POP MART(09992) 浦银国际证券·2024-07-24 03:01Investment Rating and Target Price - The report initiates coverage on Pop Mart with a "Buy" rating and a target price of HKD 51.3, implying a potential upside of 27.6% from the current price of HKD 40.2 [1] - The target price is derived using a DCF valuation method, reflecting the company's strong growth prospects and competitive advantages [1] Core Investment Thesis - Pop Mart is a leader in China's trendy toy industry, benefiting from its strong IP incubation and monetization capabilities, which drive its global expansion [1] - The company has three key advantages: 1) industry leadership in a high-growth segment, 2) competitive moat through IP incubation and monetization, and 3) a well-developed omnichannel sales network [1] - Pop Mart's overseas expansion is gaining momentum, reducing its reliance on the Chinese market and providing a new growth driver [1] IP Incubation and Monetization - Pop Mart operates as an integrated IP platform, covering the entire value chain from IP acquisition, incubation, product design, production, to sales and consumer engagement [4][5] - The company has built a rich portfolio of over 40 artist IPs, with 10 IPs generating over RMB 100 million in sales each, reducing reliance on any single IP [8][12] - Pop Mart's IP monetization is supported by a diversified product portfolio, including blind boxes, figurines, BJDs, plush toys, and building blocks, catering to various consumer needs [17][18][23] Sales Network and DTC Strategy - Pop Mart has established a comprehensive omnichannel sales network, covering both offline (retail stores, robot stores, exhibitions) and online (Tmall, JD, Douyin, and its own app) channels [34][35] - The company's DTC (direct-to-consumer) strategy accounts for 88% of total revenue, enabling better consumer interaction, data collection, and personalized shopping experiences [44][45] - As of 2023, Pop Mart has 3,435 million registered members in mainland China, with a member repurchase rate of 50% and member sales contributing 92% of total revenue [46] Overseas Expansion - Pop Mart has rapidly expanded its overseas presence, with 80 retail stores and 159 robot stores in over 20 countries and regions as of 2023 [48][50] - Overseas revenue grew at a CAGR of over 140% from 2021 to 2023, reaching RMB 1.07 billion and accounting for 17% of total revenue in 2023 [51][52] - The company's overseas strategy includes localized product offerings, collaborations with global IPs (e.g., Marvel, Disney), and the establishment of overseas supply chains, such as its factory in Vietnam [54][55] Financial Performance and Outlook - Pop Mart's revenue is expected to grow from RMB 6.3 billion in 2023 to RMB 15.1 billion in 2026, with a CAGR of 33.6% [56] - Overseas revenue is projected to grow faster than domestic revenue, increasing from RMB 1.07 billion in 2023 to RMB 6.7 billion in 2026, driven by continued market expansion [57] - The company's gross margin is expected to improve from 61.3% in 2023 to 65.0% in 2026, supported by cost optimization and economies of scale [60]