According to Zhixin Finance APP, Guosen Securities released a research report stating that they are bullish on the category expansion effectiveness and overseas growth potential of the leading collectible toy brand, maintaining a "buy" rating for Pop Mart (09992). Due to the accelerated growth of the company's Southeast Asian revenue in the third quarter driving profit margin improvement, profit forecasts have been revised upward, predicting adjusted net income for 2024-2026 to be 2.61/3.51/4.24 billion yuan, representing a year-on-year growth of 141%/35%/21%. The company's top IP continues to perform strongly, with a stable pace of new product launches, and its IP creation and operation capabilities being consistently verified; furthermore, the company's overseas market continues to experience rapid growth, becoming a new growth driver.

Guosen Securities' main points are as follows:

Company Overview: The company is the largest and fastest-growing enterprise in the collectible toy industry.

Pop Mart focuses on IP, layout across the entire industry chain, with continuous improvement in operational levels and consumer reach capabilities, as well as a good brand reputation and recognition. Starting in 2021, the company began laying out overseas channels, with significant success in its international expansion, consistently showing phenomenal annual revenue growth. As of the first half of 2024, overseas revenue accounts for nearly 30%, with stores opened in more than 20 countries/regions.

Industry Overview: The market size of the collectible toy industry in China is 60 billion yuan, with Pop Mart holding the top market share.

Collectible toys are toys with IP and trendy attributes, primarily consumed by a young demographic under 40 with certain purchasing power, capable of meeting consumers' social and emotional needs. The collectible toy industry has developed rapidly, with the industry size growing from 6.8 billion yuan in 2015 to 60 billion yuan in 2023, achieving an average annual compound growth rate of over 30%. In terms of competitive landscape, Pop Mart holds an 8.5% market share, ranking first in China's collectible toy industry.

Business Introduction: The company's IP development, IP operation, product manufacturing, supply chain, channel establishment, and membership operation capabilities are leading.

1) IP as the core barrier: The company has formed a huge IP matrix, with core IPs (SKULLPANDA, MOLLY, DIMOO, THEMONSTERS) growing alternately and having long life cycles, with the proportion of self-owned IP continuously increasing; 2) Clear development process and strong IP incubation ability: The company has strong IP incubation capability, a clear product development process, and is relatively restrained in the product launch rhythm, resulting in a high success rate of IP incubation; 3) Comprehensive channel layout reaching consumers, strong membership operation capabilities: The company has established a comprehensive coverage of online and offline channels, with memberships reaching 38.93 million in the first half of 2024, contributing over 90% of sales, and roughly 45% member repurchase rate, indicating strong loyalty. 4) Strong product manufacturing capabilities, and a flexible supply chain achieving dynamic balance of supply and demand.

Growth drivers: High success rate of IP commercialization on the product side and smooth category expansion, while on the channel side, same-store growth is rapid domestically, and there is ample space for opening stores overseas.

1) High success rate of IP commercialization, strong monetization. 2) Smooth advancement of category expansion strategy. In recent years, the company has expanded into categories such as games, amusement parks, plush toys, building blocks, and cards, with very positive feedback. Games and amusement parks enhance interaction between fans and IPs, while plush toys, building blocks, and cards enrich product forms and expand price ranges, resulting in rapid same-store growth. 3) From the channel side, the efficiency of offline same-store sales has benefited from the category expansion strategy and has seen rapid improvement, with plenty of room for overseas store openings. 4) Overseas revenue showing phenomenal growth, successful cultural expansion abroad, with ample overseas store opening potential.