Pop Mart Shares Hit Record High on New Mini Labubu Launch
Shares of Chinese toy maker Pop Mart International Group Ltd. rose to a record high on Wednesday, after Chief Executive Officer Wang Ning said the company could easily surpass its annual sales projection and announced plans to launch a new mini Labubu doll.
Record-Breaking Sales Projections
The stock climbed as much as 14% to HK$319.4, the highest level since the company went public in December 2020, and closed at HK$316. This reversed earlier losses of up to 4.7%, as some analysts flagged concerns about longer-term demand for Pop Mart’s popular characters.
Wang told an earnings call that even he’s been unable to accurately predict earnings growth amid a global collecting frenzy for Labubu dolls. He said that while earlier this year Pop Mart hoped sales to hit 20 billion yuan ($2.8 billion), he now feels 30 billion yuan “would be quite easy.”
New Mini Labubu Doll Launch
A new mini version of Labubu will be launched as soon as this week, Wang added, saying consumers can hang it on their mobile phone expecting it to be “a blockbuster,” without giving further details.
Global Expansion Plans
Beijing-based Pop Mart is racing ahead with its global expansion plan, leveraging the worldwide craze over Labubus — plush toys that have turned into a pop culture phenomenon in Western markets, particularly the US. Its overseas revenue grew 440% to 5.6 billion yuan during the first six months of the year.
Pop Mart expects total foreign store numbers to exceed 200 by year-end, up from its current 140, Co-Chief Operating Officer Moon Duk II told the earnings call. Store expansion will remain fast in the US market in the next one to two years, fellow co-COO Si De said.
Analyst Views on Pop Mart’s Growth
“We believe Pop Mart’s strong capability in IP incubation and operation and overseas expansion will continue to underpin its solid growth momentum” in the second half, Citigroup Inc. analysts including Lydia Ling wrote.
However, others took a more cautious view. Pop Mart’s top intellectual property, including its Labubu dolls, “still see high uncertainties on long-term popularity,” Morningstar Inc. analyst Jeff Zhang said.
Net store growth in mainland China won’t exceed 10 this year, according to Wednesday’s call, as the company wants to focus on improving each existing store’s operations instead of aggressively expanding.
Labubu’s Popularity and Future Prospects
Labubus’ popularity is due in part to the company’s blind-box packaging approach for many of its products, a draw for customers curious about what’s inside. Revenue for The Monsters, the toy series that includes Labubu, reached 4.81 billion yuan, compared with 626.8 million yuan for the same period last year.
“Based on the current financial report, Pop Mart’s stock price is expensive but not overvalued,” said Chen Da, founder of investment consulting firm Dante Research. “This reflects recognition of its ability to continuously break into new markets, mass-produce products, and diversify its revenue streams, and there is still room for further price appreciation in the future.”
Pop Mart will keep expanding its global footprint by establishing offline channels in major landmarks, stepping up investment in its website and self-developed apps, and aiming to collaborate with more international brands and artists, according to its earnings statement.
Conclusion and Future Outlook
While some analysts are optimistic about Pop Mart’s growth prospects, others are more cautious, citing uncertainties about the long-term popularity of Labubu dolls. As the company continues to expand globally and diversify its revenue streams, it will be interesting to see how its stock price performs in the coming months.
For Indian investors looking to tap into the growth of global toy makers, Pop Mart’s story offers valuable insights into the importance of innovation, brand building, and strategic expansion. As the company navigates the challenges of sustaining its growth momentum, its commitment to continuous improvement and customer engagement will be key to its success.
With its strong financial performance, expanding global presence, and innovative products, Pop Mart is an interesting stock to watch for investors looking to diversify their portfolios. However, as with any investment, it’s essential to do your research, consider your risk tolerance, and consult with a financial advisor before making any investment decisions.