Vi e w p o i n t | 16 Nov 2025 16:19:20 ET │ 12 pages CITI'S TAKE We hosted meetings for Pop Mart at Citi China Conference in Shanghai on 14 Nov and store visits during consumer tours in Nanning and Shenzhen recently. We still perceive Pop Mart as a scarcity growth play in the China consumer space on its unparalleled capability of IP incubation and operation. The concerns over growth sustainability and single IP risks should be addressed by its sustained strength in new product launch and IP operation, in o ...

Core Viewpoint - The decline in popularity of Labubu is not indicative of a deterioration in the company's fundamentals, as Bubble Mart is not solely an IP toy company but a platform for creating and commercializing various IPs [1] Group 1: Market Performance - Recent sales data from the U.S. market showed a significant slowdown in growth compared to Q3 2025, leading to concerns about Labubu's brand strength [2] - The slowdown in sales is attributed to the pre-sale of Labubu in July and August, which exhausted future market demand and strained the supply chain [2] - However, sales data for the first week of November indicates a return to higher growth rates, with expectations for continued strong sales during the Thanksgiving and Christmas seasons [2] Group 2: Growth Potential in North America and Europe - Despite impressive growth in the Americas, this region accounted for only 16.3% of the company's total revenue in the first half of 2025, with projections of around 20% for the full year [3] - The company has only 41 retail stores in North America compared to 443 in Greater China, indicating significant room for expansion [3] - The European market also shows potential, with only 3.4% of total revenue coming from this region and just 18 retail stores as of the end of the first half of 2025 [3] Group 3: Valuation and Stock Performance - Bubble Mart is recognized as a leader in the global trendy toy industry, with solid fundamentals and a high certainty of long-term growth [4] - The current stock price has fallen to 15 times the estimated P/E for 2026, suggesting a high value proposition [4] - Short-selling activity has decreased, indicating improving market sentiment, and the company is expected to see a rebound in stock price and valuation as growth certainty for 2026 increases [4]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 286.9, representing a potential upside of 32.0% from the current price of HKD 217.4 [1][5][15]. Core Insights - The report emphasizes that the company is not solely reliant on the popularity of its Labubu IP, but rather operates as a platform for creating and commercializing multiple IPs. The ability to launch new successful IPs is seen as a key competitive advantage [5]. - Recent sales trends in the U.S. market have shown a recovery, with expectations for continued growth during the holiday season. The report suggests that the recent slowdown in sales was largely due to pre-sales in previous months [5]. - The company has significant growth potential in the North American and European markets, which currently represent a small portion of total revenue. The report highlights the potential for expansion through physical retail stores in these regions [5]. - The current valuation is considered attractive, with a P/E ratio of 15 times the estimated earnings for 2026, indicating high value for investors [5]. Financial Performance and Projections - The company is projected to achieve substantial revenue growth, with estimated revenues of RMB 38,003 million in 2025, reflecting a year-on-year increase of 191.5% [7][10]. - Net profit is expected to reach RMB 12,920 million in 2025, representing a significant increase of 313.4% compared to the previous year [7][10]. - The report outlines a steady improvement in profit margins, with gross profit margins projected to rise to 70.8% by 2025 [10][11]. Market Performance - The company's stock has experienced volatility, but recent data suggests a recovery in market sentiment, with short-selling activity decreasing [5]. - The report notes that the company's sales in the domestic market have shown impressive growth, with online sales increasing by 212% in the first half of 2025 [11]. Regional Revenue Breakdown - In the first half of 2025, the company reported a 440% increase in overseas revenue, with North America showing a staggering growth rate of 1,142% [11]. - The report indicates that the company has only a limited number of retail stores in North America and Europe, suggesting significant room for growth in these markets [5].

Core Viewpoint - The market's concerns regarding Pop Mart's growth sustainability and single IP risk are considered excessive, with the company's core value lying in its unparalleled IP incubation and operational capabilities [1][4]. Group 1: IP Strength and Growth - The flagship IP Labubu has strong vitality, with its 4.0 version postponed to 2026 due to high demand for Labubu 3.0, and Sony Pictures is reported to have acquired the film adaptation rights, potentially enhancing the IP's global recognition [4][8]. - The company is diversifying its growth engines by actively managing online pre-sale scales to ensure sustainable IP operations, with a successful IP matrix formed around Labubu, SKULLPANDA, and CRYBABY, effectively mitigating risks [4][9]. Group 2: Global Expansion and Market Performance - Pop Mart's global expansion is exceeding expectations, particularly in the U.S. and Japan, with plans to optimize operations and deepen local market channels [6][10]. - The company aims to operate over 60 stores in the U.S. by the end of 2025, with additional plans for Canada, Latin America, and the Middle East, emphasizing localized operations and partnerships [10]. Group 3: Financial Performance and Valuation - Financial projections indicate significant growth, with net profit expected to rise from 1.082 billion RMB in 2023 to 23.169 billion RMB by 2027, and diluted EPS increasing from 0.807 RMB to 17.370 RMB over the same period [7]. - Citi has set a target price of 415.00 HKD for Pop Mart, representing a potential upside of 91.8% from the closing price of 216.40 HKD, based on a 28x P/E ratio for 2026 [1][13].

