We give Pop Mart a "Neutral" rating with a 12-month target price of HK$236 corresponding to an expected price-to-earnings (P/E) ratio of approximately 26 times in 2027, and discount it to mid-2026 at a capital cost of 12%.

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1. Investment Summary

Since IPO in 2020, Pop Mart has rapidly emerged as a leader in the Asian trendy toy market with its unique blind box sales model and strong original IP incubation capabilities. In 2024, the company delivered a brilliant report: operating income reached RMB 13.038 billion, a year-on-year increase of 106.9%; net profit was RMB 3.308 billion, a significant year-on-year increase of 203.86 %, and net profit margin rose to 25.38 %, a record high.

However, the nature of the trendy toy industry determines that its growth path is full of uncertainty: the industry's characteristics are mainly driven by short-term popularity, user preferences change rapidly, and the IP life cycle is limited.

This article will analyze Pop Mart's valuation, stock price trends, business model, sustainability, and comparison with evergreen IPs such as Hello Kitty and Disney IPs, to explore whether it can break through the retail boundary of " making quick money" and grow into a true cultural content empire.

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2. Company Overview

Pop Mart was founded in 2010 and started out as a trendy toy retail agent. In 2015, the company officially transitioned to its own brand of blind boxes, launched the Molly series in 2016, and Labubu in 2019, gradually forming a complete "IP incubation-design-production-sales" vertical integration system.

In December 2020, the company was listed on the main board of the Hong Kong Stock Exchange with an issue price of HKD 38.50, becoming one of the few "new economy brands" in the Hong Kong stock consumer retail track.

In terms of revenue structure, according to Pop Mart's 2024 annual report, "self-owned products" are the company's main product category, accounting for 97.6% of total revenue, of which artist IP accounts for 85.3 % and licensed IP accounts for 12.3 %. This revenue structure shows that the company's business is highly dependent on self-owned products, especially artist IP series, such as The Monsters, Molly, Skullpanda, etc., which constitute Pop Mart's core growth engine and revenue source.

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3. Stock Price Trend and Valuation Analysis

3.1. Stock Price Trend

As of July 9, 2025, Pop Mart 's share price rose to HK$ 266.80, close to its 52-week high, with a year-to-date increase of over 600%, showing a strong upward trend.

Technically, the stock price is above the short-term moving average, with an RSI of 57.24, in the neutral to strong zone, and no overbought risk. Fundamentally, the company's revenue in 2024 reached RMB 13.038 billion, with a net profit of RMB 3.308 billion, indicating the market's high expectations for its growth.

However, we need to be wary of the policy and regulatory risks faced by the blind box model, as well as the potential fluctuations brought about by changes in the popularity of the trendy toy market.

Overall, Pop Mart maintains a strong trend, but investors should pay attention to policy trends and user consumption trends to determine the sustainability of its high valuation.

3.2. Valuation Calculation

We give Pop Mart a "Neutral" rating with a 12-month target price of HK$236, corresponding to an expected price-to-earnings (P/E) ratio of approximately 26 times in 2027, and discount it to mid-2026 at a capital cost of 12%.

This valuation mainly reflects the company's rapid growth in short-term profits, especially driven by core IPs such as Labubu , with strong momentum in domestic revenue and overseas expansion. However, considering that Pop Mart's current business model is still mainly blind box sales, long-term growth depends on the verification of IP content capabilities, including whether it can build a complete story universe and character personality through animation, film and television or games, and further enhance users' emotional connection and brand loyalty.

In addition, the company is still highly dependent on a single IP in terms of IP structure. If the popularity of phenomenal products such as Labubu declines, the overall performance volatility risk is high. We are also concerned about the potential strengthening of supervision of the blind box industry in China and overseas markets. For example, the restrictive policies of regulators on the purchase of blind boxes by minors under eight years old will put pressure on industry demand if the enforcement continues to increase.

Overall, we believe that the current stock price basically reflects the balance between Pop Mart's short-term performance explosion and the uncertainty of its long-term growth path. Whether the company can further rise in the future depends on the progress of its content and internationalization.

