Jin Rong Jie·2025-05-07 03:17Core Viewpoint - The recent significant share reductions in Pop Mart, known as the "first stock of blind boxes," have sparked market speculation regarding the company's fundamentals and the reasons behind these actions [1][2]. Group 1: Share Reduction Events - On May 7, a major investor sold 3.86 million shares at HKD 190.20 each, cashing out approximately HKD 734 million, marking the third large-scale reduction in a week [1]. - The total shares sold in three transactions amounted to 11.91 million, representing about 0.9% of the company's total share capital, with a total cash value of HKD 2.264 billion [1]. - The reductions are believed to be linked to the expiration of a fund, rather than a loss of confidence in the company's future [2]. Group 2: Market Reaction - Despite the large-scale sell-offs, Pop Mart's stock price did not experience a panic drop; it only fell 0.3% after the first reduction but rebounded by 4.7% the next day [2]. - Following the second reduction, the stock briefly dipped but quickly rebounded, resulting in a cumulative increase of 6.3% over three trading days [2]. - After the third reduction, the stock price fell by only 0.8%, with trading volume increasing by 30%, indicating a potential resilience in the market [2]. Group 3: Historical Context - Historical instances in the Hong Kong market show that share price often rises after fund expirations, as seen with Meitu and 3SBio, where significant share reductions led to subsequent price increases [3]. - Analysts suggest that fund reductions are often passive actions unrelated to the company's fundamentals, potentially allowing long-term investors to reassess the stock positively [3]. Group 4: Globalization Strategy - Pop Mart's overseas revenue reached HKD 1.066 billion in 2023, a year-on-year increase of 134.9%, with the first quarter of 2024 showing a growth rate of over 240% [4]. - The company has expanded its overseas store count to 80, a 45% increase from the end of 2023, and has introduced over 200 robot stores [4]. - Pop Mart's strategy includes localizing operations and supply chains, with factories in Vietnam and Indonesia to reduce costs and tailor products to regional markets [5]. Group 5: Valuation Perspectives - Current market valuations show a dynamic PE of approximately 30 times, which is higher than some competitors, raising concerns about potential valuation corrections [6]. - Supporters of the stock argue that its overseas penetration is still low, suggesting significant growth potential, while skeptics highlight increasing competition in the market [6]. - The recent share reductions are viewed as a test of the market's perception of the company's long-term value, with the potential for a rebound if the stock remains stable [6]. Group 6: Market Insights - The recent share reduction and subsequent stock performance illustrate a clash between capital movements and fundamental growth, with the long-term outlook remaining positive due to globalization and strong IP [7]. - Investors are keenly observing the company's upcoming performance metrics, particularly regarding new store openings and product launches, as these will be critical for long-term stock performance [7].