Morgan Stanley remains optimistic about Pop Mart International Group’s stock despite a 10% drop, seeing it as a buying opportunity due to the toymaker’s strong growth prospects driven by popular new product launches.
While store queues and resale prices have eased, this does not indicate weaker demand, as most of Pop Mart’s products are mass-market rather than limited editions, the U.S. bank said in a recent report, as cited by Singapore-based investment platform Moomoo.
 |
|
Various Labubu soft toys from Pop Mart. Labubu dolls are a creation of Dutch-Hong Kong designer Kasing Lung and wildly popular among youth and children. Photo by ANP via AFP |
In addition to the globally popular Labubu, emerging product lines such as Crybaby and Twinkle Twinkle have also shown strong performance, with the potential to become the next top-tier toys.
Pop Mart’s direct-to-consumer model, which drives 90 to 95% of its sales, provides granular, real-time data that can effectively indicate when to reduce supply.
Morgan Stanley projects Pop Mart’s sales to hit US$4.3 billion in 2025 and $6 billion in 2026, with overseas operating profit potentially comprising up to 60% of the total this year.
But its share price has recorded a peak loss of 10% from a high of HK$269.60 since July 8, due to a lack of near-term growth drivers.
“Market sentiment towards the company has yet to fully recover in the short term, given the high base last year,” said Richard Lin, chief consumer analyst at SPDB International, a Hong Kong-based investment bank, as cited by South China Morning Post.
“For the stock to rebound, the company will need to provide greater visibility on what could drive earnings in the near term.”
The Labubu toys – which depict furry monsters and sharp teeth in various designs and colors – have become a global sensation with fans lining up for hours for the latest and rarest models.
The toys are sold in blind boxes to create a mysterious shopping experience for buyers and spiked up their desire to collect uncommon models which can be sold for profit.
The Labubu phenomenon has propelled Pop Mart to a valuation exceeding US$40 billion, with its Hong Kong-listed shares soaring 588% over the past year, according to Bloomberg.
