POP MART sells well overseas, and Chinese trendy toy brands are rising

Time: 2024-05-21 15:38

As a leading brand of trendy toys in China, what step has POP MART taken in its journey to go global?

What kind of wave will the trendy blind box culture set off in the overseas market?

What encouraging signals does POP MART's 2023 financial report data reveal?

POP MART's overseas expansion is gradually accelerating, with high growth in revenue and profit

As a leading brand of trendy toys in China, POP MART has been actively expanding into overseas markets since 2020.

Currently, POP MART adopts an online and offline parallel business model, setting up offline stores in North America, Europe, Japan and other places, and constantly expanding online channels such as e-commerce.

POP MART's 2023 financial report shows that both revenue and Net Profit have achieved high-speed growth, becoming a strong footnote for Chinese trendy toy brands to emerge in overseas markets.

In 2023, the company achieved a revenue of 6.30 billion yuan, a year-on-year increase of 36.5%; the net profit attributable to the parent company was 1.08 billion yuan, a year-on-year increase of 127.5%.

Among them, the overseas market revenue is particularly eye-catching, reaching 1.07 billion yuan, a year-on-year increase of 134.9%, accounting for 17% of the company's total revenue.

It is worth noting that the proportion of revenue from POP MART's independent products continues to rise, contributing 5.86 billion yuan in 2023, a year-on-year increase of 39.8%, accounting for 93% of the overall revenue.

In terms of profit margin, the company's gross profit margin reached 60.4%, an increase of 2.9 percentage points year-on-year; the expense ratio decreased by 5.4 percentage points to 40.4%, further improving efficiency.

POP MART's asset operation quality is stable, with a ROE of 13.9% in 2023, a year-on-year increase of 7.1 percentage points.

Behind the impressive performance is the continuous exploration of the global trendy toy market by POP MART.

With the increasing influence of Chinese trendy toy culture, domestic trendy toy brands such as Pop Mart are setting sail in overseas markets.

IP business generates new growth momentum, and POP MART seeks to expand its cultural and entertainment territory

POP MART's IP-centric business model has a strong driving force in creating new available market totals, which will bring the company greater market space and a longer-term development path.

In order to further explore the value of IP, POP MART is actively trying to expand across borders.

On the one hand, the company plans to launch its first social simulation mobile game in the first half of 2024 to test the market response of the new IP in the gaming field, and is expected to bring some in-game purchase revenue.

On the other hand, the company is also increasing its investment in supporting POP Land urban theme parks, expanding its revenue channels through diversified operations such as tourism services and catering.

Institutional analysts believe that POP MART's innovative attempts in IP business will continue to inject new growth momentum into the company, helping it further expand its cultural and entertainment territory and move towards the goal of becoming the Chinese version of "Disney".

Institutions are optimistic about POP MART and raise their revenue and net profit expectations for 2024

Morgan Stanley released its latest research report, raising the target price of POP MART from HKD 32 to HKD 38, implying a 35% upside potential.

Analysts believe that, driven by overseas expansion and new business, POP MART's profit curve will accelerate in the next 1-2 years and enter the fast lane of development.

Specifically, it is expected that the company's revenue will increase by 31% YoY in 2024, with overseas market revenue increasing by 102% and the market share expanding from 17% in 2023 to 26% -32%.

Sales in overseas markets performed better than expected, and measures such as enriching the company's own brand accessories will further boost the gross profit margin level.

Considering the above factors, Morgan Stanley has raised its expectations for POP MART's revenue and Net Profit in 2024, with growth rates of 5% and 11%, respectively.

According to this forecast, POP MART's overseas revenue in 2024 is expected to increase from 1.066 billion yuan in 2023 to 2.153 billion yuan, achieving Chairperson Wang Ning's goal of "recreating a POP MART overseas".

 

Summary

Overall, although POP MART is still some distance away from becoming a LEGO or Disney-level entertainment giant, relying on steady operation and continuous innovation, the future of POP MART is worth looking forward to.

Against the backdrop of improving macro environment and accelerating overseas expansion, it is expected to achieve an average annual growth rate of over 30% in the coming years.

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