Summary of the Conference Call for Pop Mart Company Overview - **Company**: Pop Mart - **Industry**: Character IP (Intellectual Property) and Toy Industry Key Points and Arguments Industry Insights - Character IPs like Sanrio and Disney's Mickey Mouse and Winnie the Pooh have significant commercial potential, possibly surpassing content-based IPs due to their broad appeal and adaptability to market changes [2][3] - The commercial value of character IPs does not solely depend on content depth; successful IPs can attract audiences with lower barriers [3][4] Pop Mart's Business Strategy - Pop Mart maximizes the lifecycle value of its IPs through long-term operations and channel capabilities, attracting talented artists to create popular products [2][6] - The company has seen a long-term upward trend in the popularity of its key IPs, with shorter periods of decline compared to competitors [6][7] - The construction of an IP matrix is crucial for enhancing operational stability and risk resistance, allowing for cross-selling and increased frequency of hit products [7][8] International Expansion - Since July 2023, Pop Mart has made significant progress in international markets, with overseas revenue increasing by 140% year-on-year, now accounting for 17% of total revenue [2][8][15] - The successful international launch of the "Labbub" brand has driven explosive growth in company performance and valuation [8][15] Financial Performance - Pop Mart's gross margin and operating profit margin have significantly improved due to strong operational leverage and higher gross margins in overseas markets [3][18] - Revenue is projected to reach 30.5 billion yuan in 2025, a 134% year-on-year increase, with net profit expectations raised from 6.5 billion yuan to 10 billion yuan [3][18] Product and Marketing Strategies - The company regularly updates its product lines, introducing new series every six months to maintain consumer interest [17] - Marketing efforts include social media campaigns and collaborations with influencers, which have significantly boosted brand visibility [17][19] Challenges and Adjustments - The company faced challenges in profitability due to rising product costs and inventory pressures, leading to strategic adjustments in product line management [12][14] - Organizational restructuring has been implemented to enhance IP innovation and supply chain capabilities [14] Future Outlook - While short-term focus may be on the popularity of the "Labbub" brand, the long-term commercial value of Pop Mart's IP matrix is expected to be underestimated [20] - The company aims to expand its store presence and diversify its international markets to support the growth of various IPs [20] Valuation Comparison - Compared to global IP companies like Disney and Bandai, Pop Mart's current valuation of 23x PE is considered attractive given its higher profit growth expectations [21] Additional Important Insights - The overall market sentiment towards the blind box industry has been cautious due to regulatory uncertainties and competitive pressures [11] - Pop Mart's ability to adapt to changing consumer demands and market conditions is a key factor in its ongoing success [14][20]

Core Insights - Douyin E-commerce launched the "Interest Industry Belt Support Plan" in Guangzhou, marking a significant step in integrating digital economy with the real economy, aimed at fostering new consumption dynamics and driving industrial upgrades [1][6] Group 1: Interest Consumption Rise - The concept of "Interest Industry Belt" refers to geographic clusters of products that fulfill consumers' emotional and spiritual needs, characterized by niche, cultural, and social aspects [3] - In the past year, five interest industry belts on live-streaming e-commerce platforms achieved a payment GMV exceeding 10 billion, with 57 belts surpassing 100 million, and Guangzhou's related order volume exceeding 340 million [3] Group 2: Digital Empowerment and Upgrading - The growth of interest industry belts is facilitated by live-streaming e-commerce platforms, which have lowered operational barriers for small and medium-sized businesses through policies like zero-cost entry and zero-commission on product cards [4] - The complete industry chain for the Guangzhou water pet industry belt includes "pet breeding + equipment maintenance + knowledge payment," showcasing a successful transition from traditional offline models to online integration [4] Group 3: Building a Guangzhou Model - Guangzhou has been designated as a key area for pet consumption, with Douyin E-commerce providing services such as traffic subsidies and operational training to stimulate local industry vitality [6] - Douyin E-commerce's initiatives have reached 130 cities across 27 provinces, helping 332 industry belts achieve order volumes exceeding 10 million and 830 belts with sales over 100 million [6] Group 4: Economic Growth through Interest Consumption - Interest consumption is identified as a crucial direction for consumption upgrade, transforming niche interests into new growth for the real economy [7] - The ongoing implementation of the "Interest Industry Belt Support Plan" is expected to deepen the integration of digital and real economies, contributing to the construction of a new development pattern and fostering new productive forces [7]

