Event: Bubble Mart released operating data for the first quarter of 2024:2024Q1's overall revenue increased by 40%-45% year on year. Among them, revenue in mainland China increased 20% to 25% year on year, and revenue from Hong Kong, Macao, Taiwan and overseas increased 245%-250% year on year.
Domestic and offline channels are heating up, and Douyin continues to grow at a high rate. On the offline side, 2024Q1 retail store/robot store/wholesale and other channels (including paradise) revenue increased by 20%-25%/15%-20%/50%-55%, respectively. On the online side, revenue from the 2024Q1 drawer applet increased by 0% to 5% year on year, and there was some recovery (23Q1 fell 40%-45%). E-commerce channels increased 20%-25% year over year. Among them, Douyin sales continued to increase by 95%-100% year on year, and Douyin's share of online channel revenue increased from 2.9% in 2022 to 16.6% in 2023; the Tmall channel was under pressure in '23, but it stopped falling in December '23 and recovered to 10% year on year, with a slight increase of 0%-5% year over year in 24Q1 (down 40%-45% year on year in 23Q1). By the end of 2023, the number of domestic retail stores/robot stores reached 363/2190 respectively, an increase of 34/123 over the end of the previous year.
Overseas “reinvent bubble marts”, and Southeast Asia may become an emerging growth point. The company's overseas business continues to advance DTC's development strategy. In 2023, Hong Kong, Macao, Taiwan and overseas business revenue reached 1,066 billion yuan, a year-on-year growth rate of 134.9%; in 2023, the gross profit margin of overseas business was 64.9%, higher than the domestic market's 60.6%. By the end of 2023, there were 80/159 stores/robot stores (including joint ventures) in Hong Kong, Macau, Taiwan and overseas. 2024Q1 sales in Hong Kong, Macao, Taiwan and overseas continued to grow at a high rate of 245%-250% year-on-year. By region, the East Asian market (China, Hong Kong, Macao, Taiwan, Japan and South Korea) already accounts for half of overseas business: East Asia is the overseas market where the company has been entering the longest, and the number of offline stores reached 43 by the end of 2023. The Southeast Asian market has shown strong potential for development. By the end of 2023, the number of offline stores had reached 15. Wen Deyi, president of the company's international business, revealed that Bubble Mart will further expand into Indonesia, the Philippines, Vietnam and other countries in 2024. Continuing to promote localization to optimize production costs, as of January 2024, the company has completed the first batch of product production at its overseas factory in Vietnam to promote the optimization of overall procurement costs; Bubble Mart Chief Operating Officer Si De expects the company to produce more than 10% of its products from overseas factories in 2024.
Upgrade the business structure and build a comprehensive operating platform covering the entire Chaowan IP industry chain. The company continues to create popular models from a product perspective. In 24Q1, MOLLY, SKULLPANDA, etc. all launched new series, and 28 new products were released in April alone. At the same time, the company enriches the commercial ecosystem framework through emerging businesses such as parks and games. In September 2023, “Bubble Mart City Park” officially opened in Chaoyang, Beijing. The strategic significance of the park business is to feed back IP. Doll shows and scene construction in the park can present the IP image more fully and vividly; at the same time, emerging business formats such as restaurants, desserts, and children's entertainment in the park can be tested and incubated, and then expanded to shopping malls or shopping centers. On March 15, '24, omni-channel pre-orders for the company's first simulated management game, “Dream Home”, began. Of these, the number of TapTap reservations reached 230,000, which is expected to increase the company. The net profit for 24-26 is estimated to be 14.4/19.6/2.35 billion yuan, and the PE valuation is 30X/22X/18X, maintaining the “recommended” rating.
Risk warning: The risk that market demand falls short of expectations, new product promotion falls short of expectations, and industry competition intensifies.