Recently, Morgan Stanley released the latest research report, raising the target price of Bubble Mart (09992) from HK$32 to HK$38, which means that the current stock price still has room to rise by 35%. The report indicates that Bubble Mart products are relatively affordable and can benefit from the “lipstick economy” effect, and the company is expected to maintain strong profit strength in 2024. Furthermore, sales and profit are expected to increase by 31% and 32%, respectively, in fiscal year 2024, based on the projected price-earnings ratio of 30 times in 2024.

As Bubble Mart continues to increase the layout of overseas stores and new business revenue increases, Morgan Stanley is optimistic about Bubble Mart's profit growth, and it is expected that its operating profit margin will further increase under the scale effect and DTC business model (direct to consumer business model).

As far as business is concerned, Damo believes that Bubble Mart's IP-centered business model has a strong driving force in creating new TAM (usable market size), which will bring the company a larger total market volume and a longer term development path.

Currently, Bubble Mart is trying to establish a game business and is expected to launch a social simulation game in the first half of this year. According to the report, the game can be used to test the market preferences of the new IP, which may bring in a small amount of revenue from in-game purchase services and increase the company's IP value. The initial performance is expected to be good.

Damo believes that under the impetus of continued overseas expansion and new business, Bubble Mart's stock price is expected to rebound for a second wave after the recent rise, and the profit curve is expected to enter the fast track within the next 1-2 years.