Group 1: Market Overview - The Hong Kong stock market is experiencing a surge in consumer stocks, with notable companies reaching historical highs and significant market valuations, reflecting the unique appeal of the Hong Kong consumer sector characterized by high growth, strong brand power, and valuation opportunities [1] - The influx of southbound capital into Hong Kong stocks is driven by the narrative of asset revaluation in China, improving market liquidity, and a favorable policy environment, positioning the Hong Kong consumer sector as a new battleground for global capital [1] Group 2: Consumer Recovery - The consumer market is witnessing a revival, with increased foot traffic in shopping areas, packed cinemas, and a surge in online shopping, indicating a robust recovery in consumer spending [2] - During the recent Dragon Boat Festival holiday, domestic travel reached 119 million trips, a year-on-year increase of 5.7%, with total spending of 42.73 billion yuan, up 5.9%, showcasing the recovery across various sectors including hospitality and transportation [2] Group 3: Policy Support - The Chinese government has prioritized boosting consumption and expanding domestic demand in its economic agenda, with comprehensive measures outlined in the "Special Action Plan for Boosting Consumption" to enhance consumer confidence and spending [3][4] Group 4: Emerging Consumer Trends - The rise of "self-care consumption" reflects a shift in consumer behavior, particularly among the Z generation, who prioritize emotional satisfaction and personal well-being in their purchasing decisions [5][6] - Emotional consumption, driven by the need for emotional fulfillment rather than just practical utility, is becoming increasingly popular, with key demands including self-care, value realization, personal expression, and emotional satisfaction [9][10] Group 5: Investment Opportunities in Hong Kong - The Hong Kong stock market is becoming a preferred destination for new consumer companies due to its more lenient listing requirements and the government's supportive measures for domestic companies seeking to list abroad [11] - The National Index for Hong Kong Stock Connect Consumer Theme has shown a cumulative increase of 32.3% in 2024, outperforming other consumer indices, indicating strong growth potential in the sector [15]

Core Insights - The "new consumption" concept is gaining significant market attention, with companies like Pop Mart expected to surpass 10 billion yuan in revenue in 2024, and IPs like LABUBU becoming globally popular, thus opening new consumer markets [1][2] - There is a notable divergence in performance between new and traditional consumption sectors, with new consumption stocks showing remarkable growth, prompting fund managers to adjust their portfolios [2][3] Industry Trends - The rise of new consumption began in 2020, driven by younger consumer groups (90s, 95s, and 00s) who have grown up during China's rapid economic development, leading to a significant shift in consumer behavior [2] - The new consumption index has increased by 17% year-to-date as of June 10, indicating strong market performance in sectors like gold jewelry, trendy toys, and pet economy [1][2] Investment Strategies - Fund managers are increasingly reallocating their investments as the beta of the consumption sector narrows, suggesting a future divergence within the sector [2][3] - Investment strategies should focus on both short-term explosive products with "internet celebrity" effects and long-term sustainable products like food and beverages, which rely on word-of-mouth [2][3] Market Opportunities - There are emerging opportunities in personalized consumption areas such as leisure entertainment, specialty food, and health products, which are currently underexplored [3] - The concept of "going global" presents additional investment opportunities, including production capacity expansion, cross-border e-commerce, and brand establishment overseas [3][4] Performance Metrics - As of June 10, the Xingyin Consumption New Trend Fund has achieved a return of 21% year-to-date, ranking in the top 5 among similar products, with a portfolio concentration of 38% in its top holdings [4]

