CICC released a research report maintaining its adjusted net profit forecasts of 11.0/14.1 billion yuan for POP MART (09992) for fiscal years 2025/2026, corresponding to adjusted PE ratios of 35x/27x for 25/26 years respectively. The firm maintains its outperform rating and target price of HK$370, representing adjusted PE ratios of 42x/32x for 25/26 years with 20% upside potential.

CICC's main viewpoints are as follows:

1. Category Expansion and Enhanced New Product Development Capabilities Boost IP Momentum and Extend IP Boundaries The company has gradually increased its product launch frequency and successful hit product creation rate in recent years. Behind this lies more mature and comprehensive product launch planning, while the capabilities of artists and the company's product teams, as well as their collaborative synergy, continue to improve. Enhanced product capabilities provide the company with stronger IP expression abilities, allowing IP images and content to become more comprehensive through different materials, craftsmanship, and series derivatives, while maintaining dynamic balance in SKU numbers. In terms of categories, plush products continue to empower more IPs and demonstrate strong customer acquisition effects in new overseas markets. Accessories, confectionery, apparel, and building blocks are also progressing steadily. The company will subsequently explore categories such as small home appliances to extend IP boundaries and consumption scenarios. The firm believes the company's proactive approach to trying new categories and timely adjustments serves as strong support for IP accumulation and medium-to-long-term growth.

2. Continuous Understanding of Market Demand with Improved Production Capacity Reserves and Flexibility According to the earnings conference, the company's existing plush production capacity has increased approximately 10-fold since the beginning of the year, reaching 30 million units per month, continuously understanding and catching up with market demand. The mini LABUBU "Secret Code" series plush keychains launched on August 28 once again sparked fan enthusiasm. Although still sold out quickly, consumers' overall purchasing experience has significantly improved. Looking ahead, as understanding of demand in more regional markets deepens, combined with supply chain flexibility brought by optimized capacity and supply chain arrangements, the firm believes the company's ability and precision in matching demand with supply will further improve.

3. Rapid Growth in Overseas Markets with Operational Details Requiring Refinement, but Long-term Potential Remains Broad Currently, POP MART's overseas market momentum continues to improve. The Thailand ICONSIAM flagship store has shown excellent performance since opening in early August, with no cannibalization effect on other stores. The US is expanding stores rapidly, but demand growth is even faster, leading to continued increases in online sales proportion. Compared to domestic operations, overseas store models, official websites, membership systems, and other operational details require refinement. The firm believes the company's retail DNA and capabilities can support same-store improvements following rapid expansion in recent years, and remains optimistic about the long-term potential of the company's globalization strategy.