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4. Business Model Analysis: Is the Trendy Toy Empire Making Quick Money or Creating Everlasting Success?

4.1. Trinity Business Model

The core of Pop Mart’s rise lies in its unique trinity business model:

First, the blind box sales model maximizes the user's FOMO psychology (fear of missing out), and significantly increases the average order value and repurchase rate through the random sampling mechanism. The user's desire for hidden models during the purchase process and the instant satisfaction brought by "unboxing" have formed a strong secondary transaction premium in the trendy toy market, and some hidden models can reach 5-10 times the original price.

Secondly, the IP incubation capability has built a relatively sustainable product moat for the company. Pop Mart has formed a rich IP matrix by signing independent designers, internal design teams, and cooperating with well-known external IPs (such as Disney and Harry Potter). However, the company's current revenue is still highly dependent on a few core IPs, especially Labubu and Molly.

Finally, the community operation of the fan economy is the source of stickiness of its model. Pop Mart has built a trendy play culture circle through Xiaohongshu, Bilibili, and WeChat ecology, strengthened user community stickiness, and formed a powerful self-propagation traffic pool.

4.2. The Essence of Trendy Toys: Driven by Short-Term Popularity

The underlying logic of the trendy toy industry determines that it is closer to the retail format of "making quick money" rather than consumer durables. Users' purchasing motivation mainly comes from "good-looking, interesting, and limited ", lacking functional attributes and deep cultural connotations. Therefore, user loyalty and repurchase rate strongly rely on the continuous launch of new products.

The scale of China's trendy toy market has increased from RMB 29.48 billion in 2020 to RMB 76.4 billion in 2024, with an average annual growth of 27 %. However, the overall growth momentum of the industry is weakening, and corporate competition will rely more on IP content power rather than marketing battles.

4.3. Comparison with Domestic Competitors

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5. Sustainable Development and International Challenges

5.1. User Structure and Growth Ceiling

Pop Mart users are highly concentrated in women aged 18-35, with a limited proportion of male users and children. Although the company continues to launch joint products with male IPs such as Harry Potter and Disney, it is still difficult to break into the male market due to the limitations of the blind box model itself. Besides, the middle-aged and elderly groups have limited interest in trendy toys, and there is a ceiling for the expansion of the overall user base.

5.2. Internationalization Process

The company is actively developing Asian markets such as Japan, South Korea, Singapore, Thailand, and entering the US market. However, it faces the following challenges:

• Japanese Market: The local Gashapon (gachapon) culture is deep, and consumers are very sticky to local brands such as Bandai. New entrants need to invest more resources to build brand awareness and IP identity;

• US Market: The acceptance of blind box culture is low, consumers prefer clearly visible product choices; at the same time, trendy toy consumption has not yet formed a collection community foundation of the same scale as in Asia, and the market cultivation cycle is relatively long;

• International Users: The emotional connection with Pop Mart’s original IP is still in the establishment stage. The brand lacks the popularity and transnational fan base of global IPs such as Hello Kitty and Marvel, which limits its ability to command a premium.

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6. Comparison with Hello Kitty and Disney’s Well-Known IPs: Can Pop Mart Become an Evergreen IP?

6.1. Hello Kitty: 50 Years of Cuteness

Hello Kitty was born in 1974, with the core of "simple, cute, and non-aggressive" image. Over the past 50 years, Hello Kitty has been widely adapted to multiple categories such as stationery, accessories, home furnishings, clothing, and beauty products, covering the needs of different age groups from children to adult women, with its highly recognizable visual image and versatile attributes. It has built an IP licensing business model with extremely light assets ( no production or retail, only IP licensing ) and extremely high premium ( the price of products with the same functions has increased several times over ) .

However, Hello Kitty has limitations in content innovation. It lacks a long storyline and world view setting, and is more of a "symbolic IP." This shortcoming limits its secondary growth potential on content-based platforms.

