Core Viewpoint - TOP TOY, a rapidly growing collectible toy brand in China, has reported impressive financial data, with a 105.6% increase in revenue from 2022 to 2023 and a projected 38.2% growth in net profit for 2023 to 2024. However, there are several risk factors that investors should be aware of [1]. Business Model and Strategy - TOP TOY aims to build a comprehensive platform for the collectible toy industry, catering to the demands of trend-conscious consumers through a diversified IP strategy that includes proprietary, licensed, and third-party IPs [2]. - The company has established a multi-channel sales network, including offline stores, online platforms, and distributors, with the number of offline stores expected to reach 293 by June 30, 2025, and online sales accounting for 8.8% of total sales in the first half of 2025 [3]. Financial Performance - Revenue Growth: TOP TOY's revenue has shown significant growth, with figures reaching 6.79 billion yuan in 2022, projected to grow to 19.09 billion yuan by 2024, reflecting a compound annual growth rate (CAGR) of 67.7% [4][6]. - Net Profit: The company turned a profit with net income of 2.12 billion yuan in 2023, expected to rise to 2.94 billion yuan in 2024, marking a 38.2% increase [5][7]. - Gross Margin: The gross margin has steadily increased from 19.9% in 2022 to 32.7% in 2024, driven by a higher proportion of self-developed products [8][9]. Revenue Composition - In the first half of 2025, the revenue composition includes 12.8% from direct retail, 25.2% from franchise sales, 51.6% from offline distributors, and 8.8% from online sales, indicating a diversified revenue stream [11]. Customer and Supplier Dynamics - The company has a high customer concentration, with the largest customer, Miniso Group, accounting for 45.5% of total revenue in the first half of 2025, which poses a risk if the relationship changes [20]. - Supplier concentration is relatively low, with the top five suppliers accounting for 19.3% to 21.0% of total purchases from 2022 to the first half of 2025, which helps mitigate risks associated with supplier dependency [21]. Management and Governance - The core management team has extensive experience in retail and finance, but there is a need for improved talent retention and incentive mechanisms as the company grows [23]. - Miniso Group holds a significant stake in TOP TOY, controlling approximately 86.9% of the issued share capital, which raises concerns about the influence of major shareholders on company decisions [22].