Key points of investment
Is Mingchuang Premium the next potentially hot IP?
On March 16, Mingchuang Premium officially announced that it will launch a blockbuster IP, Chiikawa co-branded product, on March 29 at Joy City, Shanghai. Just 2 hours after the official announcement, Official WeChat received over 100,000 likes, and sparked great enthusiasm for discussion among fans.
Just how popular is Chiikawa?
1) Chiikawa is a Japanese manga created in 2020. In 2022, it was adapted into an anime of the same name, and it overtook classic hit IPs such as Mario to win the Japanese Character of the Year Award, and remained very popular.
2) The current popularity of Chiikawa has spread rapidly in Japan and South Korea. Sanrio, Coca Cola, Uniqlo, McDonald's, etc. have all collaborated with Chiikawa. Chiikawa can be seen everywhere in aquariums, Japanese trains, daily necessities, variety shows, etc., and it is a well-deserved national IP.
3) The popularity of Chiikawa was also quickly reflected in the popularity of surrounding products. In Japan, offline stores are popular, and there are long queues in many places, and prices in the second-hand market are rising accordingly. Looking at China, the Chiikawa trend has rapidly spread domestically, and young people who can't buy from the surrounding area are looking for Japanese agents to buy at a higher price. On March 16, on the day that Mingchuang Premium officially announced the new Chiikawa at the end of the month, there were already many proxy buyers on platforms such as Leisure Fish and Xiaohongshu, which added a proxy purchase fee of about 10%. On March 14, before the company officially announced the new date, it already attracted consumer attention. On that day, the “Mingchuang Premium” WeChat Index increased +379% month-on-month. As of March 16, there were 860,000+ notes about Chiikawa on Xiaohongshu. As the new day approaches, the popularity is expected to continue to ferment.
Why is Chiikawa popular all over China, Japan, and South Korea?
Chiikawa's popularity was not only due to the character's cute appearance, but also because it is highly compatible with the current mentality of migrant workers. This is similar to the popularity of Barbie and Loopy in '23. Young people need resonance, need expression, and are very willing to pay for the emotional value behind the product. If Barbie represents the ideal state of young people: confident and sophisticated, and being their own big heroine, then Loopy and Chiikawa are more like spiritual comfort for young people in their daily lives.
Adhere to the super IP strategy and become the world's number one IP design retail group 1) The IP strategy is inseparable from the outstanding performance of Mingchuang Premium, and is one of the company's core driving forces. Founder Ye Guofu proposed the “interest consumption” trend for the first time in the industry in 2020; officially launched a global brand strategy upgrade in February 2023, focusing on super IP, super categories, super users, and super destinations to build a super brand; established the company's long-term vision on Investor Day in January 2024: to become the world's number one IP design retail group.
Mingchuang Premium has established partnerships with more than 80 IPs around the world, leading peers in IP asset reserves. 2) The IP co-branding strategy has been tried and tested, and past sales performance has exceeded expectations. Since MINISO x Marvel came out in 2019, Mingchuang Premium has embarked on the fast track of IP co-branding. In 2021-2023, it has successively created a series of popular products such as the NBA Co-Name, Strawberry Bears Co-Name, Coulomy Co-Name, Barbie Co-Brand, and Loopy Co-Brand. Take the Barbie collaboration in '23 as an example. It's only been on the market for a week, and the sales rate of all Barbie categories is as high as 50%. Many consumers are eagerly awaiting this Chiikawa co-branded product, and the sales performance is worth looking forward to.
3) Analysis of the reasons for the success of the IP joint name: ① Select mature IPs from around the world, or potential IPs that have been verified in other markets (for example, Chiikawa, which is about to launch a new top IP). ② Good at creating an IP-themed shopping environment, rich SKUs and check-in devices create an immersive shopping experience and stimulate impulsive spending. ③ With supply chain and scale advantages, the price of MINISO's genuine authorized IP products is only 1/3 or even lower than that of the IP licensor, so that young people can enter the store to spend without the burden.
Profit forecasting and valuation
We believe that the launch of this major IP will significantly drive sales growth, and the second quarter results are expected to exceed expectations.
The estimated annual revenue for 2024-2025 is 174.212 billion, +26% and +21.3% year-on-year. Its revenue in China was +18.3%, +12.3% YoY, while overseas revenue was +37.5% and +32.1% YoY. The adjusted net profit is estimated at $30.4 billion and $3.73 billion, +29% and +22.7% year over year. As of March 15, the corresponding PE for 24 was about 14.5X. We gave the company a 20-fold valuation for 24, and the corresponding market capitalization space for March 15, 24 was about 38%.
Risk warning
Risk of increased tariffs, geopolitical risk, and risk of IP sales falling short of expectations.