SPDB International·2025-05-28 11:50Investment Rating - The report assigns a "Buy" rating to the company with a target price of 293.9 HKD, indicating a potential upside of 26.0% from the current price of 233.2 HKD [6][16]. Core Insights - The launch of Labubu 3.0 has created a global phenomenon, significantly boosting the brand's visibility and popularity, leading to long queues outside stores and endorsements from celebrities [1][2]. - The overseas popularity of Labubu is expected to drive domestic sales growth, with projections indicating a year-on-year revenue increase of 95%-100% in Q2 2025 compared to Q1 2025 [2]. - The company is shifting its focus to the North American and European markets, with significant revenue growth reported in these regions, outpacing Southeast Asia [3]. - The earnings forecast for 2025 has been raised by 17%, with profit estimates increased by 20%, reflecting strong growth expectations [4]. Summary by Sections Revenue and Profit Forecast - The company is projected to achieve revenues of 25,732 million RMB in 2025, representing a year-on-year growth of 97.4% [5][12]. - The net profit for 2025 is estimated at 7,030 million RMB, with a year-on-year increase of 124.9% [5][12]. Market Performance - The report highlights that the company's stock is currently trading at 26.7 times the estimated P/E for 2026, suggesting a PEG ratio of approximately 0.4x, which is lower than most Chinese consumer stocks [4][6]. - The average daily trading volume over the past three months is reported at 2,127 million HKD, indicating strong market interest [6]. Strategic Focus - The company is actively relocating a majority of its U.S. orders to Vietnam and expanding production capacity in Southeast Asia and Mexico to mitigate potential supply chain risks [3]. - The brand's strong market presence allows it to pass on potential tariff costs to consumers, reducing concerns about trade tensions affecting its U.S. market prospects [3].