Core Viewpoint - The article discusses the transformation of HERE (formerly known as Quantum Song) from an adult education company to a pure-play trendy toy company, highlighting its financial performance and strategic direction in the competitive market of emotional consumption and cultural assets [3][5][7]. Financial Performance - In the first quarter of fiscal year 2026, HERE achieved revenue of 127 million RMB, a 93.3% increase quarter-over-quarter, surpassing the previous guidance of 100-110 million RMB [5][6]. - The company raised its revenue guidance for the second quarter to 150-160 million RMB, indicating confidence in short-term growth [5]. - The company reported a net loss of approximately 25.8 million RMB for the quarter, which has widened compared to the previous quarter [13]. IP Portfolio - As of September 30, HERE owns 17 IPs, including 11 proprietary IPs, 4 exclusive licensed IPs, and 2 non-exclusive licensed IPs [5]. - The top three performing IPs are WAKUKU, generating approximately 89.73 million RMB in revenue, ZIYULI with 20.76 million RMB, and SIINONO contributing 12.89 million RMB [5][6]. Market Dynamics - The global collectible toy market reached 57.1 billion USD in 2023 and is expected to grow to 69.6 billion USD by 2028, with the Chinese IP toy market projected to grow from 57.8 billion RMB in 2025 to 91.1 billion RMB by 2028, reflecting a compound annual growth rate of over 17% [9][10]. - The market is highly fragmented, with nearly 80% of the Chinese market being occupied by numerous small brands, presenting both opportunities and competitive risks for new entrants like HERE [9][10]. Strategic Approach - HERE's strategy involves a dual approach of online and offline channels to enhance brand visibility and IP recognition, leveraging social media platforms for marketing [11][12]. - The company has expanded its offline presence with flagship stores and pop-up events in major cities, aiming to create an immersive brand experience [12]. Production and Supply Chain - HERE's plush blind box production exceeded 1 million units in August, marking a more than 20-fold increase since the beginning of the year, indicating a robust and flexible production system [6][13]. - The rapid scaling of production capacity is crucial for responding to market demands and supporting the launch of popular products [6]. Challenges Ahead - Despite initial success, HERE faces challenges in maintaining profitability and managing operational costs, which have significantly increased during its expansion phase [13]. - The company must evolve from creating a single hit product to establishing a sustainable system capable of consistently producing successful products [13].

Core Viewpoint - The article highlights the increasing interest of American investors in Chinese assets, particularly in new consumption and automation themes, indicating a potential for significant investment opportunities in these sectors [1][2][21]. Group 1: Market Trends and Opportunities - The Chinese asset market is undergoing a new round of value reassessment, with a focus on emerging sectors like new consumption and AI [2][21]. - The "潮玩" (trendy toys) sector and the silver economy are identified as key growth areas, with companies like Quantum Song demonstrating strong growth potential in these fields [1][4][11]. - The trendy toy market in China is projected to grow from 22.9 billion RMB in 2020 to 76.3 billion RMB by 2024, reflecting a compound annual growth rate of 35% [11]. Group 2: Company Performance and Strategy - Quantum Song reported a revenue of 2.726 billion RMB and a net profit of 357 million RMB for the fiscal year 2025, with its trendy toy business contributing over 10% of total revenue in Q4 [1][4]. - The company is transitioning to focus on its trendy toy segment, having restructured its non-trendy toy businesses and rebranded to "奇梦岛" (Qimeng Island) [7][9][23]. - Quantum Song's trendy toy business has shown strong growth, with key IPs like WAKUKU and SIINONO demonstrating significant market appeal and sales potential [9][14][28]. Group 3: Valuation and Growth Potential - Despite the strong performance and growth potential, Quantum Song's trendy toy segment is not fully priced in by the market, with a current P/E ratio of only 10.8 compared to industry peers [14][16]. - The company's cash reserves of 1.041 billion RMB provide a solid foundation for its strategic transition and growth initiatives [9][16]. - Analysts suggest that if Quantum Song achieves its revenue guidance of 750-800 million RMB for the trendy toy business in fiscal year 2026, it could indicate a tenfold growth potential [16][19]. Group 4: Competitive Landscape - The trendy toy sector is characterized by high growth and increasing valuations, with leading companies like Pop Mart reaching market caps exceeding 400 billion HKD [12][14]. - Quantum Song's unique positioning in capturing emerging consumer trends across different age groups enhances its competitive edge in the market [22][24]. - The company's strategic partnerships and collaborations with major events and brands are expected to enhance its brand visibility and market presence [25][28].