Pop Mart: Positive focus on ACCUMULATE (+49% upside potential)

On March 25, Pop Mart released its 2025 annual report (revenue RMB 37.12 billion +185%, net profit RMB 13.01 billion +316%), which can be described as historically rare in the consumer goods sector.

However, management issued 2026 guidance of "not less than 20% growth," which the market viewed as a signal of "the end of the high-growth narrative," leading to a 31% cumulative stock price decline over 3 days. The current PE (2025A) has been compressed to about 14x. On the first day after the report, a large-scale buyback was conducted, with a cumulative HK$900 million repurchased over 3 days, showing management's commitment with real money😂

Current weighted risk/reward: Bull +101% vs Bear -34%, target price set at 221.5HKD, expected return +49%, supporting [Active Monitoring]. However, if CMB's core thesis holds—that overseas store efficiency has already seen a structural decline, not a temporary fluctuation—then the current PE is not truly cheap, and profit forecasts will continue to be revised downward. This needs to be clearly confirmed or refuted in the 2026H1 results.

Reference: CMB International downgraded its rating to "Sell," 380→127; Bank of America changed from Buy to Neutral (300→170); while Morgan Stanley maintained Overweight (325 → 278) and BOCOM International maintained Buy at 232.8HKD. Research reports are a byproduct of industry research. Analyst downgrades contain more information than upgrades. A downgrade means the analyst risked offending underwriting clients, so downgrades are often more truthful.

Valuation Method:

Pop Mart has achieved stable profitability (net margin 35%), using PE valuation as the primary anchor, supplemented by PS (consumer goods industry comparison). Light-asset CapEx (stores + molds) does not rely on DCF. Benchmarks: Hermès historical PE 60x, Pokémon-related IP licensing companies 40-80x, Disney consumer products 20-35x. The current PE of 14x corresponds to an extremely pessimistic assumption of "growth rate dropping to single digits." The only reasonable explanation is that the market believes profits will be significantly revised downward.

The 2025A net margin of 35.1% (calculated from confirmed figures in the annual report) is a historical high for consumer goods, surpassing Hermès' peak (about 33%). Driving factors: ① Overseas proportion exceeded 40% (71.3% high-margin structure); ② Sales expense ratio ↓4.5pp→21.8%; ③ Management expense ratio ↓2.5pp→4.8%. Scale effects fully realized, 2025 was the optimal year for marginal profit quality.

Has the Labubu IP cycle peaked? Is overseas single-store efficiency declining?

(CMB research report cuts 50-60%), and has already lowered 2026/2027 net profit forecasts by 32%/43% respectively. If other sell-side firms follow, 2026E net profit may fall in the RMB 12 billion range (corresponding to PE ~17.5x), which is more expensive than the literal 11.7x.

If CMB's thesis holds, the high overseas growth rate in 2025A is the "last glory" rather than a sustainable trend. 2026H1 overseas segment data is the validation watershed. Disney's high PE is largely due to the contextual monetization of IP through theme parks. The revenue contribution from Pop Mart's first theme park phase two has not yet been incorporated into any valuation framework by the market. Welcome to discuss.