On Xianyu, many young people bid 99.9999 million yuan for hidden models such as Pop Mart International Dimoo and Labubu. Although the list price is not the final transaction price, which has a more display and social meaning, it is also enough to reflect the popularity of Pop Mart International's blind box and its unique position in the hearts of young people.

As it can bring irreplaceable spiritual enjoyment to consumers, the fanaticism of Pop Mart International's blind box is extending from the consumer market to the capital market.

Since its listing in December 2020, the stock price has jumped all the way, with the highest market capitalization exceeding HK $100 billion and a price-to-earnings ratio of more than 200 times, making Pop Mart International known as the Maotai of the fashion game world. With Pop Mart International's high valuation, the whole tide-playing industry expanded rapidly, players poured in one after another, capital continued to bet, and quickly entered the warring States era.

However, Pop Mart International has failed to continue the legend of high growth. As of March 30, Pop Mart International's share price was at HK $60.30. From its post-IPO high of HK $107.6 to now, the share price has fallen by nearly 50%, and its market value has evaporated by more than HK $70 billion, which means that the capital market has begun to treat Pop Mart International calmly and rationally. Share prices rebounded slightly after the March 26 results, but they are still a long way from the hundreds of billions of market capitalization of their glory days.

Capital is no longer loving, is the Pop Mart International myth known as "post-00 Maotai" shattered?

Sell 50 million + tide play, offline contribution needs to be strengthened.

Spread out Pop Mart International's first financial report after listing, the annual revenue was 2.513 billion yuan, an increase of 49.3% over the same period last year, the adjusted net profit was 590 million yuan, and more than 50 million trendy toys were sold.

But it is worth noting that revenue growth has almost fallen off a cliff. Pop Mart International's total revenue growth rate in 2018, 2019 and 2020 was 225.5%, 227.2% and 49.3% respectively.

From the point of view of the specific channels that contribute to revenue, the revenue of online channels was 539 million in 2019 and 952 million in 2020, with a revenue growth rate of 76.5%. Compared with 39.9% of retail revenue, revenue from online channels is nearly the same as that of offline retail stores.

In terms of online revenue, 49 per cent of online revenue comes from box extractors, 42.7 per cent from Tmall flagship stores, and other e-commerce platforms such as JD.com flagship stores and fun contribute a small amount of revenue. Over the past year, revenue from both the box extractor and Tmall's flagship store has increased by more than 60 per cent as Pop Mart International has stepped up its online layout and marketing. However, the private e-commerce platform that is favored at the time of listing is interesting, and the relevant data are not disclosed in the financial report, and the trendy play community created by Pop Mart International may be mediocre.

Bubble Matt's online income mainly comes from Tmall's flagship store and box extractor Mini Program. Although box extractor Mini Program simulates the offline purchase of blind boxes and sets up various interactive games, its essence is nothing more than promotion. there is still a long way to go to build a real tide play cultural community. Although the interesting Chao play community created by Pop Mart International has set up columns such as "artist" and "changing child" to increase user stickiness and interaction, it is difficult to drive users to create content, the community is not active, and the income from selling products through the community is not good.

In contrast to the high growth online, the offline income increase is not ideal. The number of new stores opened in 2020 increased by 66.7%, expanding rapidly, but retail revenue increased by only 35.5%, of which robot stores in first-tier cities increased by nearly 50%, but total revenue fell from 120 million yuan in 2019 to 119 million yuan in 2020. The offline robot store that is trying to expand may be going in the wrong direction.

Offline income growth is slowing, but the market for offline retail stores is still anxious. For the fashion play industry, the toy display and shopping atmosphere in offline stores can stimulate young people's desire for consumption and give consumers a richer emotional experience. Pop Mart International's competitors naturally will not miss the opportunity to expand.

There are more than 200 stores offline, and groceries have launched various series of blind boxes. At present, there are more than 200 stores offline. MINISO Group, who has more than 2000 stores in the country, has also aimed at the opportunity of the blind box market and launched his own brand "TOPTOY". Opponents to capture the city and land, Pop Mart International is not easy, there are only less than 200 stores in the past five years, how to enhance offline income, is an important problem that we have to face.

The ace is off, and IP is having a teenage meal?

The "key girl" of the Pao Bao Matt family is Molly. In the beginning, it was Pop Mart International who turned losses into profits with the help of the Molly image designed by Hong Kong designer Wang Xinming, and even helped him to walk into the blind box.

