Pop Mart Shares Jump After Toy Maker Guides for Higher First-Half Profit

Dow Jones07-19

By Tracy Qu

Pop Mart International shares surged after the Chinese toy maker guided for higher profit for the first half of 2024.

Shares of the Beijing-based company, known for its "mystery box" toys, were 11% higher at 41.90 Hong Kong dollars (US$5.36) in midday trading, on track for their biggest daily gain since March. With Friday's rally, the stock has doubled this year.

The Chinese toy maker said in an exchange filing Thursday that it expects its first-half profit to rise at least 90% from a year earlier, thanks to product cost optimization and better expense control, among other factors. Revenue is likely to increase by at least 55%, driven by robust growth in Hong Kong, Macau, Taiwan and overseas markets, it said.

Pop Mart's solid sales growth was "more or less priced in" by the market, but the high earnings growth for the first half is a positive surprise, Nomura analysts Jizhou Dong and Riley Jin said in a research note.

The Chinese toy maker is also well placed to sustain its sales momentum into the second half, they said, noting steady overseas store openings and efforts to diversify product offerings.

The analysts increased their 2024 to 2026 forecasts for Pop Mart's sales and profit by 8%-12% and 34%-37%, respectively.

Nomura upgraded the stock to neutral from reduce and raised the target price to HK$41.00 from HK$31.00, saying that faster-than-expected growth in domestic membership numbers could be a share-price catalyst, though geopolitical uncertainty may present risks to its overseas expansion plans.

Write to Tracy Qu at tracy.qu@wsj.com

(END) Dow Jones Newswires

July 19, 2024 00:40 ET (04:40 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

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