Group 1 - TOP TOY has completed Series A financing, with Temasek as the investor [1] - The financing will enhance TOP TOY's market expansion and product innovation in the trendy toy sector [1] - TOP TOY was established on November 5, 2020, and offers products across seven core categories including blind boxes, art toys, anime figures, comic figures, doll models, assembly models, and building blocks [1]

Core Viewpoint - The essence of Pop Mart is to position itself as an art company, transforming toys into emotional art pieces, which justifies their high pricing [1][2]. Group 1: Business Performance - Pop Mart's gross margin increased to 70.3%, driven by a rise in overseas sales, which accounted for over 40% of total revenue [2][3]. - The company reported a nearly fourfold increase in net profit year-on-year, with revenue growing over twofold to 13.88 billion yuan [2][3]. - The company was included in the Hang Seng Index for the first time, indicating growing recognition in the capital market [3]. Group 2: Market Dynamics - The current "involution" in many industries is a natural phase as markets mature, similar to the evolution seen in personal computers and other sectors [5]. - The manufacturing efficiency has limits, and products with only practical functions are more susceptible to price competition [5][6]. - Pop Mart's overall gross margin of 70.3% demonstrates that creativity and emotional connection can maintain high value despite material costs [5][6]. Group 3: IP Development Strategy - Pop Mart's business model focuses on creating new IPs, emphasizing long-term value over mass production [8][19]. - The company nurtures its IPs carefully, avoiding rapid commercialization to ensure sustainable growth [17][22]. - Successful IPs like LABUBU and DIMOO have shown that value comes from time and continuous innovation rather than quick replication [20][22]. Group 4: Cultural Impact and Future Trends - Pop Mart's IPs, such as MOLLY and LABUBU, thrive without traditional narrative support, indicating a shift in how IPs can be developed and monetized [24][25]. - The company's approach to aesthetics and emotional connection positions it as a modern art symbol, appealing to both domestic and international markets [25][26]. - The future of industries may increasingly rely on beauty and design, as consumer preferences shift towards emotional and aesthetic values [26].

Consumer Trends - The new consumption sector continues to gain momentum, with A-shares experiencing a valuation increase driven by emotional consumption, channel innovation, and brand expansion overseas[4] - In the first half of 2025, the domestic smartphone shipment volume was 20.63 million units, a year-on-year decline of 6.4% but a quarter-on-quarter increase of 7.6%[28] - The global IP toy market is expected to exceed 400 billion yuan by 2025, with China's market growing at a compound annual growth rate (CAGR) of 11.90% from 2019 to 2023, significantly higher than the global rate of 9.30%[8] High-end Manufacturing - Liquid cooling technology is identified as a key solution for data centers to address energy consumption issues, potentially reducing Power Usage Effectiveness (PUE) to below 1.1[4] - The energy consumption of AI data centers is projected to reach 77.7 TWh in 2025, doubling from 2023, with a CAGR of 44.8% from 2022 to 2027[16] - Liquid cooling solutions can achieve energy savings of over 20%-30%, providing both economic and environmental benefits[18] Hard Technology - The penetration rate of foldable smartphones is expected to rise from 1.6% in 2025 to over 3% by 2027, driven by Apple's entry into the market and ongoing price reductions[31] - The total cost of foldable smartphones is significantly higher than non-foldable models, with display/touch modules and lenses seeing increases of 177% and 28% respectively[38] - In 2025, foldable smartphone shipments are projected to reach 19.8 million units, maintaining the same penetration rate as 2024[31]

Investment Rating - The report maintains a "Strong Buy" investment rating for the company [2][6]. Core Views - The company achieved a revenue of 13.876 billion yuan in the first half of 2025, representing a year-on-year growth of 204.4% [6]. - Adjusted net profit reached 4.710 billion yuan, with a year-on-year increase of 362.8%, and an adjusted net profit margin of 33.94%, up by 11.6 percentage points [6]. - The company’s IP matrix continues to grow, with significant contributions from top IPs and a rapid increase in new IP cultivation [6]. Financial Performance - Revenue breakdown shows that the top IPs generated significant income, with "The monsters" contributing 4.81 billion yuan, "Molly" 1.36 billion yuan, and "Skullpanda" 1.22 billion yuan, among others [6]. - The plush category saw a staggering growth of 1276.2% to 6.139 billion yuan, becoming the highest revenue-generating category [6]. - The company’s gross margin improved to 70.3%, a year-on-year increase of 6.3 percentage points, driven by better cost control and a higher proportion of overseas high-margin business [6]. Revenue and Profit Forecast - The company forecasts total revenue of 30.05 billion yuan for 2025, with a year-on-year growth of 130% [7]. - Adjusted net profit is projected to reach 10.368 billion yuan in 2025, reflecting a growth of 205% [7]. - The adjusted PE ratios for 2025, 2026, and 2027 are estimated at 37.4x, 27.3x, and 22.4x respectively [7]. Market Expansion - The company reported a revenue of 8.28 billion yuan from the China region, a year-on-year increase of 135.2%, with significant growth in offline channels [6]. - Overseas revenue reached 5.59 billion yuan, marking a remarkable growth of 439.6%, with the Americas showing a particularly high growth rate of 1142.3% [6]. - The company plans to expand its overseas store count to 200 by the end of the year, with a focus on emerging markets such as the Middle East and South Asia [6].

