The company has successfully turned around its 困境， with its stock price surging 1.4 times since the beginning of the year, and its 业绩预喜 increasing by more than 90%!

Today let's talk about the 逆境反转 of POP MART $POP MART(09992.HK)

On July 18, POP MART announced on the Hong Kong Stock Exchange that it expects revenue for the first half of the year to increase by no less than 55% year-on-year, with profits rising by no less than 90% year-on-year

The next day, while the broader Hong Kong stock market fell by over 2%, POP MART surged against the trend by 10%

Notably, POP MART's stock price has rebounded nearly 1.4 times from its low before the Spring Festival. Does POP MART's resurgence mean that the new consumer sector it represents is experiencing a revival? $MATRIX HOLDINGS(01005.HK)

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Before discussing POP MART's rebound, let's rewind to the end of 2020

At the time of its IPO, it was the tail end of the previous bull market. As a representative of the trendy toy and new consumer sector, POP MART was pushed by frenzied investors to a peak market cap of HKD 140 billion

But then the bull market abruptly ended, and POP MART's 神话轰然坠地. From its peak of HKD 105 in February 2021, the stock price plummeted for a year and a half, losing nearly 90% of its value and dropping below HKD 10, with its market cap briefly hovering around just HKD 10 billion

A decline of this magnitude wasn't solely due to macroeconomic factors in the capital markets; POP MART's fundamentals also deteriorated

By mid-2022, POP MART was struggling operationally, with 业绩大滑坡. The market widely believed that the 潮玩 trend had faded, and young people had abandoned POP MART

Moreover, criticisms about poor quality, difficult returns, and 诱导消费纷纷而至

In 2023, POP MART embarked on a challenging path of self-redemption

POP MART's 自救 revolved around two key themes: globalization and product expansion

1. Globalization achieved significant success

According to media reports, globalization became POP MART's top priority in 2023

The company doubled the size of its international team, focusing primarily on Southeast Asia, a region with over 600 million people, more than 50% of whom are under 35. Thailand, with its large female consumer base, became a key target market for POP MART

Thanks to successful localization, POP MART successfully penetrated the Thai market. Its IP, Labubu, gained immense popularity there. The same Macaron series, priced at RMB 99 domestically, could be resold for up to RMB 500 in Thailand

2. Product expansion: Creating more growth avenues

For the domestic market, where penetration was already high, POP MART focused on expanding its product lines, introducing new categories like the Syrup series and building blocks

These new products shared one common trait: higher price points

Although everyone talks about 消费降级 these days, for young people, living standards might decline, but spending on hobbies only increases

As the 知名经济学家付鹏 put it, today's young consumers might spend RMB 3,000 out of a RMB 5,000 salary on concerts, then use the remaining RMB 2,000 to 抢 KFC 优惠券. Spending 60% of their income on happiness still feels worth it to them

POP MART's toys also provide emotional value

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POP MART's 自救 strategy proved successful. In 2023, the company's revenue grew 36% year-on-year, while net profit surged over 128%, hitting a record high

Domestic revenue increased by 25.7%, while business in Hong Kong, Macau, Taiwan, and overseas skyrocketed by 134.9%

This year, POP MART continued its overseas expansion, opening 20 new stores in the first half. Its strong performance in Thailand persisted, with a new store in Bangkok generating nearly RMB 5 million in revenue on its opening day in June. Its IP, Labubu, even caught the attention of Thai officials, who 授予其神奇泰国体验官称号

3. Valuation and future upside potential

With improved performance, market sentiment naturally shifted. Institutions like CICC and UBS 纷纷上调 POP MART's target price

However, as mentioned earlier, POP MART's stock price has already rebounded nearly 1.4 times from its pre-Spring Festival low and surged over 2.85 times from its October 2022 historic low. Its current PE ratio stands at a lofty 45x

Most of these positives are already priced into the strong stock performance. Future upside potential now hinges on 业绩继续大超预期 $TENCENT(00700.HK)

Therefore, in the short term, upside potential is limited—watch out for possible 回调风险！