Summary of the Conference Call for Pop Mart Company Overview - Pop Mart has undergone three development stages: opening offline stores, establishing product models with the launch of the first IP "Cat Zodiac Blind Box," and exploring diversified product forms while accelerating overseas expansion. In 2023, revenue grew by 36% and profit increased by 128%, indicating a strong recovery momentum [2][5][21]. Core Business Insights - Artist IP is the main revenue source for Pop Mart, accounting for approximately 77% of total revenue, with a compound annual growth rate (CAGR) of about 72% over the past five years [2][6]. - The sales channels are diversified, with retail stores and online channels contributing 48% and 30% of revenue in 2023, respectively, while robot stores accounted for about 10% [2][6]. - The company has over 40 million registered members, maintaining a repurchase rate of 40% to 50% [4][17]. Financial Performance - From 2017 to 2021, Pop Mart experienced rapid growth in revenue and net profit, with CAGRs of over 100% and 350%, respectively. However, in 2022, the pandemic impacted growth, leading to a slowdown. In 2023, the company returned to strong growth with a revenue increase of 36% and profit growth of 128% [5][21]. - Future net profit forecasts for the next three years are projected to reach 2.6 billion, 3.9 billion, and 5 billion yuan, respectively [4][23]. Market Position and Competition - The Chinese trendy toy market is fragmented, with Pop Mart holding a leading market share of 12%, up from 9% in 2019. The second-ranked company has an 8% market share, while others range from 1% to 2% [2][10]. - The global trendy toy market was nearly $20 billion in 2019, with China's retail scale reaching 35.2 billion yuan in 2022, growing at a CAGR of about 28% over the past seven years [9]. IP Creation and Operation - Pop Mart has strong IP creation and operation capabilities, utilizing three cooperation models: proprietary IP, exclusive IP, and non-exclusive IP. The company has over 50 artist IPs, significantly outpacing competitors [11][14]. - Popular IPs like "Jasmine" have maintained annual sales exceeding 100 million yuan for over seven years, showcasing the company's ability to extend IP lifecycles [13]. Product Diversification and Innovation - In addition to traditional blind boxes, Pop Mart is exploring new product forms, with Mega Collections and plush toys contributing 13% and 10% of revenue, respectively, in the first half of 2024 [15][16]. - The company has maintained innovation in blind boxes, enhancing playability and product quality, and has introduced high-end toys in collaboration with international brands [16]. Sales Channels and Performance - Pop Mart's sales channels include offline retail stores, robot stores, and online platforms. In 2023, retail stores, online channels, and robot stores contributed approximately 47%, 33%, and 10% of revenue, respectively [18][19]. - The online platform, particularly Douyin, has seen significant growth, with sales exceeding 200 million yuan in the first half of 2024 [20]. Overseas Expansion - Since 2018, Pop Mart has been expanding its overseas business, achieving revenue of 1.066 billion yuan in 2023, accounting for 23% of total revenue. This is expected to rise to 30% in the first half of 2024 [4][21]. - The company has established 92 retail stores and 162 robot stores in Hong Kong, Macau, and overseas regions by the end of 2024 [22]. Future Outlook - The company's valuation is currently high, but considering future growth, the target price is set at around 125 yuan based on a 40x valuation for 2025 [23].

