【9992 Analysis】Pop Mart stock price continues to fall by 9%; major banks cut target prices; Analysis: Management's growth targets are too conservative, revenue is too concentrated in Labubu

Pop Mart (9992)
After a 22% plunge on Wednesday, the stock continued to decline on Thursday, dropping over 9% in the half-day session. Despite strong revenue growth, the market is concerned about over-reliance on a single IP for income, with Labubu’s The Monsters series contributing 38% of revenue. Chairman Wang Ning stated that after rapid development, this year is a correction period, and they will strive to achieve at least 20% growth.

UBS has lowered the target price for Pop Mart from HKD 326 to HKD 278, maintaining a “Buy” rating, and has cut its adjusted net profit forecast for the next three years by 7% to 13% to reflect slowing overseas growth. Nomura has reduced its target price from HKD 372 to HKD 261, believing management’s sales growth guidance this year is conservative, but confident that Pop Mart has established a solid IP ecosystem supporting multiple IPs to grow rapidly. Last year, six IPs each generated over RMB 2 billion in sales.

A stock analyst said in a video program that Pop Mart’s performance is decent and it is a rare high-profit listed company. “Last year’s results were actually impeccable; the only criticism is that revenue is quite concentrated,” relying too heavily on a single IP, Labubu. Its slowing revenue growth has raised market doubts about the company’s future growth drivers. Additionally, management set the lower end of revenue growth targets too conservatively, contrasting sharply with past high growth, which has caused investor concerns about a rapid slowdown and increased disappointment.

The analyst mentioned that Pop Mart’s stock price has fallen to more than ten times PE (price-to-earnings ratio), clearly undervalued. However, in the short term, stock performance is driven by market sentiment, and the price could fall further. Currently, it’s better to wait and see, and review after the price stabilizes, as there is potential for a medium-term rebound. He pointed out that the stock price broke below the platform support from last November to mid-January this year. Investors holding shares who have not yet cut losses at key support levels can wait for a rebound before making decisions.