Since the fourth quarter, the company has continued to grow at a high pace. The domestic market continues to have strong omnichannel performance, driven by popular new IP products and vinyl fleece sales; in overseas markets, Southeast Asia continues to be popular, European and American market expansion is progressing rapidly, and trends in peak season sales, fan expansion, and brand breakthroughs are expected to further drive valuation increases. We are optimistic about the company's strong growth performance in Q4 and next year, as well as the prospects for growing into a leading world-class trendy brand in the medium to long term, and maintain a “buy” rating.

Domestic emotional value/IP consumer demand is strong, and hot new products and plush volume are expected to drive high growth in Q4

The domestic trendy game market continues to be booming. According to Jiuqian data, the four mainstream trendy game categories of blind boxes, models, anime game peripherals, and board games were summarized. In October, Tmall, JD+ Douyin GMV also increased 59% (vs Q1-Q 37%/56%/39%). On the product side, new products such as Molly Bread Head and SP Christmas models have been very popular since Q4, and vinyl plush has spread to more IPs and achieved good performance. By channel, online channels continued to grow significantly, with Tmall Guanqi's sales exceeding 100 million yuan during the Double Eleven period. According to Jiuqian data, offline retail stores grew 20% + in October, and we expect that strong performance will continue as consumption gradually recovers.

Thailand's phenomenal popularity is replicating to more Southeast Asian countries, and sales in Europe and the US are showing impressive growth during peak season

Overseas stores have continued at a faster pace, and about 30 new stores have been opened since H2 (30-40 new stores were added in the interim report guideline H2). Looking at the subregion, Southeast Asia is expected to continue its high store efficiency performance. The three-story Siam Square store in Thailand opened in October, and the store efficiency was close to Thailand's level after the first Indonesian store opened in July, and queuing has been normalized since the first store opened in November; the peak season in Europe and the US is obvious. According to FastMoss, the sales volume of the company's US TikTok Shop exceeded 15 million US dollars from November 1 to 25, +85% compared to October. The company launched themed products such as Halloween themes and SP Christmas lift cards, which are expected to further improve the efficiency of European and American stores.

Overseas localization operations and fan development continue to deepen, driving brand awareness to break the circle

As of mid-November, the company had nearly 7 million overseas fans, an increase of 280% + since the beginning of the year. Looking at the subregion, in April-October, the number of fans in the US, Vietnam, Malaysia, and Indonesia was +43%/60%/51%/22%. The exit effect was obvious, and marketing capabilities such as IP story transmission, local element integration, and live streaming talent cooperation improved rapidly. In November, Lisa was interviewed by the US “Vanity Fair” to once again promote Bubble Mart. Dimoo was invited as the official IP image for the establishment of diplomatic relations between China and Thailand to further accelerate the company's expansion of popularity and fan base.

Profit forecasting and valuation

We maintained the company's 24-26 adjusted net profit of 2.86/3.85/4.81 billion yuan. We believe that the company is more comparable to mature IP operators at home and abroad. International companies chose Disney, Sanrio, and China chose Optical Media and Aofei Entertainment. According to Bloomberg, the median PE value of comparable companies in 2025 is 31x.

In the current environment where the pace of consumption recovery is still uncertain, Bubble Mart continues to achieve strong growth in performance. Considering that the company relied on high growth and full value chain layout barriers, it was given a 25-year 34x adjusted PE (previous value 25x), with a target price of HK$105 (previous value HK$80), maintaining a “buy” rating.

Risk warning: Overseas macro-uncertainty, the pace of overseas expansion is slowing down, and new business development falls short of expectations.