Core Viewpoint - The eighth China International Import Expo (CIIE) is being held in Shanghai from November 5 to 10, showcasing the global leading trend culture and entertainment group, Pop Mart, which highlights its popular IPs SKULLPANDA and CRYBABY, creating an immersive experience for attendees [1][3]. Group 1: Event Highlights - Pop Mart's exhibition theme is "Creating Trends, Boundless Play," featuring a birthday celebration design to commemorate the company's 15th anniversary, creating a warm and festive atmosphere [3]. - The exhibition booth includes a giant birthday cake adorned with various IP characters that have accompanied the brand's growth, symbolizing the connection to a beautiful life [3]. Group 2: IP Showcase - Pop Mart emphasizes its popular IPs SKULLPANDA and CRYBABY, with SKULLPANDA designed by artist 熊喵, representing the aesthetic of "boundless imagery" and encouraging self-exploration [5]. - CRYBABY, created by Thai artist Molly, focuses on emotional expression and resonates deeply with global audiences, advocating for facing emotions and moving forward [5]. - The exhibition also features limited edition products that incorporate local cultures, enhancing the connection with global consumers [5]. Group 3: Product Innovation - Pop Mart showcases a variety of products, including figurines and plush toys, allowing attendees to experience the brand's unique culture and service [6]. - The company continues to innovate product categories, expanding consumer engagement through the use of PVC plush toys that enhance expression and display [6]. - Pop Mart has developed a diverse product matrix and is exploring new business areas such as building blocks, desserts, and jewelry, breathing new life into its IPs [6]. Group 4: Future Outlook - The company reports that all four major regions achieved over 100% growth in the first half of 2025, with the Americas experiencing a tenfold increase, indicating a successful internationalization strategy [8]. - Pop Mart aims to maintain its brand essence and collaborate with artists to create a better trend lifestyle in the future [10].

Group 1: Market Trends - The China International Import Expo showcases a variety of intelligent products and trendy items, reflecting new consumer themes, scenarios, and trends in the market [1] - Exhibitors express confidence in the Chinese market due to a transparent and stable policy environment, as well as a fair and inclusive market atmosphere [1][2] - The demand for health-related products is on the rise, with companies like lululemon noting that the Chinese market has become one of their fastest-growing regions [2] Group 2: Consumer Behavior - There is a noticeable increase in consumer awareness regarding health products, with a growing demand for high-quality, environmentally friendly, and natural health products [2] - Interest consumption is expanding, as seen with brands like PEZ and Pop Mart, which leverage emotional connections through popular IPs to attract consumers [3] Group 3: Technological Advancements - The trend of intelligent upgrades is evident, with companies like Samsung integrating AI into their products to enhance consumer experiences [4] - SYR Hansgrohe showcases AI applications in their products, such as a dual-tank soft water system that learns user habits and predicts water usage trends [4]

Core Insights - The eighth China International Import Expo (CIIE) is being held from November 5 to 10 in Shanghai, showcasing various brands including Pop Mart, which emphasizes its theme of "Creating Trends, Boundless Play" [1][4] - Pop Mart prominently features its popular IPs, SKULLPANDA and CRYBABY, creating an immersive experience for attendees [4] Group 1: Event Highlights - Pop Mart's exhibition design is inspired by a "birthday celebration," creating a warm and festive atmosphere with a giant birthday cake adorned with various IP characters [1] - The SKULLPANDA character, created by artist 熊喵, embodies the aesthetic concept of "boundless imagery," while CRYBABY, designed by Thai artist Molly, focuses on emotional expression and resonates globally [4] Group 2: Product and Market Expansion - Pop Mart showcases a diverse range of products including figurines and plush toys, enhancing the customer experience with smooth offline services and unique brand culture [4] - The company is expanding its product matrix to include new categories such as building blocks, desserts, and jewelry, breathing new life into its IPs and enriching consumer experiences [4] - By 2025, Pop Mart aims for triple-digit growth across four major regions, with the Americas experiencing over tenfold growth, marking a significant milestone in its international strategy [4] Group 3: Global Presence - Pop Mart continues to establish its presence in iconic global locations, opening its first store in landmark areas such as Cambridge, UK, and Bali, Indonesia, with a total of over 570 stores worldwide [5] - The company has also opened its first store in the Middle East at Hamad International Airport in Doha, becoming the first Chinese brand to enter this airport [5]