Summary of the Conference Call for Pop Mart Company Overview - **Company**: Pop Mart - **Industry**: Toy and IP (Intellectual Property) Development Key Points and Arguments Business Performance and IP Development - Pop Mart has made significant progress in its IP categories and globalization efforts, with self-designed products increasing from 29% in 2017 to 96% in the first half of 2024, while outsourced products dropped from 71% to 4% [3][4] - Revenue from licensed IP grew by 124.4% from 2018 to 2023, while artist IP revenue increased by 117.3% during the same period, indicating rapid growth in both categories [3][4] - The Molly IP saw revenue rise from 40 million in 2017 to over 1 billion in 2023, with a 90% year-on-year increase to 780 million in the first half of 2024, showcasing successful IP management [3][9] - The Labubu IP experienced a nearly 300% increase in revenue in the first half of 2024, surpassing the total revenue for 2023, aided by social media promotion from BLACKPINK member Lisa [3][13] Product Innovation and Market Expansion - Pop Mart continuously innovates product lines, including Mega collectibles and Inner Flow art lines, and is exploring apparel and home goods to meet diverse consumer needs [3][15] - The global flagship store for the Xiaono brand in Bangkok generated 5 million in revenue on its first day, with overseas revenue reaching 350 million in the first half of 2024, accounting for 30% of total revenue, particularly strong growth in Southeast Asia at nearly 500% [3][17][18] Strategic Partnerships and Supply Chain - Pop Mart leverages its strong supply chain capabilities to collaborate with international brands like Disney and Mattel, enhancing its global market presence [6][22] - The company focuses on platform development and operations, continuously introducing new artist IP to attract diverse audiences [5][7] Future Directions - The company plans to enhance platform development and operations, strengthen partnerships with international brands, and improve its design and supply chain management to optimize product structure and market competitiveness [7][31] Unique Aspects of IP Incubation and Operations - Pop Mart's internal design center (PDC) is responsible for incubating proprietary IP, which has become a significant revenue source [8] - The company maintains a balanced structure of top and mid-tier IPs, reducing reliance on a few key IPs and promoting healthy growth [12] Sales Channels and Consumer Insights - Pop Mart actively expands online sales channels, including live-streaming e-commerce, and has successfully launched new product lines to sustain growth [11][14] - The company recognizes diverse consumer preferences, tailoring products to different demographics, from children to young adults [28] Market Potential and Trends - The global toy market is valued at approximately 100 billion USD, with the US market alone accounting for 40 billion USD, indicating significant growth potential for Pop Mart in North America [19][24] - The importance of IP in the toy industry has increased, with many companies now relying heavily on IP for sales, reflecting a shift from channel-driven to content-driven strategies [23] Financial Outlook - Expectations for Pop Mart's performance in the second half of 2024 and into 2025 are optimistic, with anticipated high growth rates driven by new IP projects and improved supply chain capabilities [35] Additional Insights - The global licensing market for goods and services is substantial, with significant growth potential in China, which is still in the early stages of developing its licensing market [27] - The toy industry is witnessing a trend towards IP-driven products, with companies increasingly focusing on unique IP to differentiate themselves in a competitive market [23][24]

Investment Rating - The report assigns a "Buy" rating to the company with a target price of 124.57 HKD based on a 2025 PE valuation of 40 times, reflecting a 30% premium over comparable companies [2][5]. Core Insights - The company has established itself as a leading brand in the Chinese trendy toy market, transitioning from an exploratory phase to a diversified development stage since its founding in 2010 [7][14]. - The trendy toy industry in China is experiencing robust growth, with a market size reaching 352 billion CNY in 2022 and a compound annual growth rate (CAGR) of 28% from 2015 to 2022 [30][32]. - The company's revenue and net profit have shown significant growth, with a projected net profit of 25.68 billion CNY in 2024, 38.58 billion CNY in 2025, and 50.37 billion CNY in 2026 [2][4]. Financial Forecast and Investment Recommendations - The company is expected to achieve a net profit of 25.68 billion CNY in 2024, 38.58 billion CNY in 2025, and 50.37 billion CNY in 2026, with corresponding earnings per share (EPS) of 1.91 CNY, 2.87 CNY, and 3.75 CNY respectively [2][4]. - The company's revenue is projected to grow from 6,301 million CNY in 2023 to 21,050 million CNY in 2026, reflecting a CAGR of 36.5% from 2023 to 2026 [4][20]. Company Overview - The company has a strong competitive edge in IP (intellectual property) development, with its artist IP products accounting for 77% of total revenue in 2023, and a CAGR of 72% from 2018 to 2023 [20][41]. - The company has diversified its sales channels, with offline retail stores and online channels contributing 48% and 30% of revenue respectively in 2023 [22][24]. - The company has successfully expanded its international presence, with overseas revenue accounting for 30% of total income as of 2024 [12][20]. Market Position - The trendy toy market in China is relatively fragmented, with the top five companies holding only 24% of the market share, while the company itself has increased its market share to 12% in 2022, up from 9% in 2019 [35][36]. - The global trendy toy market is projected to grow from nearly 20 billion USD in 2019 to 41.8 billion USD by 2024, indicating a CAGR of 16% [30][32]. Operational Efficiency - The company has improved its profitability metrics, with gross margin and net profit margin increasing by 3.8 percentage points and 6.9 percentage points respectively in 2023 [25][26]. - The company has maintained a low store closure rate, indicating strong operational stability [12].

Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 124.57, reflecting a 30% premium over the estimated PE ratio of 40 times for 2025 [2][5]. Core Insights - The company has established itself as a leading brand in China's trendy toy market, with significant growth potential in international markets [1][7]. - The company's revenue and net profit have shown impressive growth, with a compound annual growth rate (CAGR) of 65% and 61% respectively from 2018 to 2023 [19][20]. - The company’s artist IP products are the main revenue driver, contributing approximately 77% of total revenue in 2023 [20][21]. Financial Forecast and Investment Recommendations - The forecasted net profits for the company from 2024 to 2026 are expected to be CNY 25.68 billion, CNY 38.58 billion, and CNY 50.37 billion respectively, with corresponding EPS of CNY 1.91, CNY 2.87, and CNY 3.75 [2][4]. - The company’s revenue is projected to grow significantly, with estimates of CNY 11.77 billion, CNY 16.46 billion, and CNY 21.05 billion for 2024, 2025, and 2026 respectively, reflecting growth rates of 86.7%, 39.9%, and 27.9% [4][20]. Company Overview - The company has transitioned through three phases since its establishment in 2010: exploration, rapid growth, and diversification [14][15]. - The company has a strong market position in the trendy toy industry, with a market share of approximately 12% in 2022, up from 9% in 2019 [35][36]. Industry Analysis - The trendy toy market in China has been growing rapidly, with a retail market size of CNY 352 billion in 2022 and a CAGR of 28% from 2015 to 2022 [30][32]. - The global trendy toy market is expected to reach USD 41.8 billion by 2024, with a CAGR of 16% from 2019 to 2024 [30][32]. Sales Channels - The company’s main sales channels include offline retail stores, online platforms, and innovative sales methods such as robot stores, contributing 48%, 30%, and 10% to total revenue respectively in 2023 [22][24]. - The company has been expanding its international presence, with overseas revenue accounting for 30% of total income as of 2024 [12][20].

Investment Rating - The report gives a "Buy" rating for the company, indicating a positive outlook for future performance [11]. Core Viewpoints - Pop Mart is a leading player in the trendy toy industry, with a strong integrated layout covering the entire industry chain. The company has shown rapid growth in revenue and profit, with a significant increase in its market share [1][11]. - The trendy toy market is expected to grow significantly, with the total market value projected to reach 110.1 billion yuan by 2026, indicating a robust growth trajectory for the industry [2][42]. - Pop Mart's strong IP operation capabilities have been validated, with a diverse range of successful IPs contributing to its revenue growth. The company is continuously expanding its product categories and business models [3][11]. Summary by Sections Company Overview - Pop Mart, established in 2010, is the largest trendy toy company in China, focusing on self-owned IP sales. The company has built an integrated platform covering artist discovery, IP operation, consumer engagement, and cultural promotion [6][23]. Industry Growth - The trendy toy industry is rapidly developing, with a market value of approximately 60 billion yuan in 2023, expected to grow at a compound annual growth rate of over 20% [2][42]. - The industry is highly fragmented, with Pop Mart holding an 11.9% market share, leading the competition [2][45]. IP Operation and Business Expansion - Pop Mart has successfully developed a strong IP matrix, with over 10 IPs generating over 100 million yuan in sales in 2023. The company is expanding its product categories, including accessories and plush toys, to enhance customer engagement [3][11]. - The company has established a multi-dimensional business ecosystem around its IPs, including parks and games, which are expected to extend the lifecycle of its IPs [3][11]. Sales Channels and Market Reach - In 2023, Pop Mart's domestic revenue accounted for 87%, with overseas revenue growing rapidly, reaching 30% in 2024H1, a year-on-year increase of approximately 400% [4][11]. - The company has a robust offline and online channel strategy, with 374 retail stores and a significant online presence, leveraging membership systems to enhance customer retention [4][11]. Financial Projections - The company is projected to achieve revenues of 124 billion yuan, 172.69 billion yuan, and 213.04 billion yuan from 2024 to 2026, with corresponding net profits of 29.21 billion yuan, 41.37 billion yuan, and 51.81 billion yuan [11][12].

