Chinese toymaker Pop Mart is gearing up for another period of blockbuster growth, following the runaway success of its Labubu toy internationally, saying it expects a massive surge in first-half revenue and profit.
In a filing to the Hong Kong stock exchange on Tuesday, the Beijing-based company said that it expected net profit for the first half to rise by at least 350 per cent from a year ago and revenue to increase by more than 200 per cent.
The company attributed its first-half growth to “the increased global recognition of the Pop Mart brand and its [intellectual properties], and diversified product categories”, noting that revenue from all regional markets rose “rapidly and continuously”.
Nomura on Wednesday lifted Pop Mart’s share-price estimate by 13 per cent to HK$330 from HK$291. The Japanese investment bank said in a report that the management would offer a positive business outlook in the interim earnings call and that the stock was its favourite consumer name.
Meanwhile, US investment bank Jefferies raised the target price by 55 per cent to HK$315.20 from HK$203 to reflect the stronger-than-expected first-half profit and maintained a buy rating on the stock.
The stock rose as much as 3.3 per cent, before closing 4 per cent lower at HK$252.80 on Wednesday.
“We like management’s strategy of focusing on its core IPs and investing in these IPs through various media,” analysts led by Annie Ling at Jefferies said in a report on Tuesday. “Pop Mart’s IPs could be in the form of not just blind boxes but also games, films and other product categories. It is also looking to expand its retail format using the theme park as an incubator. This could lengthen an IP’s cycle should it be successful.”
Growing presence in overseas markets, where the brand has a more premium positioning, helped improve its revenue structure and overall gross profit, Pop Mart said in the exchange statement. The toymaker also said it benefited from a substantial increase in profit from economies of scale, cost optimisation and tighter expense controls.
Pop Mart’s breakneck success in international markets came in 2024 when its “Labubu” toy – a toothy, elfin character created by Hong Kong-born artist Kasing Lung – won over millions of fans in Asia, including K-pop star Lisa of Blackpink and members of the Thai royal family. The company’s launch of the third iteration of the toy in Western markets in April also experienced success, attracting high-profile fans like Rihanna and the family of David Beckham.
Its shares have almost tripled this year after surging 343 per cent in 2024, despite a major restock that pushed down resale prices and an official warning on the mainland about the potential addictiveness of “blind boxes”, which are a core part of the company’s business model.
In April, Pop Mart said its first-quarter revenue rose by 170 per cent from a year earlier, driven by a nearly 480 per cent surge in overseas business and close to 100 per cent growth at home. - SOUTH CHINA MORNING POST
