Amid a summer time of subdued shopper spending, Chinese toy firm Pop Mart alerted traders to double-digit development within the first half of the 12 months: it now expects income to rise by at the least 55% and revenue to rise by 90% or extra. Morgan Stanley and different funding corporations raised their value targets on the Hong Kong-traded inventory after Pop Mart issued a revenue warning on July 18. Shares initially jumped, however later fluctuated amid a broad decline in Asian shares. Morgan Stanley analysts mentioned final month, “We assume Pop Mart’s enlargement continues to be within the early levels, with gross sales of Rmb7bn ($970 million) from China and Rmb3bn from abroad market,” including that “the runway is lengthy” as Lego has annual international gross sales of 70 billion yuan. Beijing-based Pop Mart sells collectible collectible figurines based mostly by itself mental property (IP), in addition to units that includes Minions, Avengers or Disney characters. Each toy prices about $10, bought in a “blind” field so prospects don’t know which character they’ve bought. ‘Inherent demand’ “We consider the emotional worth coupled with the low value sensitivity provided by Pop Mart IP merchandise present robust help to underlying demand within the China market,” CLSA analysts wrote in a observe final month, ranking Pop Mart outperform. “We count on 30 retail shops to open in China this 12 months and China market gross sales to develop by 21% in 2024.” CLSA analysts raised their value goal to 45 Hong Kong {dollars} ($5.76), from 37 beforehand. They count on Pop Mart to publish high-single-digit development in same-store gross sales in mainland China this 12 months. China retail gross sales rose 2% in June from a 12 months earlier, and main Western manufacturers similar to Apple and Starbucks reported decrease second-quarter gross sales in China. When Pop Mart listed in Hong Kong in December 2020, the share value instantly doubled and hit an all-time excessive of HK$105.21 in February 2021. The inventory fell together with the Hong Kong market earlier than recovering earlier this 12 months. Despite the newest decline, Pop Mart shares have gained greater than 90% for the 12 months thus far – briefly surpassing the 100% mark with a excessive of HK$41.75 on Wednesday. But that also remained a number of Hong Kong {dollars} under analysts’ newest value targets. Raised goal Morgan Stanley raised its value goal to HK$52 from HK$45 beforehand following Pop Mart’s revenue alert. The Wall Street funding financial institution has an “chubby” ranking on the inventory. “According to the market, we estimate China’s development accelerated from 20% within the first quarter to 40% within the second quarter,” Morgan Stanley mentioned. “Strong surges in on-line channels and Pop Land had been the principle drivers, whereas offline gross sales additionally grew (pushed by teenagers% (same-store gross sales development)).” Pop Land is a theme park that Pop Mart opened in September 2023 close to a significant metropolis park in Beijing. The firm, which considers mental property its core asset, mentioned in its annual report in April that it additionally opened an artwork gallery with plans for gaming and animation merchandise. “Pop Land’s share of earnings development is encouraging – it is one other instance that exhibits the worth of administration’s dedication in pursuing new initiatives even when they’re thought-about ‘far-fetched’,” Morgan Stanley analysts mentioned. “Moreover, dangerous climate in China and a slowdown in consumption didn’t deter Pop Mart’s momentum, evidenced by its market share development within the rising IP product section.” Pop Mart has not but introduced when it would launch full outcomes for the primary half of the 12 months. In 2023 the corporate printed its interim report on the finish of August. Other funding corporations are extra cautious on Pop Mart shares. China Renaissance has given the inventory a “maintain” ranking, with a value goal of HK$27.39. “In our view, Pop Mart’s June 2024 on-line gross sales declined by 6%, probably as a result of Pop Mart didn’t supply a lot discounting in the course of the 618-shopping pageant,” China Renaissance analysts mentioned in a report final month. Also in mid-July, analysts at Nomura upgraded their view on Pop Mart, however solely from “low” to “impartial,” though with a value goal raised to HK$41. “In our view, the corporate is effectively positioned to keep up its excessive gross sales development momentum in 2H24F (we estimate 2H24F complete gross sales development of 39% yoy),” Nomura analysts mentioned. Growing worldwide enterprise While most of Pop Mart’s shops are in mainland China, the corporate’s worldwide enterprise is rising, with shops in nations starting from Thailand to the US. A day after the opening ceremony of the 2024 Paris Olympics, Pop Mart opened a retailer on the Louvre. “It may be very tough to forecast Pop Mart’s gross sales tempo after 2025, as the driving force of its development shouldn’t be retailer openings however the tempo of IP product launches,” Jefferies analysts mentioned. They give the inventory a purchase ranking with a value goal of HK$47.40. “We like administration’s technique of specializing in its core IPs and investing in these IPs by way of varied media,” a Jefferies report mentioned. “Pop Mart’s IPs could be not solely within the type of blind packing containers, but additionally within the type of video games, motion pictures and different product classes. It can also be trying to broaden its retail format through the use of theme parks as an incubator. This can lengthen the cycle of IPs if profitable.” — CNBC’s Michael Bloom contributed to this report. Disclosure: Comcast is the mum or dad firm of NBCUniversal and CNBC. CNBC’s mum or dad firm NBCUniversal owns NBC Sports and NBC Olympics. NBC Olympics is the U.S. broadcast rightsholder for all summer time and winter video games by way of 2032.
