Hua Er Jie Jian Wen·2025-08-02 09:38Core Viewpoint - Morgan Stanley suggests that the recent stock price pullback of Pop Mart presents a valuable buying opportunity, emphasizing the company's strong performance in new IP product lines and its significant growth potential in the global IP market [1][11]. Group 1: Product Performance - Despite investor concerns about a slowdown after the Labubu craze, Pop Mart continues to launch popular new products, indicating strong demand rather than supply issues [3]. - New IPs like Crybaby and Twinkle Twinkle are performing well, alongside traditional favorites such as Molly and Skullpanda, with many products frequently sold out [3]. - The supply-demand imbalance reflects the attractiveness of the company's products, not a lack of demand [3]. Group 2: Brand Collaborations and Global Expansion - Recent innovative collaborations include partnerships with renowned brands like Godiva and Chopard, as well as the opening of new stores in key cities like Berlin and Melbourne [4]. - These initiatives demonstrate the global appeal of Pop Mart's IP and products, positioning the company to capture consumer demand across various markets [4]. Group 3: Financial Performance and Valuation - Morgan Stanley forecasts Pop Mart's revenue to reach RMB 31.046 billion in 2025, a 138% increase year-on-year, and RMB 42.994 billion in 2026, a 38% increase [5]. - The gross margin is expected to improve from 66.8% in 2024 to 71.5% in 2025, with operating profit margin rising from 31.5% to 42.0% in the same period [6]. - The estimated P/E ratio for 2025 is 31x, dropping to 22x in 2026, highlighting Pop Mart's valuation advantage compared to other high-growth stocks [7]. Group 4: Market Potential - The global IP product market is estimated to be around USD 800 billion, with Pop Mart's current market share at only 2.3%, indicating substantial growth potential [9]. - Pop Mart aims to evolve into a combination of Bandai Namco, LEGO, and Disney, suggesting that its growth story is still in the early stages [10]. Group 5: Investment Recommendation - Morgan Stanley maintains an "Overweight" rating with a target price of HKD 365, indicating over 48% upside potential from the current stock price of HKD 246 [1][14]. - The firm has outlined three scenarios for target prices based on different market conditions, reinforcing the investment opportunity presented by the current pullback [11].