Core Insights - The eighth China International Import Expo (CIIE) is being held in Shanghai, with Pop Mart showcasing its popular IPs SKULLPANDA and CRYBABY under the theme "Creating Trends, Boundless Play" [1][4] - Pop Mart's booth features a giant brown cake, but the anticipated Labubu character is not present, as the company aims to highlight its diverse range of IPs beyond Labubu [1][4] - The exhibition is for display purposes only, and no products are for sale at the Pop Mart booth [3] Company Highlights - SKULLPANDA, created by artist Xiong Miao, features a design that includes an astronaut helmet and promotes the aesthetic concept of "boundless imagery," encouraging exploration and self-discovery [4] - CRYBABY, designed by Thai artist Molly, focuses on emotional expression and advocates for facing emotions and moving forward bravely [4] - Pop Mart aims to leverage the international platform of CIIE to showcase its diverse IPs and the limitless possibilities of trendy toys to a global audience [4] Performance Metrics - In the first half of 2025, Pop Mart's performance across four major regions achieved over 300% growth, with the Americas experiencing a growth rate exceeding tenfold [4] - The total number of Pop Mart stores worldwide has surpassed 570 [4]

Core Insights - The eighth China International Import Expo (CIIE) is being held in Shanghai from November 5 to 10, showcasing global consumer trends and lifestyle aspirations [1] - Pop Mart, a leading cultural and entertainment group, is celebrating its 15th anniversary at the expo with a themed booth that highlights its IP-centric strategy [1][4] - The expo features over 4,108 overseas exhibitors from 155 countries and regions, marking a record high in exhibition area and number of companies [3] Company Highlights - Pop Mart's booth features popular IPs SKULLPANDA and CRYBABY, designed to create an immersive experience for attendees [2][4] - SKULLPANDA, created by artist 熊喵, embodies the aesthetic of "boundless imagery," while CRYBABY, by artist Molly, focuses on emotional expression [2] - The company has expanded its product range to include various categories such as figurines and plush toys, enhancing consumer engagement [3] International Strategy - Pop Mart's international strategy has led to significant growth, with all four major regions achieving triple-digit growth in the first half of 2025, particularly in the Americas with over tenfold growth [4] - The company has opened its first store in Qatar at Hamad International Airport, marking its entry into the Middle East [4] - By 2025, Pop Mart aims to continue expanding its global presence, having already surpassed 570 stores worldwide [4]

Core Viewpoint - The article highlights the participation of Pop Mart at the 8th China International Import Expo, showcasing its internationalization and IP-centric strategy through popular IPs like SKULLPANDA and CRYBABY, while celebrating its 15th anniversary [3][5][11]. Group 1: Event Overview - The 8th China International Import Expo took place from November 5 to 10 in Shanghai, featuring Pop Mart in the consumer goods section with a theme of "Creating Trends, Boundless Play" [3]. - Pop Mart's booth design was inspired by a "birthday celebration," reflecting its achievements in IP-driven internationalization and attracting significant visitor interaction [5][11]. Group 2: IP Showcase - Pop Mart prominently displayed its popular IPs SKULLPANDA and CRYBABY, which resonate emotionally with global consumers and embody high-quality lifestyle aspirations [7][10]. - SKULLPANDA, created by artist 熊喵, promotes the aesthetic of "boundless exploration," while CRYBABY, by artist Molly, focuses on emotional expression, both of which have gained global resonance [7][9]. Group 3: Product Innovation - The company showcased a variety of products, including figurines and plush toys, emphasizing its innovative approach to expand consumer engagement [9]. - Pop Mart has developed a diverse product matrix, including new categories like building blocks and jewelry, enhancing the life of its IPs and providing varied consumer experiences [9][13]. Group 4: Global Expansion - Pop Mart's international strategy has led to significant growth, with all four major regions achieving over 100% growth in the first half of 2025, particularly in the Americas, which saw a tenfold increase [13][15]. - The company has opened its first stores in iconic locations globally, including the UK and Indonesia, and recently established its first store in Qatar, marking a significant milestone for a Chinese brand [15].