There is not an oversupply of Labubus – at least for now, according to HSBC.
Second-hand prices of the wildly popular monster dolls – endorsed by celebrities like pop star Rihanna and Lisa from the South Korean girl group Blackpink – have recently begun to fall as maker Pop Mart ramped up production. Shares of the company have dropped more than 20 per cent since peaking in late August, raising investor concerns that the toys’ supply is exceeding demand.
But analysts at HSBC said such worries might be exaggerated. “The supply and demand of Labubus won’t tilt 180 degrees,” they said in a report published on Thursday, indicating that fans were likely to continue buying the dolls and overseas sales were expected to keep growing.
Labubu, a global pop toy phenomenon comparable to Kaws and Bearbrick, “only started its active crossover with global brands in 2024,” the bank said. “We believe it is too early to call for a peak.”
Labubu, an ugly-cute elfin figure with a toothy grin designed by Hong Kong-born artist Lung Ka-sing in 2015, gained international fame in April last year when Lisa featured a Labubu doll in an Instagram story.
In China, Labubu’s rise occurred despite sluggish domestic consumption, as younger shoppers seek emotional value amid a slowing economy and uncertain job prospects.
Last month, the unemployment rate for youth aged 16 to 24 in mainland China reached a 20-month high of 18.9 per cent, according to data from the National Bureau of Statistics. Meanwhile, retail sales – a key indicator of household spending – grew only 3.4 per cent year on year, falling short of the anticipated 3.8 per cent.
Despite this backdrop, Pop Mart has seen its revenue and profit soar. In the first half of this year, the world’s most valuable toymaker by market capitalisation reported 13.88 billion yuan (US$1.95 billion) in revenue, a more than three-fold increase from a year earlier. Net profits jumped nearly five-fold to a record 4.57 billion yuan.
After announcing its half-year results in August and launching its latest mini Labubus, the company’s Hong Kong-listed stock surged to about HK$340.
With a valuation of around HK$359 billion (US$46.2 billion) as of Thursday, Pop Mart is worth more than several major toymakers combined, including Hasbro, Mattel and Sanrio.
Amid red-hot demand, Pop Mart’s monthly manufacturing capacity, including Labubu and other series, is set to rise to 50 million pieces by the end of this year – 10 times the capacity at the start of the year, according to HSBC.
While the increase in production has hurt the toymaker’s share price, HSBC forecast that by 2026, each Pop Mart member would buy an average of 1.23 Labubus, up from 0.99 in 2025.
At the same time, the company expected overseas revenues to continue growing.
Founder Wang Ning said in a recent interview with state media People’s Daily that Pop Mart’s overseas revenue was projected to surpass domestic sales by the end of 2025. In the first six months, revenues from outside mainland China and Taiwan accounted for about 40 per cent of the total. -- SOUTH CHINA MORNING POST
