Core Insights - Morgan Stanley analysts emphasize that Pop Mart's platform value is underestimated by the market, focusing too much on individual IP ceilings rather than the company's core long-term investment value in platform incubation [1][4]. Group 1: IP Growth Potential - The Twinkle Twinkle IP showcased strong market demand at the Beijing Toy Expo, with products selling out quickly, indicating its potential as a significant revenue contributor from 2025 onwards [2]. - Crybaby's lifestyle product line, with an average price exceeding 250 RMB, demonstrates substantial sales growth potential, although plush toy demand is currently limited by supply constraints [2]. Group 2: Global Expansion and IP Diversification - Pop Mart has four regional sales segments, primarily sourcing its IP from Greater China, with exceptions like Crybaby from Thailand and Peach Riot from the U.S. The company has significant potential to tap into artist resources in the U.S., Europe, Japan, and Southeast Asia [3]. - The report notes that each new IP requires a sufficiently large local market to generate initial momentum, making the focus on Greater China a natural choice for early IP development [3]. Group 3: Platform Capability as Core Investment Value - Analysts argue that the true investment value lies in Pop Mart's platform capabilities rather than just the success of individual IPs, which is often misjudged by investors [4]. - Data shows that Labubu accounted for only 6% of group sales two years ago, while now it is globally recognized, with Crybaby and Twinkle Twinkle also gaining strong market attention [4]. - The implied PEG ratio of approximately 1.4 for the years 2025-2027 is considered reasonable for a high-growth consumer company with global expansion potential [4].

Core Viewpoint - Morgan Stanley suggests that the recent stock price pullback of Pop Mart presents a valuable buying opportunity, emphasizing the company's strong performance in new IP product lines and its significant growth potential in the global IP market [1][11]. Group 1: Product Performance - Despite investor concerns about a slowdown after the Labubu craze, Pop Mart continues to launch popular new products, indicating strong demand rather than supply issues [3]. - New IPs like Crybaby and Twinkle Twinkle are performing well, alongside traditional favorites such as Molly and Skullpanda, with many products frequently sold out [3]. - The supply-demand imbalance reflects the attractiveness of the company's products, not a lack of demand [3]. Group 2: Brand Collaborations and Global Expansion - Recent innovative collaborations include partnerships with renowned brands like Godiva and Chopard, as well as the opening of new stores in key cities like Berlin and Melbourne [4]. - These initiatives demonstrate the global appeal of Pop Mart's IP and products, positioning the company to capture consumer demand across various markets [4]. Group 3: Financial Performance and Valuation - Morgan Stanley forecasts Pop Mart's revenue to reach RMB 31.046 billion in 2025, a 138% increase year-on-year, and RMB 42.994 billion in 2026, a 38% increase [5]. - The gross margin is expected to improve from 66.8% in 2024 to 71.5% in 2025, with operating profit margin rising from 31.5% to 42.0% in the same period [6]. - The estimated P/E ratio for 2025 is 31x, dropping to 22x in 2026, highlighting Pop Mart's valuation advantage compared to other high-growth stocks [7]. Group 4: Market Potential - The global IP product market is estimated to be around USD 800 billion, with Pop Mart's current market share at only 2.3%, indicating substantial growth potential [9]. - Pop Mart aims to evolve into a combination of Bandai Namco, LEGO, and Disney, suggesting that its growth story is still in the early stages [10]. Group 5: Investment Recommendation - Morgan Stanley maintains an "Overweight" rating with a target price of HKD 365, indicating over 48% upside potential from the current stock price of HKD 246 [1][14]. - The firm has outlined three scenarios for target prices based on different market conditions, reinforcing the investment opportunity presented by the current pullback [11].