POP MART(09992) 华创证券·2024-10-25 06:56Investment Rating - The report maintains a "Recommend" rating for Pop Mart (09992 HK) with a target price of HKD 88 10 [1] Core Views - Pop Mart's Q3 2024 revenue exceeded market expectations with a year-on-year growth of 120%-125% Domestic revenue grew by 55%-60% while overseas revenue surged by 440%-445% [1] - The company's overseas expansion is accelerating with new stores opened in key markets such as South Korea Italy the Netherlands France and the US contributing to revenue growth [1] - Pop Mart's core IPs like MOLLY SKULLPANDA DIMOO and The MONSTERS continue to drive product innovation and sales growth [1] - The company's online revenue particularly through platforms like TikTok Shop and Tmall has shown significant growth with TikTok Shop achieving a record single-session sales of USD 280 000 [1] Financial Performance - Pop Mart's total revenue for 2024E is projected to be RMB 12 253 million a 93 1% increase from 2023A [2] - Net profit attributable to shareholders is expected to reach RMB 2 711 million in 2024E up 150 5% from 2023A [2] - The company's gross margin is forecasted to improve to 66 3% in 2024E from 61 3% in 2023A [6] - EPS is projected to increase from RMB 0 80 in 2023A to RMB 2 02 in 2024E [2] Market Expansion - Pop Mart's overseas revenue growth is driven by both store expansion and improved store efficiency with the number of overseas stores expected to reach 130-140 by the end of 2024 [1] - The company's strategy of localizing products and adopting a direct-to-consumer (DTC) model has been effective in penetrating international markets [1] Product and IP Strategy - Pop Mart continues to innovate with new IPs such as OIPIPPI Nyota CHAKA inosoul and POLAR which have contributed to revenue growth [1] - The company is expanding its product categories including building blocks and exploring new business areas like theme parks and games to enhance the value of its core IPs [1] Valuation and Projections - The report forecasts Pop Mart's net profit for 2024-2026 to be RMB 2 711 million RMB 3 601 million and RMB 4 458 million respectively [1] - The company's PE ratio is expected to decrease from 34 5x in 2024E to 21 0x in 2026E reflecting strong earnings growth [2] Key Financial Metrics - Pop Mart's total assets are projected to grow from RMB 9 969 million in 2023A to RMB 23 348 million in 2026E [6] - The company's operating cash flow is expected to increase significantly from RMB 1 991 million in 2024E to RMB 3 644 million in 2026E [6] - ROE is forecasted to rise from 14 7% in 2023A to 29 7% in 2024E indicating improved profitability [6]