Amid a summer time of subdued shopper spending, Chinese toy firm Pop Mart alerted traders to double-digit development within the first half of the 12 months: it now expects income to rise by at the least 55% and revenue to rise by 90% or extra. Morgan Stanley and different funding corporations raised their value targets on the Hong Kong-traded inventory after Pop Mart issued a revenue warning on July 18. Shares initially jumped however later fluctuated amid a broad decline in Asian shares.
Morgan Stanley analysts mentioned final month, “We assume Pop Mart’s enlargement continues to be within the early levels, with gross sales of Rmb7bn ($970 million) from China and Rmb3bn from abroad markets,” including that “the runway is lengthy” as Lego has annual international gross sales of 70 billion yuan. Beijing-based Pop Mart sells collectible collectible figurines based mostly on its mental property (IP) in addition to units that includes Minions, Avengers, or Disney characters. Each toy prices about $10 and is bought in a “blind” field so prospects don’t know which character they’ve bought.
“Inherent demand” “We consider the emotional worth coupled with the low value sensitivity provided by Pop Mart IP merchandise gives robust help to underlying demand within the China market,” CLSA analysts wrote in a observe final month, ranking Pop Mart outperform. “We count on 30 retail shops to open in China this 12 months and China market gross sales to develop by 21% in 2024.” CLSA analysts raised their value goal to 45 Hong Kong {dollars} ($5.76) from 37 beforehand. They count on Pop Mart to publish high-single-digit development in same-store gross sales in mainland China this 12 months.
China retail gross sales rose 2% in June from a 12 months earlier, and main Western manufacturers similar to Apple and Starbucks reported decrease second-quarter gross sales in China. When Pop Mart was listed in Hong Kong in December 2020, the share value instantly doubled and hit an all-time excessive of HK$105.21 in February 2021. The inventory fell together with the Hong Kong market earlier than recovering earlier this 12 months. Despite the newest decline, Pop Mart shares have gained greater than 90% for the 12 months thus far, briefly surpassing the 100% mark with a excessive of HK$41.75 on Wednesday.
But that remained a number of Hong Kong {dollars} under analysts’ newest value targets. Morgan Stanley raised its value goal to HK$52 from HK$45 beforehand following Pop Mart’s revenue alert. The Wall Street funding financial institution has an “chubby” ranking on the inventory. “According to the market, we estimate China’s development accelerated from 20% within the first quarter to 40% within the second quarter,” Morgan Stanley mentioned. “Strong surges in on-line channels and Pop Land had been the principle drivers, whereas offline gross sales additionally grew (pushed by teenagers% (same-store gross sales development)).”
Pop Land is a theme park that Pop Mart opened in September 2023 close to a significant metropolis park in Beijing. The firm, which considers mental property its core asset, mentioned in its annual report in April that it additionally opened an artwork gallery with plans for gaming and animation merchandise. “Pop Land’s share of earnings development is encouraging; it is one other instance that exhibits the worth of administration’s dedication in pursuing new initiatives even when they’re thought-about ‘far-fetched’,” Morgan Stanley analysts mentioned. “Moreover, dangerous climate in China and a slowdown in consumption didn’t deter Pop Mart’s momentum, evidenced by its market share development within the rising IP product section.”
Pop Mart has not but introduced when it would launch full outcomes for the primary half of the 12 months. In 2023, the corporate printed its interim report on the finish of August. Other funding corporations are extra cautious about Pop Mart shares. China Renaissance has given the inventory a “maintain” ranking, with a value goal of HK$27.39. “In our view, Pop Mart’s June 2024 on-line gross sales declined by 6%, probably as a result of Pop Mart didn’t supply a lot discounting in the course of the 618 procuring pageant,” China Renaissance analysts mentioned in a report final month.
Also in mid-July, analysts at Nomura upgraded their view on Pop Mart, however solely from “low” to “impartial,” though with a value goal raised to HK$41. “In our view, the corporate is effectively positioned to keep up its excessive gross sales development momentum in 2H24F (we estimate 2H24F complete gross sales development of 39% yoy),” Nomura analysts mentioned. Growing worldwide enterprise While most of Pop Mart’s shops are in mainland China, the corporate’s worldwide enterprise is rising, with shops in nations starting from Thailand to the US. A day after the opening ceremony of the 2024 Paris Olympics, Pop Mart opened a retailer on the Louvre.
“It may be very tough to forecast Pop Mart’s gross sales tempo after 2025, as the driving force of its development shouldn’t be retailer openings however the tempo of IP product launches,” Jefferies analysts mentioned. They give the inventory a purchase ranking with a value goal of HK$47.40. “We like administration’s technique of specializing in its core IPs and investing in these IPs by way of varied media,” a Jefferies report mentioned. “Pop Mart’s IPs could be not solely within the type of blind packing containers but additionally within the type of video games, motion pictures, and different product classes. It can also be trying to broaden its retail format through the use of theme parks as an incubator. This can lengthen the cycle of IPs if profitable.”
CNBC’s Michael Bloom contributed to this report. Disclosure: Comcast is the mum or dad firm of NBCUniversal and CNBC. CNBC’s mum or dad firm, NBCUniversal, owns NBC Sports and NBC Olympics. NBC Olympics is the U.S. broadcast rightsholder for all summer time and winter video games by way of 2032.