Investment Rating - The report gives a "Buy" rating for Pop Mart, indicating strong growth potential and market leadership in the trendy toy industry [11]. Core Viewpoints - Pop Mart is a leading player in the trendy toy industry, with a comprehensive integrated layout covering the entire industry chain. The company has shown rapid revenue growth, with 2023 revenue reaching 6.3 billion yuan, and profits expected to grow over 100% in 2023 and the first half of 2024 [1][11]. - The trendy toy market is rapidly expanding, with the total market value expected to grow from approximately 60 billion yuan in 2023 to 110.1 billion yuan by 2026, indicating a strong growth trajectory [2][42]. - Pop Mart's strong IP operation capabilities have been validated, with a growing portfolio of successful IPs and continuous expansion into new product categories and business models [3][11]. Summary by Sections Company Overview - Pop Mart, established in 2010, is the largest trendy toy company in China, focusing on self-owned IPs, which account for 77% of its revenue. The company has a stable controlling shareholder and a young, dynamic management team [1][6][37]. Industry Development - The trendy toy industry is characterized by a high degree of fragmentation, with Pop Mart holding an 11.9% market share, leading the competition. The industry is expected to continue its rapid growth, particularly in the blind box segment [2][45]. IP Operation and Business Expansion - Pop Mart has developed a strong IP matrix, with 10 IPs generating over 100 million yuan in sales in 2023. The company is expanding its product categories and business models, including accessories and games, enhancing customer engagement and increasing average transaction values [3][11][54]. Online and Offline Integration - The company has established a robust channel network, with 87% of revenue coming from domestic sales and 17% from overseas. The integration of online and offline channels has driven significant growth in membership and repeat purchases [4][11][31]. Financial Forecast and Investment Rating - The financial forecast predicts revenues of 12.4 billion yuan, 17.3 billion yuan, and 21.3 billion yuan for 2024, 2025, and 2026, respectively, with corresponding net profits of 2.9 billion yuan, 4.1 billion yuan, and 5.2 billion yuan. The report maintains a "Buy" rating based on these projections [11][12].

