POP MART(HK:09992) Yong Xing Zheng Quan·2024-10-27 03:11Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [3]. Core Views - The company is the largest player in the trendy toy industry, establishing an integrated platform covering the entire industry chain. The trendy toy sector has maintained a growth rate of over 30% since 2021. In 2023, the company achieved a market share of 12% in China, benefiting from industry growth despite a relatively weak economic environment [2][17]. - The company's strong IP operation capabilities allow it to diversify its revenue streams. By the first half of 2024, non-figure product revenue accounted for 41.7% of total revenue, indicating a decreasing reliance on figure sales [2][11]. - The company has seen significant growth in overseas markets, with revenue from Hong Kong, Macau, and overseas regions reaching 1.352 billion yuan in the first half of 2024, a year-on-year increase of 260% [2][14]. Summary by Sections 1. Company Diversification and Growth - The company, founded in 2010, is the largest trendy toy company in China, with a business model that includes IP incubation and operation, trendy toys and retail, theme parks and experiences, and digital entertainment. As of the first half of 2024, it operates 374 retail stores and 2,189 robot stores in mainland China and overseas [11]. - In the first half of 2024, the company achieved a revenue of 4.558 billion yuan, a year-on-year increase of 62%, with a net profit of 921 million yuan, up 93% [14]. 2. Core Competitive Advantages - The trendy toy industry in China is expected to exceed 100 billion yuan, with a compound annual growth rate (CAGR) of 36% from 2023 to 2026. The company holds a significant market share and continues to benefit from industry growth [17]. - The company maintains a high proportion of self-produced products, with self-produced products accounting for 96.2% of total revenue in the first half of 2024. The gross margin for self-produced products is generally 22-36.5 percentage points higher than that of externally sourced products [21]. 3. Multi-Channel Strategy and Overseas Growth - The company has a comprehensive multi-channel strategy, with significant growth in online sales. In the first half of 2024, the company opened 20 new stores in mainland China, increasing its total to 374 [23]. - The overseas market remains a significant growth area, with the company aiming to replicate its success in Southeast Asia in other regions, including Europe and the United States [2][14]. 4. Profit Forecast and Investment Recommendations - The company is expected to achieve net profits of 2.736 billion yuan, 3.633 billion yuan, and 4.565 billion yuan from 2024 to 2026, with corresponding earnings per share (EPS) of 2.04 yuan, 2.71 yuan, and 3.40 yuan [3][5].