From HK$400 to HK$300: The Logic Behind JPM’s Downgrade and Where It Could Be Wrong

J.P. Morgan downgraded $POP MART(09992)$ from Overweight to Neutral and cut its target price from HK$400 to HK$300 (2026E ~25x P/E, PEG 1.1x).

The firm noted that four major catalysts have already been realized this year—strong 1H25 results, the Uniqlo collaboration, index inclusion, and the launch of gold jewelry stores—while the remaining three (animation launch, Labubu 4.0, and interactive toys) still lack visibility in timing and impact.

Although search interest and resale prices have declined, this is largely due to a tenfold expansion in capacity since 1Q25 rather than weakening demand, and brand momentum and sales drivers remain solid. Government agencies and platforms are also stepping up anti-counterfeiting measures, which should help strengthen the value of genuine products.

From a long-term perspective, the investment thesis is intact: strong IP acquisition and monetization via social media, a diversified IP portfolio with Labubu expected to contribute 35% of sales by 2027, and global expansion with overseas profit contribution projected to exceed 60% by 2027.

However, after a share price increase of +209% year-to-date and +466% over the past twelve months, valuation is now close to “priced for perfection,” making the risk/reward unattractive in the near term. J.P. Morgan recommends monitoring the next catalyst window in 4Q25–1Q26 for potential re-entry.