Investment Rating - The report initiates coverage with a "Buy" rating and sets a target price of HKD 125.6, indicating a potential upside of 17.2% from the current price [2][3]. Core Insights - The report highlights that Pop Mart is a leading player in the Chinese trendy toy market, with a comprehensive business model that spans from IP incubation to brand operation, demonstrating strong growth potential in both domestic and international markets [1][2][19]. - The company achieved a revenue of CNY 6.301 billion in 2023, reflecting a year-on-year growth of 36.5%, with a total registered membership of 34.35 million [1][4]. - The global trendy toy market is projected to grow from USD 19.8 billion in 2019 to USD 41.8 billion by 2024, with a compound annual growth rate (CAGR) of 16.1% [21][22]. Company Overview - Pop Mart was established in 2010 and has evolved into a leading cultural and entertainment company in China, focusing on trendy toys and IP development [6][19]. - The company operates a fully integrated platform covering the entire trendy toy industry chain, connecting niche designers with a broad consumer base [1][31]. Financial Performance - The report forecasts the company's net profit for FY24, FY25, and FY26 to be CNY 2.726 billion, CNY 3.961 billion, and CNY 5.216 billion, respectively, indicating significant growth [2][4]. - The company’s revenue is expected to exceed CNY 10 billion in 2024, showcasing robust growth momentum [6]. Market Dynamics - The Chinese trendy toy market is still in its early stages, with a projected market size of CNY 764 billion by 2024 and CNY 1.101 trillion by 2026, reflecting a CAGR of 20% [20][23]. - Pop Mart holds a market share of 8.5% in the Chinese trendy toy market, positioning it as the largest brand in the sector [24]. IP Strategy - The core of Pop Mart's business model is its IP strategy, which includes self-owned, exclusive, and non-exclusive IPs, with a total of 93 IP images as of mid-2024 [7][33]. - The company has successfully launched several popular IPs, such as MOLLY and SKULLPANDA, which have shown strong sales performance [35][36]. Supply Chain and Innovation - Pop Mart has developed a responsive and innovative supply chain system, reducing inventory turnover days from 133 to 101 days in 2024 [43]. - The company emphasizes material and process innovation, enhancing product quality and design capabilities [44]. Distribution Channels - The company has established a comprehensive online and offline distribution network, with a total of 2,789 stores as of mid-2024 [50]. - Offline channels contribute 52% of revenue, while online channels account for 29%, indicating a balanced sales strategy [50].

Investment Rating - The report initiates coverage with a "Buy" rating and sets a target price of HKD 125.6, indicating a potential upside of 17.2% from the current price [2][3]. Core Insights - The report highlights that the company, Pop Mart, is a leading player in the Chinese trendy toy market, with a comprehensive operational platform covering the entire industry chain from IP incubation to brand operation [1][6]. - The company has demonstrated strong revenue growth, with a projected net profit of RMB 27.3 billion, RMB 39.6 billion, and RMB 52.2 billion for FY24, FY25, and FY26 respectively [2][4]. - The global trendy toy market is rapidly expanding, with a forecasted growth from USD 198 billion in 2019 to USD 418 billion by 2024, driven by rising disposable incomes and the successful incubation of quality trendy toy IPs [1][22]. Company Overview - Pop Mart was established in 2010 and has evolved into a leading cultural and entertainment company in China, focusing on trendy toys and IP development [6][19]. - The company has achieved significant revenue growth over the past three years, with revenues of RMB 44.9 billion, RMB 46.2 billion, and RMB 63.0 billion from 2021 to 2023 [6][20]. - As of mid-2024, Pop Mart operates 2,789 stores, including 2,563 in mainland China and 226 in Hong Kong, Macau, and overseas [6][50]. Market Dynamics - The Chinese trendy toy market is still in its early stages, with a projected market size of RMB 764 billion by 2024 and RMB 1,101 billion by 2026, reflecting a compound annual growth rate (CAGR) of 20% [20][23]. - The report notes that the market is characterized by a low concentration of players, with Pop Mart holding a market share of 8.5% in 2019, making it the largest brand in the sector [24][30]. - The company is actively expanding its overseas presence, with expectations that international business could account for over 50% of its revenue by 2025, focusing on markets in Europe, the United States, Japan, South Korea, and Southeast Asia [24][29]. IP Strategy - Pop Mart's core business model revolves around an integrated platform that connects artists and consumers, facilitating the commercialization of IP products [31][32]. - The company has successfully incubated multiple popular IPs, including MOLLY, SKULLPANDA, and DIMOO, with a total of 93 IP images as of mid-2024 [7][35]. - The report emphasizes the importance of continuous IP operation and channel development as key competitive advantages for the company [31][33]. Financial Performance - The company's revenue for FY2023 was RMB 63.01 billion, representing a year-on-year growth of 36.5% [1][4]. - The report provides a detailed financial summary, projecting significant growth in operating profit and net profit over the next few years, with FY2024 expected to see a 94.1% increase in revenue [4][6]. - The company has also improved its inventory turnover days, reducing from 133 days at the end of 2023 to 101 days in mid-2024, indicating enhanced operational efficiency [43].

