Summary of the Call Transcript on the Trendy Toy Industry Industry Overview - The trendy toy market was initiated by Hong Kong artists, integrating art and fashion elements, with diverse forms including figurines, sculptures, and blind boxes [1][2] - The broad definition of trendy toys includes collaborations with IPs from films, anime, and games, catering to specific enthusiasts [1][3] - The blind box segment has rapidly gained popularity due to low consumer and cognitive barriers, high adaptability, and hidden design features [1][4] Key Insights - **Consumer Demographics**: The core audience for trendy toys is aged between 15 and 40, with a higher proportion of female users, although the overall gender ratio is becoming more balanced [1][6][8] - **Market Size and Growth**: The domestic trendy toy market is expected to exceed 100 billion yuan by 2026, with blind boxes showing high growth rates. The IP toy market is projected to be around 700 billion yuan, with building and assembly toys accounting for about 30% [1][11][12] - **Market Competition**: The market is fragmented, with LEGO leading at 12 billion yuan GMV, followed by Pop Mart at 8.7 billion and Brook at 2.5 billion. The top ten companies hold about 50% of the market share [1][13] Success Factors for Trendy Toy Companies - **Traffic IP**: Successful companies leverage high-traffic IPs, typically character designs rather than content-based, due to their higher commercialization potential [4][5] - **Product Quality**: High-quality products are essential, requiring effective design and supply chain barriers [5] - **Social Media and Secondary Market**: Effective social media marketing enhances brand visibility, while a convenient secondary market facilitates transactions [5] - **Entertainment and Interaction**: Creating engaging purchase experiences and interactive scenarios increases consumer entertainment value [5] Consumer Needs in Blind Box Purchases - **Value for Money**: Consumers seek affordable and easily accessible products [7] - **Emotional Connection**: There is a desire for self-identity, curiosity, and social recognition through collecting [7][6] - **Social Interaction**: Collecting and trading through social platforms fosters community engagement [7] IP Acquisition and Market Dynamics - **IP Acquisition**: The domestic market primarily acquires IP through self-incubation and collaborations with independent artists, with IP accounting for a small percentage of GMV [10] - **Future Trends**: The market is still in its early stages, with potential for structural changes and innovation in product categories [12] Company Strategies - **Pop Mart's Expansion**: Pop Mart is expanding its IP matrix and product categories, with plans to open 320 stores next year, increasing its overseas presence significantly [2][16][21] - **52TOYS Strategy**: 52TOYS focuses on a combination of self-owned and licensed IPs, with a significant portion of revenue coming from external IPs [22][23] Sales Channels and Revenue - **Diverse Sales Channels**: Both companies are diversifying their sales channels, with a significant reliance on distributors while also expanding direct-to-consumer (D2C) models [24][21] - **Revenue Projections**: 52TOYS generates 70-80% of its revenue from licensed IPs, with a focus on static blind boxes and figurines [23] Future Outlook - **IPO Plans**: The companies are preparing for potential IPOs, with Pop Mart expected to file in Hong Kong, aiming for a listing in 2025 or 2026 [26]

Summary of the Conference Call for Pop Mart Company Overview - **Company**: Pop Mart - **Industry**: Toy and Collectibles Key Points and Arguments Financial Performance - Adjusted net profit for the first half of the year is expected to be no less than 450 million RMB, with a profit margin of 33.5%, an increase of 5 percentage points compared to the second half of last year, indicating enhanced profitability and a solid fundamental outlook [2][4] - The company anticipates significant growth in 2026 driven by channel expansion in the US and Europe, new IP launches, and sustained growth of existing IPs [3] Market Expansion - The company is accelerating its overseas expansion, adding 5-6 new stores in the US in July, with active openings in the European market, indicating a strong strategic focus on global market penetration [2][5] - The domestic market has exceeded expectations, with significant increases in foot traffic and per-store revenue, suggesting a "re-recognition" phenomenon among consumers [2][30] IP Development - The Labubu IP has surpassed many well-known IPs globally, achieving an annual revenue of 10 billion RMB, placing it in the third tier of global IPs, although its future development path requires attention [2][32] - Classic products have shown extended sales cycles, indicating stable and lasting demand, which will provide a solid revenue base for the company [2][11] Supply Chain and Inventory Management - The company has adopted a strategy of bulk replenishment to stabilize market prices and meet consumer demand, reflecting strong demand and potentially increasing EPS [2][9] - Frequent replenishment has become a normalized operational rhythm, with a significant impact on domestic revenue growth expected in Q1 2025 due to replenishment activities [9] Challenges and Market Dynamics - The recent market performance has been relatively stable despite fluctuations in stock prices due to shifts in investment focus towards new consumption and AI applications [4] - The company is addressing the decline in scalper prices due to concentrated replenishment of Labubu versions, which has altered supply-demand dynamics [8] Future Growth Strategies - The upcoming mid-year performance meeting is highly anticipated for insights on store opening pace, category expansion, and new IP plans [6] - The company plans to increase its store count in the US from 40-50 to around 200, while also expanding in Europe [34][35] Regional Market Insights - The Southeast Asian market has been a strong performer, with significant revenue contributions and new store openings in Thailand and Indonesia [29] - The European market is viewed as strategically important, with ongoing expansion and a focus on artist collaborations and limited edition products [27][28] Consumer Demographics and Market Penetration - The domestic toy market still has considerable penetration potential, with estimates suggesting that 200 million people could be potential consumers of trendy toys [31] - The company has approximately 46 million registered members in China, indicating significant room for growth in market penetration [31] Long-term IP Management - The Labubu IP has crossed the threshold of 10 billion RMB in global peripheral revenue, indicating its potential for long-term operation and growth [32][33] - The company is confident in the long-term operational capabilities of its IPs, supported by successful category expansions and market adaptations [33] Additional Important Insights - The company is exploring diverse operational formats to enhance brand influence, including opening jewelry stores and establishing theme parks [22] - The search heat for Pop Mart's IPs in various countries indicates strong market interest, with notable performance in Thailand and the Philippines [20][19] This summary encapsulates the key insights from the conference call, highlighting Pop Mart's financial performance, market strategies, IP development, and future growth potential.

