Deutsche Bank: POP MART's global market and all categories are "in full bloom," and the stock price is expected to break through HKD 300

POP MART's global breakout accelerates; is this explosive growth sustainable?

From Asia to Europe and America, from pop stars to sports celebrities, cultural barriers are being broken, and the Labubu dolls are spreading "virally" around the world. Market demand has surged, driving POP MART's stock price up 27% in the past 40 days.

According to news from the Chasing Wind Trading Desk, Deutsche Bank analyst Jessie Xu has recently raised the target price from HKD 200 to HKD 303, predicting that its net profit in 2025 could reach RMB 7.91 billion, showcasing remarkable growth potential.

Deutsche Bank believes that POP MART's cross-cultural appeal means its market potential far exceeds previous expectations, and penetration in the European and American markets may just be beginning; with accelerated expansion in overseas markets and product category diversification, profitability is expected to be further solidified.

From niche trendy toys to a global cultural phenomenon

The success story of POP MART is inseparable from the Labubu dolls in the "THE MONSTERS" series.

The report states that this IP, created by Hong Kong artist Kasing Lung and blending Eastern and Western cultural elements, has recently gone viral on social media. From Dua Lipa, Rihanna to David Beckham, Aryna Sabalenka, the star effect has propelled Labubu into a cultural phenomenon, breaking the regional and cultural limitations commonly seen in trendy toys.

This craze is not limited to the Labubu character alone. Other characters in the "THE MONSTERS" series, such as Zimomo and Tycoco, as well as other POP MART IPs (like Skullpanda, Hirono), also demonstrate cross-category sales potential.

The report believes that this cross-cultural appeal indicates that POP MART's Total Addressable Market (TAM) far exceeds previous expectations, especially as penetration in the European and American markets is just beginning.

In Deutsche Bank's view, this is mainly attributed to the unique Eastern and Western cultural fusion background of IP creator Kasing Lung. As an artist born in Hong Kong and raised in the Netherlands, he drew inspiration from Nordic mythology to create the "THE MONSTERS" series, allowing the IP to naturally bridge cultural divides.

Dual breakthroughs in sales channels and category expansion

POP MART is consolidating its global expansion achievements through a multi-dimensional strategy.

On one hand, the company is accelerating store openings in overseas markets.

This year, POP MART has added 31 new stores in North America, Europe, and the Asia-Pacific region, bringing the total number of overseas stores to 161, with North America and Europe accounting for 35%.

On the other hand, POP MART is deepening its product line expansion.

The "Labubu 3.0" series launched in April has sold out in both the Chinese and overseas markets, with significant premiums in the secondary market. The upcoming "Wacky Mart" series, set to be released on June 13, is even more diversified, including various derivatives such as refrigerator magnets, water cups, and pillows, priced 30%-185% higher than ordinary figurines, which is expected to further enhance gross margins.

Significant Increase in Financial Expectations and Target Price

Based on the accelerated penetration of overseas markets, Deutsche Bank expects POP MART's revenue to grow by 122% year-on-year to RMB 28.89 billion by 2025, with overseas revenue accounting for 55%, a significant increase from 39% in 2024; net profit is expected to reach RMB 7.91 billion, with a net profit margin of 27.4%, up 3.4 percentage points from 24.0% in 2024.

Accordingly, the report raised POP MART's EPS expectations for 2025-27 by 20-25%, with overseas revenue expectations increased by 13-15% and domestic revenue expectations raised by 5%. At the same time, gross margin expectations were also increased by 0.8-1.4 percentage points, reflecting the increased contribution from overseas markets.

Deutsche Bank also raised the company's long-term EBIT margin assumption to 40% (previously 37%), reflecting the operational leverage effect brought about by rapid expansion.

After considering risk factors, the report raised the target price from HKD 200 to HKD 303, maintaining a "Buy" rating.

It is worth noting that Deutsche Bank's expectations for POP MART are significantly higher than market consensus: the 2025 revenue expectation is 27% higher, and the adjusted net profit expectation is 37% higher, indicating the bank's extremely optimistic attitude towards the company's globalization development prospects.