Group 1: Index Adjustments - The Hang Seng Index Company announced its semi-annual index adjustment results, affecting major indices including the Hang Seng Index, the Hang Seng China Enterprises Index, and the Hang Seng Tech Index [1] - China Telecom, JD Logistics, and Pop Mart were included in the Hang Seng Index, with respective weights of 1.44%, 0.51%, and 0.22%, increasing the total number of constituent stocks to 88 [1] - The Hang Seng China Enterprises Index included Pop Mart with a weight of 2.10%, while J&T Express was removed, which had a weight of 0.71%, keeping the total number of constituents at 50 [1] - No adjustments were made to the Hang Seng Tech Index, maintaining its count at 30 constituents [1] - The adjustments will take effect on September 8, 2025, with the adjustment list for the Stock Connect to be published on September 5 [1] Group 2: ETF Market Developments - Huaxia Fund's Hong Kong stock ETFs surpassed 100 billion yuan in total scale, becoming the first fund manager in the market to achieve this milestone [2] - Huaxia Fund's Hong Kong stock ETFs not only have the largest scale but also the most comprehensive layout, with 14 funds covering broad-based, technology, healthcare, dividend, and consumer sectors [2] Group 3: Related Securities - Core broad-based Hong Kong stock: Hang Seng ETF (159920) [3] - AI and platform economy: Hang Seng Tech Index ETF (513180) [3] - Focus on the development of Chinese enterprises in Hong Kong: Hang Seng China Enterprises ETF (159850) [3]

Group 1 - The Chinese Customs has intercepted 1.83 million suspected infringing LABUBU products this year [2] - During the 14th Five-Year Plan period, Chinese Customs has conducted a series of special operations, resulting in the seizure of nearly 400 million suspected infringing goods across 260,000 batches [2] - The Chinese Customs aims to protect both domestic intellectual property and the legitimate rights of foreign enterprises in China, preventing the inflow of foreign infringing products and the outflow of domestic infringing products [2] Group 2 - Since the beginning of the 14th Five-Year Plan, Chinese Customs has collaborated with public security and other departments to investigate 23,000 smuggling cases, with a total value of nearly 480 billion RMB [2] - In drug smuggling, 3,032 cases have been investigated, resulting in the seizure of 15.7 tons of various drugs [2] - The "套代购" (proxy purchasing) illegal activity has led to the investigation of cases valued at 5.9 billion RMB during the 14th Five-Year Plan [2] Group 3 - The "湄龙" action has expanded to over 20 participating countries/regions, resulting in the seizure of over 60 tons of drugs and precursor chemicals, and 479 tons of endangered wildlife products [3] - The "大地女神" action has reported the seizure of 35,000 tons of smuggled waste [3] - Both actions represent international cooperation in combating drug trafficking and smuggling of endangered species and solid waste [3]

Core Viewpoint - The recent launch of the "Starry People Dream Meteorological Bureau Series" blind box by Pop Mart has generated significant consumer interest and sales, indicating a strong market demand for new IPs in the collectible toy sector [1][2]. Product Launch and Sales - Pop Mart has introduced multiple new products, including the "Starry People" blind box, which is part of its newly signed IP for 2024 and has already achieved a revenue of 390 million yuan in the first half of the year [2]. - The pricing for the blind boxes is set at 79 yuan each and 474 yuan for a full box, while the "MOKOKO" plush toys are priced at 199 yuan each. The products sold out almost instantly upon release, with inventory disappearing within seconds on various platforms [3]. Market Demand and Resale Prices - The shortage of available stock has led to a surge in resale prices on secondary markets, with the full box of "Starry People" selling for as much as 1,350 yuan, representing a nearly threefold increase in price. Individual pieces are averaging 150 yuan, nearly double the original price, while hidden variants have reached 478 yuan, over six times the original price [8][12]. - The excitement surrounding the "Starry People" series has drawn comparisons to the previous popular series, LABUBU 3.0, which has seen its prices drop to 780 yuan, indicating a shift in consumer interest and potential for "Starry People" to become the next big hit [15][16]. Production Capacity and Challenges - Pop Mart's supply chain president revealed that the production capacity for plush toys has increased significantly, with August's output reaching approximately 30 million units, a tenfold increase compared to previous levels. However, there are concerns about meeting the high demand, as the company is still in the process of ramping up production [18].