Core Viewpoint - The article highlights the explosive commercial potential of the Labubu IP, which has transformed from a niche product to a highly sought-after collectible, driving significant sales growth for its parent company, Pop Mart [4][34]. Group 1: Labubu's Rise and Market Dynamics - Labubu, created by Hong Kong artist Long Jiasheng, has gained immense popularity, surpassing other Pop Mart products in sales and demand [5][7]. - The sales revenue for Pop Mart's The Monsters series, which includes Labubu, is projected to increase from 368 million yuan in 2023 to 3.041 billion yuan in 2024 [7]. - Labubu's popularity has led to a secondary market where some products are reselling for over 30 times their original price, turning them into investment assets [7][34]. Group 2: Emerging Business Opportunities - The surge in Labubu's popularity has spurred various ancillary businesses, including custom clothing, rental services, and modifications, catering to the growing demand from consumers [8][19]. - A young collector in Zhengzhou has successfully monetized his Labubu collection by renting them out, with rental prices ranging from 20 to 80 yuan per day depending on the size [10][15]. - Custom clothing for Labubu has become a profitable venture, with one seller reporting monthly earnings of 2,000 to 3,000 yuan, equivalent to a local salary [21]. Group 3: Customization and Modification Trends - The trend of modifying Labubu figures, known as "改娃," reflects consumer desire for personalization, with services ranging from simple alterations to complex customizations [25][28]. - The customization market for Labubu is still developing, with some players expressing concerns about the sustainability of this trend due to the high prices and limited availability of the figures [30][39]. - The demand for modified Labubu figures is expected to grow as more players enter the market, indicating a potential for long-term business opportunities [39]. Group 4: Challenges and Future Outlook - Despite the booming market, challenges such as supply chain issues and increased competition in the custom clothing sector are emerging, impacting profitability [36][38]. - The sustainability of the ancillary businesses surrounding Labubu will largely depend on Pop Mart's ability to manage and promote the IP effectively [40].

Core Insights - The profitability of IP businesses, particularly in the collectible toy market, has exceeded expectations, with the Labubu character from Pop Mart experiencing a significant surge in popularity and sales [1][18] - Labubu's rise has been fueled by social media and celebrity endorsements, leading to a secondary market where prices can exceed 30 times the original value, transforming these toys into investment products [1][3] Group 1: Market Dynamics - Labubu's sales are projected to increase from 368 million yuan in 2023 to 3.041 billion yuan in 2024, indicating a dramatic growth trajectory [1] - The character has become a cultural phenomenon, with high demand leading to sold-out official channels and a thriving secondary market [3][10] - The emergence of counterfeit products highlights the intense competition and the need for strong copyright enforcement by Pop Mart [3] Group 2: Rental and Customization Business - A growing trend involves renting Labubu figures for events and marketing purposes, with rental prices ranging from 20 to 80 yuan per day depending on the size of the toy [4][9] - Customization services for Labubu, including clothing and modifications, have gained traction, with some individuals generating significant income from these services [11][14] - The customization market is still developing, with varying levels of demand and pricing based on the complexity of the modifications [15][20] Group 3: Consumer Behavior and Trends - Consumers are increasingly willing to pay for unique experiences and products, leading to a rise in rental services as a cost-effective way to access popular items [7][10] - The trend of customizing toys reflects a desire for individuality among collectors, with some willing to invest in alterations to make their Labubu unique [14][18] - The overall market for Labubu and similar collectibles is characterized by a blend of investment potential and consumer engagement, driving ongoing interest and activity [18][20]