TOP TOY Resubmits Hong Kong IPO Application: Business Model Diverges from Pop Mart, Profits Decline and CEO's Compensation Draws Scrutiny

On March 31, Da Chaowan International Group Co., Ltd. (TOP TOY) submitted a listing application for the main board of the Hong Kong Stock Exchange, with J.P. Morgan and UBS Group AG acting as joint sponsors. This marks a renewed attempt following the lapse of its previous application dated September 26, 2025. As a leading pop toy brand incubated by the MINISO Group, TOP TOY has drawn significant market attention, primarily focused on three key areas: its distinct business model compared to Pop Mart, a substantial decline in net profit for 2025, and the high compensation package of its young founder.

The business approaches of TOP TOY and Pop Mart present a clear contrast. Launched in 2020 and fully incubated by the MINISO Group, TOP TOY was initially operated by "Nashi Shi Jia Da Chaowan (Guangdong) Cultural Creativity Co., Ltd." It is positioned as China's largest and fastest-growing pop toy collectibles brand. Through deep consumer insight, TOP TOY has developed leading, consumer-oriented capabilities in product design and IP (Intellectual Property) operation. To date, the company has successfully built a multi-layered and expanding IP matrix driven by a combination of proprietary IP, licensed IP, and third-party IP, creating a diverse pop toy ecosystem. According to its prospectus, the company's GMV (Gross Merchandise Volume) in mainland China reached RMB 4.2 billion in 2025, with a compound annual growth rate exceeding 50% from 2023 to 2025. As of the latest practicable date, TOP TOY boasted 24 proprietary IPs, 42 licensed IPs, and over 660 third-party IPs, with 334 stores globally, more than 12 million registered members, and a product range covering categories such as action figures, 3D assembly models, and vinyl/plush toys.

In the same year TOP TOY was founded, Pop Mart, often referred to as "China's first pop toy stock," successfully listed on the Hong Kong Stock Exchange on December 11, 2020. Now, as TOP TOY seeks its own Hong Kong IPO, it carries high industry expectations. However, a comparison of their business models reveals significant differences. Simply put, Pop Mart follows a "small but refined" strategy, focusing on deep cultivation of proprietary IP to build a closed but high-value ecosystem, suitable for a high-margin, long-term value development model. In contrast, TOP TOY adopts a "large and comprehensive" approach, leveraging scale effects by integrating global IP resources through an open platform, creating a broad but relatively lower-margin ecosystem, which aligns with a rapid expansion and market share growth model. Specific revenue figures for 2025 illustrate this: TOP TOY's sales from proprietary IP were approximately RMB 199 million, accounting for just 5.7% of total revenue; licensed IP sales contributed RMB 1.778 billion, or 51%; and sales from third-party IP amounted to RMB 1.511 billion, representing 43.3%.

Following its establishment, TOP TOY experienced rapid growth. Its GMV first surpassed RMB 1 billion in 2023. In 2024, the company initiated a global strategy, gradually entering markets including Thailand, Malaysia, Indonesia, and Japan. In terms of annual revenue, the company's primary income increased from RMB 1.461 billion in 2023 to RMB 3.587 billion in 2025, achieving a compound annual growth rate of 56.7%. The gross profit margin also improved, rising from 31.4% in 2023 to 32.1% in 2025. However, a notable point is that while TOP TOY's revenue reached RMB 3.587 billion in 2025, a year-on-year increase of 87.9%, its net profit for the same period was only RMB 101 million, representing a significant decline of 65.6% compared to the RMB 294 million recorded in 2024. This sharp drop in net profit was not primarily due to operational issues. Analysis indicates the main reasons were a share-based payment expense of RMB 237 million and a change in the carrying value of redemption liability for preferred shares amounting to RMB 158 million, totaling RMB 395 million in non-cash charges. Consequently, the adjusted net profit for 2025 was RMB 522 million, an increase of 77.6% compared to the RMB 294 million in 2024. This suggests that TOP TOY's core operational profitability continues to grow.

Furthermore, the substantial compensation package of TOP TOY's Executive Director and CEO, Sun Yuanwen, has attracted market attention. The prospectus discloses that Sun's total remuneration for 2025 reached RMB 112 million, even exceeding the company's net profit of RMB 101 million for the same period. Sun Yuanwen, an entrepreneur born in 1991, has a background in mechanical engineering and previously held positions at Uniqlo and as Operations Director at MINISO. He led the establishment of the TOP TOY brand in 2020 and oversees the company's strategy and operations. Financial reports show that of the RMB 112 million remuneration in 2025, only approximately RMB 2.06 million consisted of cash salary and bonuses. The remaining RMB 110 million was attributable to non-cash, share-based payment incentives, which is an accounting representation of pre-IPO equity grants and not actual cash compensation. Nonetheless, the scale of this remuneration relative to the company's net profit has sparked discussions regarding corporate governance.

According to the prospectus, the proceeds from TOP TOY's IPO will be allocated proportionally to several areas, including enriching the IP matrix, deepening global omni-channel presence, and brand building. A primary use will be to diversify the IP portfolio and strengthen operations. Specifically, funds will be used to extend licensing agreements for popular IPs to ensure longer-term authorization, thereby supporting continuous product innovation and stable marketing strategies. The company aims to collaborate with more renowned IPs globally to broaden its target consumer base and cater to diverse customer needs. Simultaneously, proceeds will be directed towards enhancing the incubation and development of proprietary IP and improving product research, design, and development capabilities. Over the next four years, the company plans to recruit and onboard 5 to 15 internal design talents annually to expand its creative team and build a stronger, more diverse talent pool. Additionally, funds will be used to deepen the global omni-channel layout, with plans to hire 200 to 250 employees annually over the next four years to expand local overseas teams.

On April 8, inquiries were sent via email to TOP TOY's joint company secretaries seeking detailed clarification on several investor concerns: the specific reasons for the profit decline despite revenue growth in 2025; the conditions attached to the CEO's share-based compensation exceeding RMB 100 million; and the company's strategy for sustaining high revenue growth post-listing. As of the time of reporting, TOP TOY had not responded to these questions.