, based on a 28x P/E ratio for 2026 [1][13].