Core Viewpoint - The resurgence of Pop Mart challenges the traditional investment beliefs held by fund managers, particularly in the context of the consumer sector, as it has outperformed traditional liquor stocks during a period of consumer stock decline [1][8]. Group 1: Company Performance - Pop Mart's market capitalization reached HKD 148.8 billion, with a stock price increase of over 10 times from its low point and more than 4 times since the beginning of 2024 [2][6]. - The company reported a revenue of CNY 4.56 billion for the first half of 2024, a year-on-year increase of 62%, and an adjusted net profit of CNY 1.02 billion, up 90.1% [2][3]. - The success of Pop Mart is attributed to its strong IP incubation and operational capabilities, particularly highlighted by the sales of its "Nezha 2" series, which exceeded CNY 10 million within eight days of launch [1][2]. Group 2: Market Dynamics - The traditional consumer sector, particularly liquor stocks, has seen a decline, with many companies reporting poor earnings forecasts for 2024, such as a projected net profit drop of 97.26% for Jiu Gui Jiu [8][9]. - In contrast, Pop Mart's performance indicates a shift in consumer preferences towards emotional consumption, particularly among the Z generation, which is becoming a significant market force [11][12]. Group 3: Investment Trends - Fund managers have largely missed the opportunity to invest in Pop Mart during its rebound, with many exiting their positions during periods of stock price decline [4][6]. - The investment community is beginning to recognize the potential of emotional consumption and the importance of understanding the spending habits of younger consumers [11][12]. - There is a growing consensus that capturing phase-based growth opportunities will be crucial for future investments in the consumer sector [9][10]. Group 4: Future Outlook - The focus for future investments will likely include sectors characterized by emotional consumption, rational industry order, and opportunities for international expansion [13][14]. - The rise of the Z generation is expected to drive demand for products that offer emotional satisfaction, such as IP-based and cultural creative products [12][13].

Core Viewpoint - The resurgence of Pop Mart challenges the traditional investment beliefs held by fund managers regarding established consumer stocks like liquor brands, highlighting a shift towards new consumption trends driven by the Z generation and emotional spending [1][9]. Group 1: Company Performance - Pop Mart, known as the "first stock of trendy toys," achieved a market capitalization of HKD 148.8 billion, marking a significant recovery from a previous decline where its market value dropped over 90% [1][5]. - The company's stock price rebounded more than 10 times from its lowest point, with a growth of over 4 times since the beginning of 2024 [1][7]. - In the first half of 2024, Pop Mart reported revenue of CNY 4.56 billion, a year-on-year increase of 62%, and an adjusted net profit of CNY 1.02 billion, up 90.1% [2][3]. Group 2: Market Trends and Investment Opportunities - The success of Pop Mart is attributed to its strong IP incubation and operational capabilities, allowing it to quickly adapt to market changes and consumer demands [2][3]. - The rise of emotional consumption among the Z generation is becoming a critical factor in investment strategies, with a focus on capturing the potential of this demographic [13][14]. - The IP economy is gaining traction, with companies that can effectively leverage IP across the entire value chain expected to thrive [3][11]. Group 3: Fund Manager Sentiment - Many public funds missed the opportunity to capitalize on Pop Mart's rebound due to skepticism about the sustainability of its growth and a preference for traditional consumer stocks [4][8]. - The consensus among fund managers regarding Pop Mart remains low, with only a few maintaining significant positions during its recovery phase [7][8]. - The investment behavior of seasoned fund managers tends to be conservative, often leading to missed opportunities in emerging consumer sectors like trendy toys [8][9]. Group 4: Traditional Consumer Sector Challenges - In contrast to Pop Mart's recovery, traditional consumer stocks have struggled, with many experiencing stagnant growth and declining valuations [9][10]. - The performance of established consumer brands, such as liquor companies, has been lackluster, with many trading at near five-year lows [10][11]. - The shift in consumer behavior towards emotional and experiential spending is reshaping the landscape of the consumer sector, necessitating a reevaluation of investment strategies [14][15].