And the core competitiveness of Chao play is to do IP, founder Wang Ning once said, "Pop Mart International wants to be the record company of this era." I hope every IP will become an enduring explosive like Jay Chou and Faye Wong. "therefore, this has also formed Pop Mart International's IP operation model, the designer concentrates on building IP, and Pop Mart International is responsible for everything else, including incubation, building supply chain, marketing, marketing and sales.

Take Maotai as an example, although in addition to 53 degrees Feitian Maotai, there are many series of vintages, but Feitian is an enduring leading product of Maotai, and a bottle is hard to get. On the contrary, Pop Mart International, do you have a product that can be played like this?

According to the 2020 financial report data, the sales volume of Molly this year is still considerable, reaching 357 million Hong Kong dollars, accounting for 14.2%. It is still Pop Mart International's leading flower, but it is worth noting that this figure is much lower than the HK $456 million at the end of 2019. In the case of total revenue growth, the leading ace products not only did not grow, but also showed a big step back.

For a long time, Molly has contributed a large share of revenue to Pop Mart International. From 2017 to 2019, the operating income of the Molly series was 41.019 million yuan, 214 million yuan and 456 million yuan respectively, accounting for 26.3%, 42.6% and 27.4% of the total revenue, respectively. But now, Pop Mart International's enduring IP seems to be far from being formed, and the distance from "evergreen" is even more hindered and long.

With the decline in the proportion of IP revenue, the vitality of IP is not long enough, and it needs to be iterated constantly to meet the market. Pop Mart International can only keep looking for new IP. According to the financial report, the intangible assets of Bubble Matt's newly licensed IP increased by 70 million in 2020, up from 18.6 million the previous year.

For the attribute of "fashion play is that designers can create hot dolls", there is a lot of uncertainty and cost in self-developed IP.

After signing a contract with Wang Xinming, the designer of Molly in 2016, Pop Mart International paid a fixed annual fee and design fee according to sales, while Wang Xinming paid 3.45 million yuan for a 2 per cent stake in Pop Mart International in June 2019. In fact, even according to Pop Mart International's valuation of 2 billion when he delisted from the new third board, the equity value of that 2 per cent is more than 170 million.

Only 3.45 million to sell the value of 170 million shares, behind the big IP designer has a very high voice, but also Pop Mart International has to make a compromise. Last year, the designer continued to storm, many veteran players have retreated to boycott, and financial reports on the substantial reduction in Molly sales, this deal is a bit "at a loss."

On the other hand, the function of self-hematopoiesis has not yet been formed. Except for Molly and DImmo, Pop Mart International's other tail IP is still in the diving stage, and the income of the other two self-owned IP adds up to only more than 10 million. In addition, in order to create the next popular style similar to Molly, Pop Mart International keeps a group of trendy designers, while at present, the original IP of the internal designer team generates less income, just over Rmb100m.

It is also worth noting that according to the 2020 financial report, Pop Mart International's exclusive IP income increased by 19.2%, but the non-exclusive income increased even more, reaching 178.1%. The proportion of total revenue increased from 9% in 2019 to 17.7%, together with other consignment sales accounting for 14.6%. In other words, Pop Mart International's total revenue has nothing to do with his own family, and the income of "second-street dealers" alone accounts for more than 30%.

This also seems to show that it is not easy to create an IP, and it is more cost-effective to acquire an IP with high profile and user loyalty. In 2020, Pop Mart International cooperated with the world-renowned IP to launch Harry Potter, Naruto and other series, which already have a complete world and human IP. After years or even decades of story accumulation, they have accumulated a group of loyal fans. "Harry Potter Wizarding World Series" sales reached 76 million yuan, "sitting Family 2-Princess Walt Disney Company" series sales reached 52 million yuan. Rather than an exclusive licensing partnership, it means that this is a business that everyone can do.

Pop Mart International, whether to continue to find a new IP on the road, or also began to tell stories for the dolls, this is a question to be solved.

Up or down, where to find the next batch of young people?

"I used to go to the pit (playing with blind boxes) and spent hundreds of dollars on average every month. Later, I felt that I had no motivation to persist, so I left a few hidden money, and the others were sold on Xianyu and pulled out of the pit. Then I became addicted to drawing cards, which was more than a few hundred a month old. later, I started playing with my classmates to make their own babies (buying handmade materials and DIY). Anyway, I didn't save this money. Later, I found out that it doesn't matter what I want to buy, "XPeng Inc., a college student in Shanghai, told Tech Planet.

