In the previous analysis of $POP MART(09992.HK), Dolphin Research has already explained its two core logics during this cycle:
a. Expanding product categories – the core is vinyl toys;
b. Expanding markets – going overseas and achieving great success;
The strong drive from both aspects brings about an exceptionally long and strong performance release cycle.
From the recently released performance for the second half of the year: overseas growth is very strong, but the basic market has already anticipated this, and it is not marginal incremental information; the relative increment in performance is in the domestic offline store sales, as the growth of plush toys and others is higher than expected.
The real incremental information comes from Wang Ning’s statements about the future during the conference call:
a. Wang Ning said that Pop Mart will be a company with a revenue of 100 billion in the future, compared to the current revenue of only 13 billion, which means there is still 10X space;
b. In terms of overseas growth structure, markets like the United States, which have high gross margins and strong purchasing power, are growing even faster;
c. There will be more than 50% growth in 2025, which is higher than Dolphin Research’s original expectation of 40%-45%.
These three points are very important: as mentioned earlier, the essence of Pop Mart in the short term is the resonance of its own products and market cycles, and such small cycles have their ups and downs; while for long-term tracks, the general expectations are relatively low, as no similar companies have achieved such a high scale, making it hard to be overly optimistic.
Now the company has given a reassurance: in the short cycle logic, there will still be 50% growth in 2025, indicating that the height of the product and market logic in this short cycle is higher, and the cycle is longer, and within this cycle, the improvement in product structure and market structure can continuously drive up gross margins.
However, when thinking in terms of long cycles, Wang Ning’s statement about becoming a company with 100 billion in revenue indicates that after exiting the product cycle, there is still high growth potential in the long term.
With these three statements, everyone should adjust their models to increase short-term revenue and gross margin momentum, while those who are bold may also raise their long-term expectations.
Based on the information disclosed in the latest financial report, Dolphin Research has updated its valuation for reference, with a range between 165-170.
It is important to note that in the long-term expectations, although the company has given very optimistic guidance for 100 billion in revenue, it still lacks the courage to set it that high. According to the product cycle-driven logic, it has given a relatively high growth rate for 2025 and 2026, but afterward, it is uncertain whether there will be new product categories (for example, if something like building blocks emerges), hence the growth rate expectation is lowered after 2027.
The overall assumption is neutral and conservative, while in reality, based on the high growth overseas and the continuous increase in the proportion of high-margin categories, the possibility of short-term performance surging remains relatively high.