Hua Er Jie Jian Wen·2025-09-09 00:57Core Viewpoint - The recent sharp decline in the secondary market prices of LABUBU has led to a significant drop in Pop Mart's stock price, but Morgan Stanley remains optimistic, suggesting that the market may be overreacting to high-frequency data [1][3]. Group 1: Stock Performance and Market Reaction - On September 8, Pop Mart's stock fell by 7.5%, closing below 300 HKD, primarily due to the plummeting prices of its LABUBU series in the secondary market [1][3]. - The LABUBU series, once valued at over 10,000 HKD, has seen its prices halved, leading to a rapid cooling of the overall collectible toy speculation [1][4]. Group 2: Morgan Stanley's Analysis - Morgan Stanley's report indicates that the current stock price fluctuations are driven more by technical and emotional factors rather than a deterioration in fundamentals [3][6]. - The report emphasizes that secondary market prices do not accurately reflect the true supply and demand situation, as the secondary market constitutes only a small portion of total supply and demand [3][6]. Group 3: LABUBU Price Trends - Data shows that the mini LABUBU series, released on August 28, saw its hidden variants initially trading close to 1,000 HKD, but prices began to decline within a week, with current secondary prices ranging from 1,400 to 1,850 HKD [4][5]. - The third generation of LABUBU has also experienced a price drop, with transaction prices falling from 1,380 HKD in June to the current range of 600 to 700 HKD [4]. Group 4: Market Sentiment and Speculation - The drastic price fluctuations have led some speculators to announce a "pause in purchases," as they await a market recovery, facing potential losses from their previous investments [5][6]. - Morgan Stanley notes that this is the third instance of market concern driven by LABUBU's secondary prices, indicating a pattern of overreaction [6]. Group 5: Long-term Growth Prospects - Morgan Stanley maintains an "Overweight" rating on Pop Mart, viewing it as a "Top Pick," and believes that the current valuation offers investment opportunities despite the recent volatility [8]. - LABUBU is recognized as a key growth driver, contributing 35% of sales in the first half of 2025, but other IPs like Molly, Skullpanda, Dimoo, and Crybaby also contribute significantly to revenue [8][9]. - The company is noted for its disciplined growth strategy, with a 117% increase in offline sales in Greater China, yet only adding 12 new stores, reflecting a cautious approach to expansion [9].