XPeng Inc. 's choice reflects a trend among young people. The blind box just cuts into the sensitive nerves of young people, but it is hard to say whether it will last long.

However, as long as the market share is large enough, even for flowing young people, trendy business is an iron mill.

Bandai has always been the leading company in the Japanese tide game market, with a market share of 62% in 2015. Although competitors have increased and Bandai's market share has decreased in recent years, it still accounts for 57.5% in 2019. It is in this way that Japan, where animation IP changes so frequently, has gone through 70 years.

For Pop Mart International, although it is now the first trendy listed company, it is not easy to keep its leading position.

According to the statistics of Rooster Sullivan's research report in 2019, Pop Mart International's market share is 8.5%, while the market share of the last four is 7.7%, 3.3%, 1.7% and 1.6%, respectively. The whole tide play industry has not yet formed a large aggregation effect, oligopoly advantage has not yet been formed, and the gap between Pop Mart International and the second place is only 0.8%, can only be said to be temporarily sitting on the throne.

Whether to continue upward, seize the higher-end market, anchor people with higher unit prices, or continue to go down to the second and third lines or even more sinking markets to seek opportunities is the fork in front of Pop Mart International.

Looking up, realizing that tide play is a blue ocean with high growth rate and high gross profit, the giants took the lead in trying: Youku launched a series of blind boxes for rural love; Bilibili Inc. acquired the tide play derivatives company ACTOYS in 2020, and originally directly cut into the overseas animation IP market by virtue of the two-dimensional advantage; in early 2021, Tencent also launched "Ooh APP", involving the tide play business; Baidu, Inc. also created a tide play project "Hot Wave play" to seize the tide play market.

And downwards, Pop Mart International also has stronger competitors. MINISO Group, who also takes a fancy to the business of Blind Box, chooses to open up another way. TOPTOY is co-signed with Walt Disney Company and Marvel to create trendy explosive products. One of MINISO Group's major advantages lies in the channel. As of Q2 in 2020, MINISO Group has a total of 4222 stores around the world, of which there are more than 2500 in more than 300 cities in China, and adhering to the always pursuit of the ultimate cost-effective way of playing, the price is set at RMB29.939 ~ RMB39.9. only half of Pop Mart International.

In terms of speed, although MINISO Group's TOPTOY only joined the bureau in November 2019, it is advertised to open more than 100 stores this year, which will soon catch up with Pop Mart International, who has 187 stores in five years.

Judging from the financial results, Pop Mart International did choose a more sinking market. According to the financial report, 47.52% of the growth of stores in offline channels is contributed by second-tier and below cities, while 65.21% of the new revenue of robot stores is provided by second-tier and below.

Before we tell the story of "China Walt Disney Company", we still have to look at Pop Mart International from the perspective of retail. Among them, the key indicator for retail is the inventory cycle. From 2017 to 2019, Pop Mart International's inventory turnover days were 49 days, 46 days and 46 days respectively. Compared with their peers, Popoma is lower than Alpha Animation & Culture, Meisheng Culture and TAKARA.

This is one of the reasons for the high valuation of the market at the beginning of the listing, and the low inventory turnover reflects the company's ability to regularly monitor inventory levels, reasonably forecast sales and control inventory.

However, this indicator changed in the 2020 financial report, from 46 days in 2019 to 78 days in 2020. This means that Pop Mart International's efficiency of making money has become slower.

While the opponent did not slow down, an investor in the fashion play project told Tech that under the influence of Pop Mart International's high valuation, competitors emerged, many of which raised new money and adopted a more radical style of play. "where Pop Mart International opened a shop, I opened a shop, and even won a store better than Pop Mart International's position." This also virtually increases Pop Mart International's expansion costs.

Entering the second and third tier and sinking market, can we replicate the ping effect of the stores in the first-tier cities of "North Shanghai, Guangzhou and Shenzhen"? In the face of many competitors entering the trend and competing for food with them in different dimensions, how can Pop Mart International really sit firmly in the "top spot"? Only after solving these problems can we really build high barriers and enjoy the high gross margin and high brand premium brought by the moat.

Judging from the current situation, it is still too early to say that Pop Mart International's bubble is the Maotai of young people in the fashion game world.