Core Viewpoint - The recent surge in new consumption trends, represented by companies like Pop Mart, Lao Pu Gold, and Mixue Group, has led to significant stock price increases in the Hong Kong market, prompting a reevaluation of investment strategies in this sector [1][2]. Group 1: New Consumption Trends - New consumption has become a key investment theme in the Hong Kong market, with stock prices of representative companies reaching historical highs [1]. - Pop Mart's stock price peaked at 252.6 HKD per share on June 5, up from less than 90 HKD at the end of last year and under 10 HKD in October 2022 [1]. - Lao Pu Gold and Mixue Group also saw their stock prices reach 1015 HKD and 618.5 HKD per share, respectively, within a year of their listings [1]. Group 2: Changing Consumer Behavior - The rise of new consumption is attributed to the changing preferences of younger consumers, particularly Generation Z, who prioritize emotional value and self-expression in their purchasing decisions [2][3]. - The shift in consumer demographics reflects a broader change in consumption ideology, with younger generations willing to pay for intellectual property and brands that resonate with their values [3]. Group 3: Market Dynamics and Future Outlook - The new consumption sector is supported by consumption upgrades and policy incentives, alongside technological innovations like AI and big data, which enhance consumer experiences [4]. - As of the first quarter of this year, 182 public funds held shares in Pop Mart, with a total market value of 8.78 billion HKD, indicating strong institutional interest [5]. - Despite concerns about potential overheating in the market, analysts believe that many new consumption companies still have significant growth potential and that their valuations can continue to rise [6].

Group 1 - The Hong Kong Stock Exchange (HKEX) has over 150 companies waiting to go public, with many seeking to raise more than $1 billion [1] - The "Chapter 18 series" listing rules may expand to allow unprofitable companies to list in Hong Kong [1] - As of May 28, there are 159 companies in the IPO queue, with 25 in the consumer sector, accounting for approximately 16% [1] Group 2 - New consumption themes, such as blind boxes and trendy toys, are reshaping the commercial landscape in Hong Kong [3] - The performance of new consumption stocks in the secondary market is linked to the significant recovery of the Hong Kong market and the influx of southbound capital [3] - CITIC Securities anticipates a potential bull market for both Hong Kong and A-share markets, with a key entry point expected between the end of Q3 and Q4 [3]

Core Viewpoint - The article discusses the surge of new consumer companies going public in the Hong Kong stock market, highlighting the strong performance of these companies and the factors driving this trend [1][4]. Group 1: Market Trends - Since the beginning of 2025, there has been a wave of new consumer companies listing in Hong Kong, with notable examples including Mixue Group and Pop Mart, which have performed well in the market [1][3]. - The consumer sector has seen a significant increase in interest, with the China Securities Hong Kong Stock Connect Consumer Theme Index rising over 20% year-to-date [1][4]. - As of May 28, 2025, there are 159 companies queued for IPOs in Hong Kong, with 25 of them being consumer-related, accounting for approximately 16% of the total [4]. Group 2: Financial Performance - New consumer companies have shown remarkable stock performance, with Pop Mart's market value exceeding 310 billion HKD and Mixue Group surpassing 200 billion HKD [1][5]. - The price-to-earnings (P/E) ratios for new consumer stocks are significantly higher than the average P/E of 20 for the broader consumer index, with Pop Mart at 86 times and Mixue Group at 43 times [5][6]. Group 3: Competitive Landscape - Despite the enthusiasm for new consumer stocks, there are concerns about increasing competition and the potential for homogenization in business models [3][8]. - Companies like 52TOYS are being compared to Pop Mart, but their financial performance shows a gap, with 52TOYS reporting continuous losses despite revenue growth [9]. - The food and beverage sector faces challenges related to brand premium and standardization, with companies needing to innovate to stand out in a crowded market [10]. Group 4: Investment Environment - The influx of southbound capital has provided liquidity to the Hong Kong market, with net inflows reaching 636.91 billion HKD since the start of 2025 [4]. - Policy support and improved liquidity have been key drivers for the surge in new consumer IPOs, with measures like streamlined approval processes attracting more companies to list [4][6]. - The article emphasizes the need for new consumer companies to focus on product innovation and brand differentiation to succeed in a competitive landscape [10].