Shenwan Hongyuan Group: Maintaining a "buy" rating for POP MART (09992) with cross-regional expansion and the expansion of IP to support long-term operations.

Shenwan Hongyuan Group released a research report stating that it maintains a "buy" rating for POP MART (09992). With its rich IP matrix and mature operational capabilities, POP MART continues to activate overseas markets, rapidly expand offline channels, and its holiday new products have repeatedly triggered sales frenzy. In addition, with the global popularity of head IPs such as Labubu, the company's brand strength has significantly improved. They are optimistic about the company's long-term competitive track, management and operational capabilities, and competitive landscape. The main viewpoints of Shenwan Hongyuan Group are as follows: The globalization process is proceeding steadily, and they are optimistic about overseas supply chain and channel expansion, catering to global fan demands. Collectible categories have strong display, social, and gifting attributes. Offline channels are important sales channels and display scenes. Highly standardized stores are also a core branding method. The expansion of retail stores is expected to further activate demand from new regions. As of October 30th, the company has a total of 171 overseas retail stores, with the overall pace following the plan: 1) 62 in North America, 28 in Europe, entering the Middle East with the opening of first stores in various countries, with significant room for growth in breadth and density; 2) 44 in Southeast Asia, channel steadily progressing; and 22 in East Asia, with continuous optimization of channels in Japan and South Korea. The overseas popularity poses a significant challenge for the company, with adjustments and optimizations being made in product supply and logistics in North America and other regions. The company's products and IP richness give it a high degree of fault tolerance. The Halloween new products in October and November have sparked a sales frenzy in North America. They are optimistic about the social interaction and revenue growth of Labubu and other new IPs during intense holiday seasons at the end of the year. The outbreak of a single IP does not affect the overall platformization of the company, with the overall brand strength significantly improved. 1)The trajectory of Labubu's single IP: The success of Bubble has validated its long-term IP operation capabilities (Molly, SP) and can maintain fan stickiness through product innovation and iteration. Pay attention to the subsequent main product lines. 2)Labubu's single IP proportion is healthy (35% of 1H revenue), other IPs like SP and Stardust have made significant breakthroughs. The large base of Bubble fans gives it an initial traffic advantage, and attention to subsequent products and marketing activities may bring further breakthroughs (Stardust Park performance, animation); 3)The platform has reached a new level: with the global popularity of Labubu and other head IPs, Bubble's global brand strength has also surged. On November 27th, multiple IPs from Bubble participated in the Macy's Thanksgiving Day Parade in New York. Long-term optimism about the company's business model barriers and sustainability. The company believes that Bubble is one of the most competitive companies globally in terms of IP design, operation, and supply chain, and can achieve long-term value through operations (single IP trajectory can be improved and smoothed out by operations). Recently, Crybaby and Dimoo's vinyl plush sales have maintained a slight premium after release, Dimoo's vinyl plush sold out quickly after launch, Stardust and LABUBU's popular single products also maintained a certain premium, indicating that the supply and demand ecosystem for IPs is healthier than before June, which is conducive to attracting long-term fans. Risk Warning: The impact of overseas geopolitical politics on expansion speed; sales of new products lower than expected; slow incubation of new IPs.