Open Source Securities: Maintain a "Buy" rating on POP MART (09992), optimistic about the continuous increase in domestic market share and acceleration in overseas channel expansion.

Open source securities release a research report, maintaining a "buy" rating on POP MART (09992), optimistic about the company's continued leading position in the trendy toy industry, and the group-based strategy centered around IP will continue to advance. It is expected that the net profit attributable to the mother in 2024-2026 will be 2.12/2.76/3.51 billion yuan respectively, corresponding to EPS of 1.6/2.1/2.6 yuan. POP MART achieved revenue of 4.56 billion yuan in the first half of 2024 (up 62.0% year-on-year, the same below), with a net profit attributable to the mother of 920 million yuan (+93.3%), and an adjusted net profit attributable to the mother of 1.02 billion yuan (+90.1%). As a leading company in the trendy toy industry, the industry is optimistic about POP MART's continued improvement in market share in China and accelerated development of overseas channels, mainly based on three aspects: (1) The first-mover advantage achieves IP monopoly, and an excellent supply chain empowers smooth operation throughout the process; (2) The scenario-based design strategy further enriches the product matrix, and the IP group-based strategy effectively advances; (3) Excellent content operations and IP linkage drive brand value enhancement. The main points of view of the open source securities are as follows: Highlight one: An efficient business model achieves IP monopoly, and supply chain empowerment facilitates smooth operation throughout the entire chain As a pioneer in the trendy toy track, the company was the first to enter the blind box track. In terms of IP layout, the company has gathered a large number of excellent IP creators through internal incubation and external signing over the years. In 2023, the number of IPs with sales exceeding 100 million yuan reached 10 (up 4 from the previous year), and the company continues to hold various trendy exhibitions and theme exhibitions, with an average Douyin search index of 133,000 over the past six months, and more than 1.96 million posts on Xiaohongshu, far exceeding industry peers. In terms of the supply chain, the company continues to build a flexible new material supply chain, empowering IP design to end-terminal sales smoothly. In 2024, the first batch of deliveries from the Vietnamese overseas factory has been completed, and the global supply chain system has further expanded. Highlight two: Product layout scenario, blooming in multiple points to create an IP "group-based" After years of development, the company has formed a diversified product matrix with blind box products as the main focus, supplemented by vinyl dolls, MEGA precious series, and other products. In 2023, the revenue ratio of blind box products fell below 70% for the first time. The company uses a scenario-based design strategy for product layout: (1) Blind box products are concentrated in the office, providing spiritual companionship in the work scene; (2) The MEGA precious series is laid out in the family scene, with both collectible and decorative value. (3) Gel products accompany outdoor outings in the form of pendants or dolls, making outdoor "strolling with children" a fashionable trend. (4) Collectible cards and building block products are further attempts to expand the product matrix. The industry is optimistic that the future blooming product layout will help promote product-centric "group-based" IP effectively, forming a unique IP universe for POP MART. Highlight three: Content operations are linked to IP, driving brand value enhancement In terms of IP operation, in 2023, the company established the POP MART City Park, which is linked to IP with the design concept of "a place for taking pictures and a spiritual paradise." It set a record of nearly 100,000 visitors in the first month of opening, and signed a cooperative project with Chaoyang Cultural and Tourism Group for the "POP MART City Park Phase II" in May 2024. On June 27, 2024, POP MART's first self-developed mobile game "Dream Home" was launched, achieving the first place in the iOS game free list and the second place in the overall list, with a gameplay of simulation management + party games, allowing players to interact intimately with their favorite IP and experience various activities such as fishing and farming together. The industry is optimistic that with the company's excellent content operation capabilities, through the linkage of IP with cultural tourism and gaming projects, it will effectively drive the enhancement of brand value.