Core Viewpoint - CICC has downgraded the net profit forecasts for 2025 and 2026 for Blokko (00325) by 19% and 17% to 650 million and 870 million yuan respectively, while introducing a net profit forecast of 1.07 billion yuan for 2027. The target price has been reduced by 26% to 100 HKD, indicating a potential upside of 40% based on adjusted P/E ratios for 2026 and 2027 [1]. Group 1: Company Current Situation - CICC conducted a company survey and engaged in in-depth discussions with management regarding strategic reviews, new product performance, and international expansion. The firm believes that the company will focus on trending categories in 2026, which is expected to enhance performance certainty, with a continued emphasis on new product categories and international market performance [2]. Group 2: Focus on Key Categories in 2026 - In 2025, the company explored business boundaries through a global strategy targeting all demographics and price points. While the 9.9 yuan products for the lower market performed well, some categories, such as female-targeted products, did not meet internal goals, which diluted resources and affected profit performance. In 2026, the company plans to stabilize the new product launch rhythm and improve the success rate of individual products. Financially, with a mature team structure and stable personnel size, operational leverage is expected to manifest. The company aims to control the proportion of low-margin products, which, combined with economies of scale, is anticipated to stabilize and improve gross margins [3]. Group 3: Successful Development of Building Block Vehicles - The company has established building block vehicles as one of its two core strategic categories alongside building block figures, planning to maintain a monthly launch rhythm in 2026. This category is expected to contribute positively to gross margins. The core IP operation for building block figures continues to deepen, with the Transformers series effectively covering price points from 9.9 yuan to 249 yuan, while new SKU specifications for Ultraman are stimulating demand. The company’s all-demographic strategy is expected to see an increase in adult-targeted products in the second half of 2025 [4]. Group 4: Strong International Performance - In the second half of 2025, the company’s overseas business is expected to continue high growth, with a projected doubling in performance. Thanks to pricing strategies and product strength, the company maintains a price advantage despite North American tariffs and has successfully entered mainstream channels like Walmart. North America is anticipated to become the largest single overseas market in 2026, while the company plans to expand its presence in Southeast Asia, particularly in Thailand and Vietnam, supported by logistics and warehousing. Additionally, the European team is currently being built, indicating significant future potential [5].

Summary of Company and Industry Insights from Conference Call Company Overview - **Company**: 布鲁可 (Blukoo) - **Industry**: Toy and Collectible Market Key Points and Arguments Sales Performance - In Q2, Blukoo's sales trend is close to expectations, targeting over 1.2 billion CNY (excluding tax), with approximately 75% of the target achieved so far [1][2][3] - The Ultraman series' sales proportion increased from 35%-40% to 50%-55% after the launch of the new Ultraman 14 series in May [1][4] Product Launch and Strategy - New product promotion occurs in three phases: trial sales (KA channels, core regions), nationwide rollout, and increased supply [1][5] - The Conan series is currently in the trial sales phase, while Pokémon and Minions have been fully rolled out [6][7] - Focus on the Kamen Rider IP, aiming for it to maintain a 15% sales share due to positive retail turnover [1][9] Target Demographics - Plans to launch female-oriented products, with 50-60% of SKUs expected to cater to this demographic [10][11] - Current consumer demographics show that approximately 75%-80% of Pokémon buyers are male, while Minions have a slightly higher female consumer ratio of about 30% [13] Market Dynamics - The domestic market remains stable, while international orders are recovering post-political negotiations [2] - The KA channel's revenue share is expected to increase from about 10% last year to over 20% this year [2][29] Financial Goals - Last year's Q2 sales were over 600 million CNY, with a full-year target of 2 billion CNY, ultimately achieving 2.2 billion CNY [2] - This year's overall sales target is doubled to 4.5 billion CNY, with Q2 specifically targeting over 1.2 billion CNY [2] Product Mix and Pricing - Blind box products account for nearly 80% of sales, with a plan to increase the proportion of named products [38] - Products priced over 100 CNY make up about 30% of sales, with new high-end figures priced at 799 CNY and 1,299 CNY expected to boost this segment [39] Channel Strategy - KA channels are directly managed by the company, with a current network of approximately 9,700 outlets, indicating limited future expansion [31] - The company is focusing on optimizing display areas and inventory management in KA channels [37] Consumer Preferences and Product Development - The company employs a market-driven approach to product development, using sales data and consumer feedback to iterate on designs [17] - There is a significant focus on maintaining the original characteristics of established IPs while exploring new designs for female-oriented products [16][17] Challenges and Opportunities - The company faces challenges in balancing the design and approval processes for major IPs while seeking to innovate in the female-oriented product space [17] - The overall sales performance in May showed a significant increase compared to the previous year, driven by promotional events [28] Future Outlook - The company is optimistic about the sales trajectory for Q2, with expectations of meeting or exceeding targets [3] - Continued emphasis on expanding the female consumer base and enhancing product offerings to cater to diverse demographics [10][11] This summary encapsulates the critical insights from the conference call, highlighting the company's strategic direction, market performance, and future opportunities within the toy and collectible industry.