CICC has issued a research report stating that, considering the resonance across POP MART's (09992) IP portfolio, product categories, and regional expansion, the firm has raised its adjusted net profit forecasts for fiscal years 2025/2026 by 13%/15% to 11.0/14.1 billion yuan respectively. At current prices, this corresponds to 36x/27x adjusted P/E ratios for 2025/2026. The firm maintains its Outperform rating and, reflecting the earnings forecast adjustments, has raised the target price by 12% to HK$370, representing 42x/32x adjusted P/E for 2025/2026, with 17% upside potential.

CICC's key investment points are as follows:

**1H25 Adjusted Net Profit Exceeds Expectations**

1H25 revenue reached 13.88 billion yuan, up 204% year-over-year, largely in line with guidance. Profit for the period was 4.68 billion yuan, up 386% year-over-year, exceeding previous guidance of +350%. Adjusted net profit was 4.71 billion yuan, up 363% year-over-year, slightly above expectations. Under the company's globalization and conglomeration strategy, POP MART's brand and IP portfolio have gained rapid global recognition, with business performance and profitability continuing to improve. Both 1H25 revenue and profit exceeded full-year 2024 figures.

**Global Brand Expansion, Conveying Diverse Pop Culture, Rapid Growth Across Four Regions**

By region, China/Asia-Pacific/Americas/Europe and Others achieved revenues of 8.28/2.85/2.26/0.48 billion yuan respectively, representing year-over-year growth of 135%/258%/1142%/729%. Store counts increased by 12/5/19/4 locations respectively compared to end-2024, reaching 443/69/41/18 stores. Asia-Pacific has strengthened refined operations, the US market has rapidly expanded coverage, and Europe has deepened regional headquarters construction with early deployment of landmark stores in locations like Cambridge.

Online channels have improved efficiency across blind box vending machines and content e-commerce platforms. The company's self-developed app has launched in 34 countries, topping the US App Store shopping charts, creating consumption scenarios. All regions achieved faster online growth, with online penetration rates of 36%/38%/59%/33% respectively.

**IP Portfolio Shows "One Leader, Multiple Strong Players" Pattern, Product Categories Flourishing**

1) **IP Performance**: In 1H25, five major IPs achieved revenues exceeding 1 billion yuan, while 13 IPs surpassed 100 million yuan in revenue. THE MONSTERS/MOLLY/SKULLPANDA/CRYBABY/DIMOO grew 668%/74%/112%/249%/193% year-over-year to 4.81/1.36/1.22/1.22/1.11 billion yuan respectively. THE MONSTERS has joined the ranks of world-class IPs, accounting for 34.7% of revenue. Emerging IPs like HIRONO are showing strong momentum, reaching 390 million yuan in 1H25 after launching in 2H24. The company employs differentiated operations for diverse IP styles, further enhancing IP vitality. Management reaffirmed their focus on IP health during the earnings call.

2) **Product Categories**: Plushies/Figures/MEGA/Derivatives achieved revenue growth of 1276%/95%/72%/79% respectively. Plushies launched nearly 20 products across 10 IPs, featuring different styles, sizes, and materials with upgraded plush fabrics and enhanced playability, achieving revenue of 6.14 billion yuan with market share rising 34.4 percentage points to 44.2%. Figures' share continued declining to 37.3%.

Mainland China added 13.04 million new members in 1H25, reaching 59.12 million total members (compared to 11.73 million additions for full-year 2024), with repeat purchase rates exceeding 50%.

**Profitability Improvement Exceeds Expectations, Optimistic About Long-term Prospects**

1H25 gross margin reached 70.3%, up 6.3 percentage points year-over-year, primarily due to increased overseas proportion and enhanced supply chain bargaining power. Distribution and selling/General and administrative expense ratios decreased 6.7/4.0 percentage points to 23%/5.6% respectively. Adjusted net margin reached 33.9%, up 11.6/5.8 percentage points year-over-year and quarter-over-quarter respectively, with operating leverage continuing to improve.

Looking ahead, CICC believes the company has opportunities to "recreate multiple POP MARTs" overseas, with individual IPs far from reaching their ceiling and potentially evolving into global super IPs. Building blocks, accessories, theme parks, and content ecosystems could expand business boundaries. The firm remains optimistic about the company's long-term growth prospects.