Investment Rating - The report indicates a positive outlook for the consumer sector, with a strong recommendation for investment in companies benefiting from the ongoing recovery in consumer demand and sports events [1][2]. Core Insights - The consumer sector has shown significant growth, with various sub-sectors such as beauty care, social services, and retail experiencing weekly increases of +5.35%, +4.55%, and +4.55% respectively [2]. - The sports industry is becoming a key driver for economic recovery, with the total scale of the sports industry growing at an average annual rate of over 10% in the past five years. Major events like the Hangzhou Asian Games are expected to boost local consumption significantly [2]. - Leading companies in the trendy toy sector, such as Pop Mart, reported explosive growth in their financial performance, with a 204.4% increase in revenue and a 362.8% increase in adjusted net profit for the first half of 2025 [2][19]. - The trendy toy market in China is projected to grow from approximately 764 billion yuan in 2024 to 1,101 billion yuan by 2026, with a compound annual growth rate (CAGR) of 20% [2]. Summary by Sections Market Weekly Review - The consumer sector saw a broad increase in stock prices, with notable gains in various sub-sectors [2][4]. - Key stocks that led the gains included Jiugui Liquor (+25.10%) and Huijia Times (+43.48%), while stocks that declined included Guifaxiang (-8.72%) and Rongtai Health (-11.79%) [12][13]. Industry News and Key Company Announcements - A partnership between Moutai and Taobao Flash Sale aims to enhance consumer access to Moutai products, indicating a strategic move to boost sales [14][15]. - The report highlights various companies' financial performances, with Pop Mart achieving remarkable growth and other companies like Shanghai Jahwa and Hainan Airlines also reporting positive trends [18][19][21].

Core Insights - The company reported better-than-expected profits for H1 2025, with optimistic full-year guidance and a "buy" rating maintained due to successful overseas expansion and the rise of new IPs [1][2] Financial Performance - In H1 2025, the company achieved revenue of 13.88 billion yuan, a year-on-year increase of 204.4% - Net profit reached 4.68 billion yuan, up 385.6%, exceeding the previous profit forecast of 350% - Adjusted net profit was 4.71 billion yuan, reflecting a year-on-year growth of 362.8% - Gross margin stood at 70.3%, an increase of 6.3 percentage points year-on-year - Adjusted net profit margin was 33.9%, up 11.6 percentage points year-on-year [1] Market Expansion - The global market saw explosive growth, with the Americas experiencing over 11-fold growth year-on-year - Revenue from different regions in H1 2025 was as follows: China 8.28 billion yuan (up 135%), Asia-Pacific 2.85 billion yuan (up 258%), Americas 2.26 billion yuan (up 1142%), and Europe & others 480 million yuan (up 729%) - The Americas accounted for 16.3% of total revenue, with offline and online revenues of 840 million yuan and 1.33 billion yuan respectively, indicating strong popularity of the company's IP on social media [2] IP Development - The company has established a strong IP matrix with five major IPs generating over 1 billion yuan in revenue - The top-performing IPs include THE MONSTERS (4.81 billion yuan, up 668%), MOLLY (1.36 billion yuan, up 74%), SKULLPANDA (1.22 billion yuan, up 113%), CRYBABY (1.22 billion yuan, up 249%), and DIMOO (1.11 billion yuan, up 193%) - Among 13 IPs generating over 100 million yuan, the fastest-growing IP is 星星人, contributing 390 million yuan [2]

Core Viewpoint - The company achieved a revenue of 13.88 billion yuan in the first half of the year, representing a year-on-year growth of 204%, with adjusted net profit reaching 4.71 billion yuan, a year-on-year increase of 363%, both exceeding expectations [1] Group 1: Revenue and Profit Growth - The company reported significant revenue and profit growth, with both figures surpassing previous forecasts [1] - The domestic and American markets showed impressive profit margins, with ongoing improvements in supply chain capabilities and performance of other IPs aside from LABUBU [1] Group 2: International Expansion - The Americas led the growth, with revenue increases of 1142% in the first half, and the company plans to open more flagship stores in the second half [1] - As of June, the number of overseas self-operated stores reached 162, an increase of 32 stores since the beginning of the year, with a target of 200 stores by year-end [1] Group 3: Domestic Market Performance - In the domestic market, single-store revenue more than doubled, with annualized figures of 18 million yuan and 47.4 million yuan for mainland China and Hong Kong/Macau/Taiwan, respectively [2] - The operating profit margin for the China division increased by 13 percentage points to 49%, outperforming overseas margins [2] Group 4: IP Development - The company plans to launch a mini version of Labubu and collaborate with celebrity IPs like Zhou Shen and Sun Yanzi [2] - Although Labubu's revenue share increased to 35%, the revenue contribution from the second to fifth largest IPs remained around 10% each, indicating a balanced and healthy IP structure [2] Group 5: Margin and Efficiency - The company achieved a record high gross margin of 70%, with adjusted net margin reaching 34%, both showing significant year-on-year and quarter-on-quarter increases [3] - Inventory turnover days decreased to 83 days from 100 days last year, reflecting improved operational efficiency alongside a 200% revenue increase [3] Group 6: Future Outlook - The company expects continued high growth while focusing on operational quality and long-term sustainable growth [3] - Key points for the second half include ramping up production capacity, enhancing production efficiency, and launching new products like mini Labubu [3]