Country Garden International: First to give BLOKS (00325) a "buy" rating. The leading position of China's building block toy industry is solid.

Guoyuan International released a research report, giving BLOKS (00325) a "buy" rating for the first time. The company has quickly grown into a leading enterprise in the segmented market through innovative product design, strong IP operation capability, and a comprehensive distribution network. The business model integrates IP operation, design and development, production, and channel connectivity, forming a complete value chain. The growth potential in overseas markets is promising. Currently, the company is using the PE valuation method, considering the expected high-quality growth and expansion in overseas markets, giving the company a corresponding target valuation of 26 times PE by 2026, with a market value target of approximately 23.8 billion Hong Kong dollars and a target price of 95.5 Hong Kong dollars, representing an expected increase of 21.1% compared to the current price. Key points from Guoyuan International: The company has a deep and efficient tiered distribution system. The company has established an industry-leading, deep, efficient, and controllable tiered distribution system, with over 140,000 offline outlets. The distributor network has achieved exponential growth in three years and has fully penetrated into third-tier and below cities, creating strong market coverage and outreach capabilities. The distributor network efficiently covers all first and second-tier cities in China, with a coverage rate of over 80% in third-tier and below cities, forming a powerful brand sales matrix that can continuously influence potential consumers. Additionally, the company's distribution channels include various national large-scale retail and chain channels such as Toys "R" Us, Kidswant Children Products, Coolplay, Walmart, as well as a large number of specialty toy stores, stationery stores, and boutiques. Building industry-standard quality benchmarks and ultimate cost-effectiveness, creating strong brand barriers. With the advancement of China's technological level, especially breakthroughs in materials science, machine tools, injection molding, etc., Chinese toy products' quality is beginning to challenge the world's top levels. The rapid growth in product sales in recent years is closely linked to continuous improvement in manufacturing processes. Currently, existing products can provide first-tier craftsmanship quality and assembly experience within a specific price range. Therefore, the company's products have a comprehensive advantage in cost-effectiveness, exquisite design, and genuine IP, building a strong brand barrier based on ultimate cost-effectiveness and supporting the company's revenue growth to continue to lead the industry average.