Core Viewpoint - Morgan Stanley believes that Pop Mart's fundamentals have not changed but have become stronger, and the market's panic presents an excellent allocation opportunity [1] Group 1: Rating and Price Target Adjustment - On October 15, Morgan Stanley upgraded Pop Mart's rating from "Neutral" to "Overweight" and raised the target price from HKD 300 to HKD 320 [1] - The adjustment is based on two key factors: the sustained popularity of Labubu and the success of the new IP "Twinkle Twinkle" [1] Group 2: Labubu's Performance - Labubu's production capacity has increased tenfold compared to Q1 2025, yet the Labubu 3.0 and Mini Labubu series remain sold out at all sales points, dispelling market concerns about demand sustainability [2] - The resale price of the Halloween "Why So Serious" plush series featuring Labubu reached a premium of 290% in the secondary market [3] Group 3: New IP Development - The new IP "Twinkle Twinkle" is rapidly becoming a new growth driver, with products from a recent Halloween series selling out within minutes on major online platforms [4] - The secondary market premium for "Twinkle Twinkle" reached 130%, indicating strong demand and a real fan base [5] Group 4: Market Sentiment and Valuation - Pop Mart's stock price has dropped 24% from a recent high of HKD 335.40 to HKD 254, while the Hang Seng Index has risen by 7% during the same period [6][7] - Morgan Stanley predicts that Pop Mart's sales and adjusted profits will grow by 165% and 276% year-on-year in 2025, respectively, with continued growth in 2026 [10] Group 5: Global Supply Chain Strategy - Morgan Stanley believes that the financial impact of global trade tensions on Pop Mart will be limited, as the company has prepared inventory for the 2025 holiday season [11] - The company has the ability to raise prices to offset rising costs, having successfully increased blind box prices by 12% and plush toy prices by 27% in April 2025 [11] - Pop Mart is planning six global manufacturing centers to support long-term global expansion, with sales contribution from the Americas expected to rise from 21% in 2025 to 28% in 2027 [13]

Core Insights - Morgan Stanley's report indicates that Pop Mart's brand popularity is expected to rebound with the release of the "Labubu and Friends" animation and Labubu 4.0 version, alongside a rise in search interest for "Mini Labubu" since June, now comparable to Skullpanda and Dimoo [1] - The search index for Skullpanda increased by 40% compared to May, anticipating a new plush toy series launch in June, while Crybaby's average search index remained stable from July to August [1] - The interaction volume on Pop Mart's global social media accounts increased by 3% over the past two weeks, leading Morgan Stanley to maintain a "buy" rating with a target price of HKD 400 [1] Group 1 - Mini and large-sized Labubu are hot-selling items, with the "THE MONSTERS Pin For Love" series and "ROCK THE UNIVERSE" series selling out within a minute during their launch on August 28 [2] - The retail price for Mini Labubu is RMB 79 in mainland China and HKD 95 in Hong Kong, with a secondary market price increase of 45% as of September 5 [2] - The large Labubu is priced at RMB 499 in mainland China and HKD 583 in Hong Kong, with a secondary market price increase of 56% as of September 5 [2] Group 2 - Twinkle Twinkle is identified as a new emerging IP, with expected sales of RMB 389 million in the first half of 2025, significantly higher than other IPs like Crybaby and Hirono [3] - The "Sweet Dream Forecast" series, priced at RMB 79 in mainland China and HKD 95 in Hong Kong, is set to launch in August 2025 and has already shown a secondary market premium of 110% in mainland China and 36% overseas as of September 5 [3]