Key points of investment
The advanced path of Mingchuang Premium's IP co-branding
1) Mingchuang Premium began experimenting with IP co-branding as early as 2016. From the Marvel co-name that appeared in 2019, to the NBA co-name in 2021, the co-name of Kuromi and Loopy in 2023, and the Chiikawa joint name this year, the company has developed all the way to today, and has established the image of an IP “co-famous boss” in the minds of many consumers. As early as '21, it had 42 million members, including more than 30 million active consumer members, which is no less than Bubble Mart, which is known for its fan stickiness (the latter had accumulated over 34 million registered members by the end of 23).
2) We believe that Mingchuang Premium has established corresponding barriers and advantages on the IP co-branded circuit, gradually widening the gap with other brands. In fact, the company has proven its IP operation and management capabilities to the market many times through frequent co-branding events. Among them, the most representative ones in the past year are the Barbie Co-Names and Chiikawa Co-brands: the Barbie product was released in 5 days, and nearly half of the categories were sold out; the Chiikawa pop-up store had sales performance of 2.68 million in 10 hours, with sales performance exceeding 8 million yuan in 3 days. If one success is a coincidence, then many successes are a reflection of the company's ability to steadily export IP development and operation.
Mingchuang Premium's IP co-brand style of play
We believe that Mingchuang Premium is already proficient in a complete set of IP co-branding games, which are summarized in four aspects:
① Search for global hot spots and cooperate with top IPs. Benefiting from the advantage of scale, when facing cooperation with major international IP licensors, Mingchuang Premium has enough bargaining chips, making it easier to win top IP licenses, or the preference for more categories of licenses or more gallery resources (affecting the effects of product development).
② Use social media to create momentum and turn popularity into performance. During the IP co-branding period, the company raised the popularity of social media discussions and maximized marketing promotion effects through KOL cooperation and private domain operations.
③ Create supporting scenes from point to point. After accumulating a high level of traffic and attention, open individual stores, then quickly spread successful experiences (including product portfolios) to stores across the country, and cooperate to create IP-themed shopping scenarios and check in devices to help increase conversion rates.
④ Instant retail empowerment to expand online traffic. Online order+offline store delivery, with the fastest delivery in 30 minutes, not only optimally allocates inventory at each store, but also broadens customer flow coverage. Online and offline shopping needs are explored and satisfied as much as possible.
It is worth mentioning that Mingchuang Premium does not bet on a single IP, but instead maintains brand exposure and customer flow through high-frequency updates, which is the logic of high turnover. Therefore, the company is less affected by fluctuations in the popularity of individual IPs, and its performance is more stable.
Be the world's number one IP design retail group
We believe in long-term principles and are optimistic about the company's long-term growth. On Investor Day in January of this year, the company proposed that Mingchuang Premium would become “the world's number one IP design retail group”. In the past, the company has used data to prove the results of the IP strategy: the number of IP partnerships increased from 17 in 20 to 80 in 23; the share of overseas IP products increased to 40% + in 23; and the share of IP products in China reached 33.8% in February '24. In the future, we look forward to seeing the company achieve the goal of 50% + IP in 28 and a compound revenue growth rate of 20% + in 24-28.
Profit forecasting and valuation
We expect 2024-2025 natural year revenue of 174.214 billion, +25.9% and +22.6% year-on-year. Its revenue in China was +16.8% and +10.9% YoY, while overseas revenue was +38.2% and +37.4% YoY. The adjusted net profit is estimated at $30.0 billion and $3.72 billion, +27.2% and +24.0% year over year. As of April 25, the corresponding PE for 24 calendar years was 17X, maintaining a “buy” rating.
Risk warning
Risk of increased tariffs, geopolitical risk, and risk of IP sales falling short of expectations.