Huaxi: POP MART (09992) rating upgraded from "hold" to "buy". Active buyback demonstrates development confidence.

Huaxi releases research report, stating that POP MART (09992) has issued consecutive repurchase announcements. On January 19, the company repurchased 1.4 million ordinary shares at a repurchase price of HKD177.7-181.2 per share, totaling 250 million Hong Kong dollars; on January 21, it repurchased 500,000 ordinary shares at an average repurchase price of 192.9791 Hong Kong dollars per share, totaling 96.49 million Hong Kong dollars. The repurchased shares are intended to be cancelled to enhance earnings per share. The company's continuous share repurchase demonstrates development confidence, and its rating has been upgraded from "hold" to "buy". Main Points by Huaxi: The bank believes that the overall business situation may be better than expected, with room for expansion and store efficiency. The third-party database is based on web crawlers, online payment data, and other factors. A single channel or payment method may not reflect the overall business situation. The bank believes that the company emphasizes the importance of offline shopping scenes, focuses on store operations and consumer experience, and the growth rate of online revenue may be affected by the company's balanced channel and inventory strategies, with overall business growth expected to exceed expectations. Additionally, based on the in-depth report "Overseas IP Group Reviewing POP MART's Growth Potential" released by the bank in August 2025, the prices of Gundam figures under Bandai often fluctuate, but this does not hinder the long-term growth of IPs, and appropriate supply and demand balance restoration can help protect the long-term value of IPs. The bank believes that under POP MART's direct sales channels and flexible supply chain system, the adjustment of prices and supply and demand can be more flexible, focusing on long-term operations to greatly maintain the value of IPs. The performance of new IPs is impressive, and the platform value of the company's strong IP operation capabilities and high growth sustainability is promising. The company's growth does not rely solely on the labubu IP, and other IPs have also performed well. In the first half of 2025, the revenues of the top 5 IPs exceeded 1 billion yuan, and the revenues of 13 IPs exceeded 100 million yuan. Among them, THEMONSTERS, MOLLY, SKULLPANDA, CRYBABY, DIMOO had revenues of 4.81/1.36/1.22/1.22/1.11 billion yuan, with year-on-year growth rates of +668.0%, +73.5%, +112.4%, +248.7%, and +192.5% respectively. Star People is one of the fastest growing new IPs, achieving revenue of 390 million yuan in the first half of 2025. After the success of labubu, the company has launched the "All-Star" series (multiple IPs series) products multiple times, increasing the exposure of other IPs and enhancing cross-selling between IPs. The "Halloween" and "Chinese New Year Horsepower Fully Open" resin series products have achieved good sales performance. According to Interface News, the newly launched "PUCKY Knock Knock Series" plush pendant blind box, which can make a crisp wooden fish sound with a light tap, has been jokingly called "electronic wooden fish" by netizens. It swept through social networks in just a few days, with the official website sold out and resale prices doubled. The company continues to attract top IP artists, ensuring a constant stream of design inspiration. At the same time, the company has systematic IP operation, product development, and flexible supply chain capabilities. The bank is optimistic about the company's product strength consistently leading the market, continuously incubating high commercial value IP images. Collectibles are an excellent platform for expressing emotions and advocating individuality. The bank is optimistic about the sustained high prosperity of the collectibles sector in the emotional consumption era. According to the "2025 Z Generation Emotional Consumption Report," from the current consumer attitudes of young people, the proportion of people choosing "happy consumption, paying for emotional value/interests" is 56.3%, an increase of 16.2 percentage points from 2024. The bank believes that the marginal tendency of emotional consumption by young people, who mainly seek to express their personalities and please themselves, will continue to strengthen. Collectibles are an excellent platform for expressing emotions and advocating individuality (with low consumption thresholds and fashionable attributes). According to commercial retail finance reports, the collectibles industry in China is expected to reach a billion yuan scale in 2025, and the bank is optimistic about the sustained high prosperity of the collectibles sector in the era of emotional consumption. Investment Recommendation: Combining the performance on the revenue side in the first three quarters, the bank has raised its previous profit forecasts. It is expected that the revenue for 2025-2027 will be 38.384/52.768/65.698 billion yuan (previously forecast as 30.801/42.786/55.314 billion yuan), with net profit attributable to shareholders being 13.291/18.599/23.91 billion yuan (previously forecast as 10.667/15.225/20.381 billion yuan), and EPS being 9.91/13.86/17.82 yuan (previously forecast as 7.94/11.34/15.18 yuan). The latest stock price (closing price on January 22nd is 206 Hong Kong dollars/exchange rate 1HKD=0.91CNY) corresponds to PE ratios of 19/14/11X, and the rating has been upgraded from "hold" to "buy". Risk Warning: Increased industry competition, overseas expansion falling short of expectations, and new business expansion falling short of expectations.