HTSC·2026-01-20 06:42Investment Rating - The report maintains an investment rating of "Buy" with a target price of HKD 410.00 for the company [1]. Core Insights - Recent market expectations for the company have been influenced by short-term high-frequency tracking data, leading to concerns about IP popularity and sustainable performance growth. However, the company's Q4 domestic and overseas performance shows strong resilience, supported by its IP matrix after the sales peak of Labubu 3.0. The report identifies three potential discrepancies in market expectations: comprehensive judgment of high-frequency data, growth potential of new IPs, and the potential of content and IP ecosystem layout [1]. Summary by Sections Q4 Overseas Market Performance - The report anticipates that Q4 overseas performance, particularly in North America, will exceed market pessimism. Despite a projected 10% decline in Tik Tok sales in Q4, improved inventory levels in stores are expected to enhance offline sales significantly compared to Q3. In Southeast Asia, while some countries saw a year-on-year decline in sales, this is attributed to natural channel structure changes, with strong growth anticipated in overall channel sales [2][3]. New IP Growth Potential - The report highlights that the diversification of IPs in Q4 has been successful, with new IPs like Star People and Crybaby gaining traction, reducing the sales share of Labubu. In Southeast Asia, the sales share of Labubu has dropped below 40%, with new IPs collectively accounting for over 50% in some markets. The report suggests that the company's channel layout in domestic and Southeast Asian markets is robust, allowing for the transmission of popularity from established to emerging IPs [3][4]. Ecosystem Development and Content Layout - The company's IP content layout is entering a practical implementation phase, with plans for animated shorts and potential feature films to enhance IP influence. The report draws parallels with the success of Sanrio's Hello Kitty in leveraging content to boost brand recognition and sales. The content strategy is expected to become a new tool for breaking into broader markets, complementing existing strengths in product offerings and fan engagement [4][5]. Profit Forecast and Valuation - The report maintains profit forecasts, projecting adjusted net profits of RMB 135 billion, 185 billion, and 237 billion for 2025-2027. The target price is based on a PE ratio of 27x for 2026, reflecting the company's high barriers to entry and ongoing diversification of IP and business models [5].