Zheshang Securities released a research report maintaining a "Buy" rating on POP MART (09992). The firm views the company's long-term IP creation and operational mechanism as its core competitive advantage, which is already in the deployment phase. POP MART possesses a well-structured domestic IP portfolio and established brand recognition, with overseas growth expected to continue, driven by store expansion. In the medium term, expanding product categories, IPs, and business formats remain the core drivers for growth. The securities house forecasts the company's adjusted net profit for 2025-2027 to be 13.4 billion, 17.0 billion, and 21.2 billion yuan, representing year-on-year increases of 294%, 27%, and 25%, respectively, corresponding to a current PE ratio of 17.7x, 14.0x, and 11.2x. Zheshang Securities' main views are as follows.
Recent events include the company spending HK$251 million to repurchase 1.4 million shares on January 19, followed by an additional HK$96.49 million to repurchase 500,000 shares on January 21. These consecutive buybacks at low price levels demonstrate management confidence, and the firm believes there is still potential for positive surprises in the domestic and other emerging overseas markets.
The domestic market structure is healthy and is expected to continue exceeding expectations, with China poised to become a core outperforming market in 2025. This is primarily due to established brand awareness, a healthy IP structure, and a refined membership system. Large-scale curated retail stores are steadily increasing store efficiency, and core plush products have remained out of stock since heavy restocking in Q4 2025. In January, Douyin sales maintained high year-on-year growth of 239% (per Chanmama), with the Pony plush toy becoming the top-selling item. Leveraging platform capabilities and maintaining a high success rate for new launches, new business formats like jewelry, desserts, and theme parks are expected to provide additional growth, solidifying the fundamental performance in China.
While North American expectations are fully priced in, emerging markets are poised for growth. Despite weaker North American consumption, company-initiated adjustments, and a gap between major hit products, Q4 performance in North America was still better than previously expected. New markets in the Middle East and South America are expected to接力 (pick up the baton) with potential for outperformance, with accelerated openings of first stores in initial cities. Store density in these new markets is anticipated to increase rapidly in 2026. The Middle East and South America have large population bases, possess certain spending power and room for store expansion, and are expected to延续 (continue) the trend of exceeding expectations seen in China and Southeast Asia.
Risks include new product sales falling short of expectations and overseas promotion underperforming.
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