6.2. Disney IPs: Closed-loop Content Ecosystem

Since its establishment in 1923, Disney has gradually built the world's most powerful IP content ecologically closed loop through nearly a hundred years of development.

The core is "content is IP". Disney relies on animation, movies, and live-action dramas to create character storylines and personalities, forming a deep emotional connection with users; and then through multi-dimensional commercialization paths such as theme parks, retail licensing, content subscriptions, and game interactions, it builds a closed loop of the entire industry chain from IP incubation to commercial realization.

The user connection point of Disney IPs is not just the appearance of the characters, but the complete world view and spiritual values behind each IP. For example, Marvel's heroism, Star Wars' rebellious spirit, and Frozen's female independence all form global cross-cultural empathy.

However, Disney's disadvantage is that its innovation cycle is long. The continuous renewal of classic IPs requires huge content investment. Some old IPs are also gradually facing the challenges of user age updates and declining appeal.

6.3. Pop Mart Labubu : A Trendy Toy Symbol or a Cultural IP?

Labubu stems from the aesthetic preferences of the trendy toy circle. As the core IP of the THE MONSTERS series under Pop Mart, Labubu is inspired by the forest elves in Nordic folklore. The image is a grinning face with long ears erected, which is both "ugly and cute" and mysterious.

Unlike Hello Kitty's cute symbolism, Labubu is closer to a "trendy aesthetic symbol". Recently, Labubu's pop-up stores and new series have triggered a wave of queues in Milan, Italy, New York, Tokyo, Los Angeles and other places, demonstrating its influence as a "trendy identity symbol"; celebrities such as Blackpink Lisa, Rihanna, and Madonna publicly wearing it also strengthened its global cultural penetration.

However, Labubu currently lacks a complete storyline and personality setting comparable to Disney-like IPs. User connections mostly remain at the level of "appearance preference" and "emotional healing", and deep user assets of "character personality empathy" have not yet been established. Whether it can become a true cultural IP depends on Pop Mart's future creation of Labubu's worldview, story content, and cross-category ecology.

6.4. Comparison of advantages and disadvantages

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7. If the Trend Subsides, Where will Pop Mart Go?

7.1. Future Feasible Paths

If the trend becomes less popular, Pop Mart needs to adopt the following strategies:

• IP Matrix: reduce reliance on a single IP, create a diversified IP portfolio, and smooth performance fluctuations;

• Content-Based Operation: animate and gamify the core IP to extend the IP life cycle and enhance the emotional connection with users;

• Light Asset Licensing: Learn from the Sanrio model and license IP images to clothing, accessories, food, stationery and other fields to form a stable cash flow;

• Experience-Based Business: Set up trendy theme parks and fashion exhibition halls to strengthen offline experience and brand stickiness.

7.2. Risks and Challenges

Although the above paths have potential, they also have challenges:

• Contentization requires huge investment, a long payback period, and high cash flow requirements;

• In the short term, licensing revenue will be difficult to make up for the scale of blind box retail;

• The theme park and exhibition idustries require strong IP appeal. Currently, the global influence of Labubu and Molly still needs to be improved.

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8. Conclusion and Recommendations

Pop Mart is a typical "product of the trendy toy era" and has achieved great success in the short term by relying on the blind box model and community operation. However, if it wants to achieve the leap from a "trendy toy retail company" to a "cultural content company", it must break through the single sales model and build a sustainable content ecology and IP cultural symbols.

We believe that the company has short-term trading opportunities, especially the valuation catalysis that may be brought about by the release of new products in the second half of the year and the expectation of "recovery of the trendy toy economy". However, if investors seek long-term stable compound returns, Pop Mart still needs to prove its IP content capabilities and international market penetration.

We give Pop Mart a "Neutral" rating, with a 12-month target price of HKD 236, and recommend paying attention to the following catalysts:

• Labubu animation or film and television development progress

• Profitability of overseas stores improved

• IP licensing revenue share increased

• A new generation of original IP was successfully incubated