Investment Rating - The report maintains a "Buy" rating for the company [1] Core Viewpoints - The demand for trendy toys is not a false need; entertainment is a necessity. The "Kidult" trend, driven by demographic changes, media evolution, and consumer psychology, is a long-term trend in the toy industry, exemplified by the increasing market share of companies targeting adult consumers [1][14] - The global entertainment and media industry is projected to reach approximately $3 trillion by 2024, indicating a growing market for diversified entertainment offerings [1][35] Supply-Side Growth Potential - Store Expansion: The company has significant room for growth in retail locations, with a projected increase in global retail stores from 571 in 2025, with a substantial portion located in China [2][58] - Increased Store Traffic: Domestic single-store membership is expected to rise from 145,000 to nearly 200,000, indicating potential for higher customer traffic [2] - Higher Member Spending: The maturity of IPs is expected to drive up member spending, as seen with the SKULLPANDA IP, where the cost to collect all items increased significantly from 5,922 RMB in 2021 to 47,430 RMB in 2025 [2] Demand-Side Competitive Barriers - Artist Talent Barrier: The company has established relationships with mature toy artists, creating a long-term competitive advantage [3] - Marketing Resource Barrier: The company's business model relies on top-tier brand collaborations and celebrity endorsements, which are core competitive barriers [3] - User Data Asset Barrier: The company's direct sales channels enhance its ability to control user data and market feedback, improving operational efficiency [3] Valuation Safety Margin - The company's valuation is expected to be significantly above 10X PE, given its growth stage and the rising influence of China's cultural output on its growth trajectory [3] Profit Forecast and Valuation - The company is projected to achieve revenues of 369.57 billion RMB, 551.72 billion RMB, and 678.11 billion RMB for the years 2025-2027, with adjusted net profits of 123.76 billion RMB, 173.73 billion RMB, and 226.85 billion RMB, reflecting year-on-year growth rates of 295.98%, 40.37%, and 30.58% respectively [4][7] - The target price is set at 359.72 HKD, based on a 25X PE for 2026 [4]

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The demand for trendy toys is not a false need; entertainment is a necessity. The "Kidult" trend, driven by demographic changes, media evolution, and consumer psychology, is a long-term trend in the toy industry, exemplified by the increasing market share of companies targeting adult consumers [1][14] - The global entertainment and media industry is projected to reach approximately $3 trillion by 2024, indicating a growing market for diversified entertainment offerings [1][35] Supply-Side Growth Potential - Store Expansion: The company has significant room for growth in retail locations, with a projected increase in global retail stores from 571 in 2025, with a substantial portion located in China [2][58] - Increased Store Traffic: Domestic single-store membership is expected to rise from 145,000 to nearly 200,000, with the opening of the first U.S. store in September 2023 [2] - Higher Member Spending: The maturity of IPs is expected to drive up the average spending per member, as seen with the SKULLPANDA IP, where the cost to purchase all products increased significantly from 5,922 RMB in 2021 to 47,430 RMB in 2025 [2] Demand-Side Competitive Barriers - Artist Talent Barrier: The company has established partnerships with mature toy artists in Hong Kong, creating a long-term competitive advantage [3] - Marketing Resource Barrier: The company's business model relies on top-tier brand collaborations and celebrity endorsements, which are core competitive barriers [3] - User Data Asset Barrier: The company has strong control over user data and market feedback due to its direct sales channels, enhancing operational efficiency [3] Valuation Safety Margin - The company's valuation is expected to be significantly above 10X PE, given its growth stage and the rising cultural influence of China on the global stage [3] Profit Forecast, Valuation, and Rating - Revenue projections for 2025-2027 are 36.96 billion, 55.10 billion, and 67.74 billion RMB, with adjusted net profits of 12.38 billion, 17.35 billion, and 22.66 billion RMB, reflecting growth rates of 295.98%, 40.21%, and 30.59% respectively [4][7] - The target price is set at 359.72 HKD, based on a 25X PE for 2026 [4]