Core Viewpoint - The financial performance of Bluko in the first half of 2025 fell short of market expectations, with revenue growth of 27.9% and adjusted net profit growth of 9.6%, significantly lower than the previous year's figures and compared to competitors like Pop Mart [1][2]. Financial Performance - Bluko reported a revenue of 1.338 billion, a year-on-year increase of 27.9%, and an adjusted net profit of 320 million, up 9.6% [1]. - In contrast, Pop Mart achieved revenue growth of 204% and adjusted net profit growth of 363% in the same period [1]. Sales Strategy and Challenges - The significant revenue growth disparity is attributed to a low-price strategy, particularly the promotion of the "Starry Version" series priced at 9.9 yuan, which accounted for a large portion of sales growth [2]. - The sales volume of core products increased by 96.8%, but revenue growth was only 27.9%, indicating that low-priced products did not translate into proportional revenue increases [2]. Inventory and Turnover - Bluko's inventory turnover days increased from 28 days in 2024 to 75 days in the first half of 2025, suggesting potential sales pressure at the retail level [3]. - In comparison, Pop Mart's inventory turnover days decreased from 130 days to 87 days during the same period [3]. Profitability and Cost Structure - The expansion into low-price products has negatively impacted Bluko's gross margin, which fell by over 4 percentage points compared to 2024, despite increased sales volume [3][5]. - Depreciation costs rose significantly, with a 140% increase in total depreciation and a 200% increase in mold-related depreciation, which outpaced revenue growth [5]. International Business Growth - Bluko's overseas revenue reached 110 million, a ninefold increase year-on-year, accounting for 8% of total revenue, indicating strong international market performance [6]. - The North American market showed the highest growth, with revenue exceeding 43 million, a year-on-year increase of over 20 times [6]. Valuation Perspective - Bluko's annualized adjusted net profit is estimated at 640 million, corresponding to a dynamic price-to-earnings ratio (PE) in the range of 35-40 times, similar to Pop Mart's valuation [8]. - Both companies face pressure to demonstrate sustainable growth, with Bluko needing to show that its revenue slowdown is a temporary adjustment [9].

Core Insights - Bruco's financial performance for the first half of 2025 fell short of market expectations, with revenue of 1.338 billion RMB, a year-on-year increase of 27.9%, and adjusted net profit of 320 million RMB, up 9.6% [1][7] - The company's stock price dropped over 10% following the earnings report, reflecting investor disappointment compared to its previous year's performance and that of competitors like Pop Mart [1][2] Revenue and Profitability - Bruco's revenue growth rate and adjusted net profit growth rate for 2024 were significantly higher at 156% and 702%, respectively [1] - The sales volume of Bruco's core product, building block toys, increased by 96.8%, but revenue growth was only 27.9%, primarily due to a low-price strategy [2][7] - The introduction of low-priced products, such as the "Starry Version" series priced at 9.9 RMB, contributed significantly to sales volume but did not translate into proportional revenue growth [2][6] Inventory and Cost Management - Bruco's inventory turnover days increased from 28 days in 2024 to 75 days in the first half of 2025, indicating potential issues with product movement at the distributor level [3][6] - The company's gross margin declined by over 4 percentage points in 2025 compared to 2024, attributed to the low-margin low-priced products and increased depreciation costs from a larger SKU base [6][7] International Expansion - Despite overall revenue and profit growth being below expectations, Bruco's overseas business showed significant growth, with revenue reaching 110 million RMB in the first half of 2025, a ninefold increase year-on-year [9][10] - The North American market exhibited the highest growth, with revenue of 43 million RMB, up over 20 times compared to the previous year [9][10] Market Position and Valuation - Bruco's estimated annualized adjusted net profit of approximately 640 million RMB corresponds to a dynamic price-to-earnings ratio of 35-40, similar to that of Pop Mart, indicating market expectations for future growth [12][13] - The company must demonstrate that the slowdown in revenue growth is a temporary adjustment and that its long-term growth strategy remains intact [12][13]