Incident: The company announced the operating results for the first quarter of 2024. The overall revenue of 2024Q1 was +40 to 45% year on year, including revenue from mainland China +20 to 25% year on year, and revenue from Hong Kong, Macao, Taiwan and overseas +245 to 250% year over year.
The domestic channel situation is as follows: ① retail stores +20-25%; ② robot stores +15-20%; ③ boxers +0-5%; ④ e-commerce and other online platforms +20-25% year over year, including Douyin flagship stores +95-100% and Tmall flagship stores +0-5% year over year; ⑤ wholesale and other channels +50-55% year over year.
Domestic: Joint name+expansion of categories to accelerate IP to further break the circle. On the joint name side, on April 3, 2024, Bubble Mart DIMOO and Uniqlo co-branded series went on sale. If you meet the conditions, you can get a limited number of co-branded figures, triggering a “night line” phenomenon in Shanghai, Xiamen, Guangzhou and other places. In April, Labubu and Lucky jointly launched stickers, cup holders, paper bags and theme stores. With Lucky's more than 16,000 stores nationwide, it is expected to quickly reach more potential customers. In terms of new products, on April 11, the Labubu Spring Home series of vinyl plush dolls was sold online. It was popular in the market. It continues to verify the popularity of the Labubu plush category. With supply chain optimization and the gradual resolution of long-term outages, the plush category can be expected to grow. At the same time, the company continues to explore IP potential and enable the release of new categories of building blocks.
Overseas: Top class delivery+store expansion to promote rapid increase in sales. Recently, Lisa, a top Thai star and a member of the Korean girl group Blackpink, frequently brought Labubu on her personal social networking platform (with about 100 million fans), helping Bubble Mart's influence in Thai and overseas markets. By the end of '23, the company had a total of 80 overseas stores, and is expected to add 50-60 in '24, and gradually expand into Indonesia, Vietnam, and the Philippines, which are the most populous countries in Southeast Asia. At the same time, the company helps overseas designers incubate IP, such as Crybaby in Thailand and Peach Riot in the US, to find and design products and series that are more suitable for overseas markets, and the overseas business is expected to continue to expand rapidly.
Profit forecast and rating: We are optimistic that the company will first release its IP and operate the entire industry chain. The product matrix continues to expand, and the rapid development of overseas business opens up room for growth. The company's net profit for 2024-2026 is estimated to be 1,457 billion yuan, 1,857 billion yuan, and 2,296 billion yuan respectively. The corresponding PE is 28x/22x/18x, maintaining the “recommended” rating.
Risk warning: industry competition intensifies; terminal demand falls short of expectations; overseas market expansion falls short of expectations, etc.