POP MART(HK:09992) Hua Er Jie Jian Wen·2025-07-29 02:11Core Viewpoint - The recent decline in the popularity of the IP Labubu is viewed as a normal fluctuation in the lifecycle of a successful IP, rather than a sign of diminishing popularity [1][2][10]. Group 1: Market Performance - Labubu's Google global search index has decreased by 5% from its peak, raising concerns about the sustainability of its growth [1]. - Despite a strong half-year performance forecast, Bubble Mart's stock has fallen by 7% since July 15, while the Hang Seng Index has risen by 3% [1]. - The company's sales increased over 200% and net profit over 350% in the first half of the year, but only met the lower expectations of some buyers [1]. Group 2: Search Index Analysis - Morgan Stanley analysts argue that a decline in search index does not necessarily correlate with a drop in sales, as established brands may see consumers directly visiting shopping platforms [2][10]. - Even after the decline, Labubu's search index remains significantly higher than competitors, being 13 times that of KAWS and 3 times that of Doraemon [6]. Group 3: Historical Context - Historical data supports the notion that a decrease in search index does not equate to a decline in sales. For instance, Hello Kitty's search index fell from 55 to 37, yet its parent company Sanrio maintained positive sales growth [11]. - The critical threshold for sales decline typically occurs when the search index drops below a certain level, as seen in the Hello Kitty case [12]. Group 4: Supply Chain and Growth Catalysts - A supply chain shortage has been reported due to many IP brands moving production out of China, affecting the availability of Labubu and other popular products [13]. - Morgan Stanley identifies six potential catalysts for future growth, including upcoming financial reports, product launches, and collaborations, which could sustain Bubble Mart's growth narrative [14][18].