North America: Market's estimate is likely too low Pop Mart's stock movements in 4Q25 were highly correlated with high-frequency sales data for North America. The data suggest the company's NA sales in 4Q25 would be 25-30% lower than 3Q25, and 2025 would be meaningfully below Rmb7bn. We also think the market has extrapolated the trend and priced in a sales decline in NA for 2026. We are not able to verify any credit-card-based sales data, but note that it has been widely circulated in the investment communi ...

Summary of Global IP Collectibles Conference Call Industry Overview - The global IP collectibles market has rapidly evolved into a mainstream market exceeding US$100 billion, outpacing most consumer discretionary categories in growth [2][21] - The market is expected to maintain a strong ~6% CAGR from 2024 to 2027, following an ~8% CAGR from 2019 to 2024 [2][25] - Character- and entertainment-driven collectibles, including toys, trading cards, apparel, and lifestyle products, are gaining consumer wallet share, particularly in China and the Asia-Pacific region [2][25] Key Players - Recommended leading IP plays include Pop Mart, Sanrio, Hasbro, and Damai [2][65] - North America accounts for nearly 50% of the global character IP licensing market, making it a focal area for Asian companies [2][25] Core Insights - The rise of "kidults" (adults embracing play and nostalgia) is driving over 25% of global toy sales, expanding the total addressable market (TAM) [3][41] - Seven structural amplifiers are identified as key growth drivers: 1. Consumer cohort expansion 2. IP creation 3. Gamified sales 4. Social media evolution 5. Product upgrade 6. Channel evolution 7. IP versatility [3][30] Consumer Behavior - A survey indicates robust purchase intent in both China and the US, with young, financially stable, family-oriented consumers at the core [4][41] - Chinese consumers average 6-7 purchases per year, while US consumers show higher repurchase rates, reflecting market maturity [4][42] - Purchase drivers differ: Chinese consumers prioritize design and emotional resonance, while US consumers value gifting, nostalgia, and affordability [4][43] Market Risks - Macro risks such as economic uncertainty and price sensitivity are significant constraints, but the "lipstick effect" supports resilience in moderate downturns [4][45] - The IP collectibles category is sensitive to severe economic downturns, with historical precedents showing outsized shocks during crises [4][46][56] Growth Projections - The leading group of IP collectibles is expected to grow at ~7% in 2025, with a moderation to 5-6% in 2026-27 [25][50] - The total retail sales value under Character/Entertainment IP is estimated to reach US$150 billion in 2024 [26] Investment Opportunities - Pop Mart is positioned to capitalize on expanding kidult demand, with a focus on strategic investments and localized crossovers [65][67] - Sanrio's growth story remains intact despite short-term concerns, particularly in the US market [72][73] - Hasbro's strategic pivot towards higher-growth franchises is expected to drive a multi-year growth trajectory [74][76] Conclusion - The IP collectibles market is characterized by structural growth drivers that extend beyond cyclical trends, with leading players well-positioned to capture incremental demand [32][63] - Investors are encouraged to focus on companies with strong product design and consumer engagement strategies to capitalize on the long-term growth potential of the IP collectibles sector [64][70]

Summary of Pop Mart International Group (9992.HK) Conference Call Company Overview - **Company**: Pop Mart International Group (9992.HK) - **Industry**: Consumer Goods, specifically in the IP collectibles market - **Market Cap**: Approximately US$37.7 billion as of November 27, 2025 Key Points 2026 Outlook - **Price Target**: Adjusted from HK$382.00 to HK$325.00, reflecting market conditions and growth expectations [1] - **Sales Forecast**: Expected total sales of Rmb48 billion in 2026, representing a 26% year-over-year growth [11] - **Growth Drivers**: Sustained momentum anticipated from China and APAC regions, supported by strategic marketing and store openings in the US [1][2] Performance Metrics - **Revenue Breakdown**: - Labubu sales projected at Rmb15.5 billion in 2025, with growth moderating to 13% in 2026 [3][17] - Non-Labubu IPs expected to contribute Rmb22.4 billion in 2025, with a growth forecast of 35% in 2026 [11][13] - **Net Profit Margin**: Expected to remain high, around 32% in 2026, supported by lower advertising and promotional expenses [4][46] Market Dynamics - **US Market Growth**: Forecasted sales growth of 34% in 2026, with a long-term view that the US market could surpass China due to its size and demand for IP collectibles [22][23] - **Offline Expansion**: Emphasis on increasing offline presence, which currently accounts for only 35% of US revenue, compared to 60% in the broader toy and hobby category [25][30] Strategic Initiatives - **Product Launches**: Management plans to increase product launches in 2026, including new figurine collections and plush series [20][21] - **Localized Marketing**: Enhanced marketing efforts to strengthen Labubu's global presence through localized designs and collaborations [31][32] Financial Adjustments - **P/E Ratio**: Target P/E reduced from 32x to 26x for 2026, reflecting unfavorable market conditions and a focus on near-term growth [5][59] - **Sales Volatility**: Increased sales volatility expected in the short term due to market dynamics and consumer behavior shifts [5][59] Regional Insights - **Greater China**: Sales estimated at Rmb21 billion in 2025, with a growth forecast of 22% in 2026 [38] - **APAC Opportunities**: Strong growth potential in Japan and Korea, leveraging cultural similarities and consumer preferences [42][43] Risks and Considerations - **Market Sentiment**: Current bearish sentiment may overlook the long-term growth potential driven by a recurring customer base [2][3] - **Supply Chain Challenges**: Management is exploring production options in Latin America to shorten supply chains and improve US operations [35] Conclusion - Pop Mart is positioned for sustained growth in the IP collectibles market, with strategic initiatives aimed at expanding its customer base and enhancing brand presence both domestically and internationally. The company’s focus on offline expansion and localized marketing efforts is expected to drive future sales growth, despite current market volatility and adjustments in financial projections.