Pop Mart's business model is good, but not as good as Evergreen Games.

Using the business model of evergreen games as an analogy for Pop Mart might make it easier to understand, at least for me.
1. The combination of "IP + blind boxes" is the core of Pop Mart—both are indispensable.
The business model of Honor of Kings is to attract users through gameplay and then monetize by selling skins. For Pop Mart, blind boxes are analogous to gameplay, and trendy IPs are analogous to skins.
Gameplay is the core of Honor of Kings. Even if everyone uses the same skins, the game is still playable. Similarly, the combination of "IP + blind boxes" is the core of Pop Mart—neither element can stand alone. Discussing either in isolation is inappropriate.
On the second-hand blind box platform "Qiandao App," nearly new blind boxes are sold at a discount, roughly 20-30% off, except for hidden editions. Even though it’s a second-hand market, purchases made through the platform’s official channels are often unopened—sometimes even still in their original boxes. In other words, through Qiandao, you can buy almost brand-new dolls you want at a discount. The popular Labubu series is always in stock on Qiandao and also sold at a discount. The "Sit Sit Party" and "Heartbeat Macaron" series of Labubu are only slightly marked up.
To put it bluntly, if you really like something and want it, you can buy it anytime. So why not just buy the exact style you want? Apart from the fleeting thrill of uncertainty when unboxing, I can’t think of any other explanation. Buying directly is just a purchase, but opening a blind box turns it into a gift.
Of course, what’s inside the box must be good enough to qualify as a gift. Pop Mart is impressive, Wang Ning is impressive, Kenny Wong is impressive, and Kasing Lung is impressive—their dolls are consistently excellent and never disappoint.

2. Pop Mart isn’t the only one making great dolls, nor is it the only one with strong IPs.
Attend a few toy fairs or visit some malls. If you’re short on time, follow some unboxing influencers. I’m overwhelmed by the brands: 52TOYS, Top Toy, Playfulism, Ruo Lai, and more. I’m also drowning in trendy IPs: Nook, Zhuodawang, Farmer Bob, and others. Then think about the massive IP portfolios of Sanrio, Marvel, Ultraman, and Disney—I’m completely submerged.
Everyone has IPs, and their popularity is often accidental. The narrative that Pop Mart is invincible because of its exclusive IPs and can dominate cultural exports? I can only laugh.

3. Everyone has learned how to do blind boxes now. This year, everyone’s doing well. In Southeast Asia, everyone’s selling well.
The "IP + blind box" strategy has been copied by everyone. Although the gashapon mechanic and Christmas mystery gifts have existed for ages, Pop Mart and Wang Ning were the first to bring them to the trendy toy scene. Starting with just two kitchen knives and feeling their way forward, it wasn’t easy.
Convincing Kenny Wong, convincing manufacturers, making huge mold investments with no guarantee of success, and refining production repeatedly—it was a struggle. When Molly was finally ready for online sales, the team only dared to list 100 units, but Wang Ning pushed it to 200. Thankfully, their hard work paid off—it sold out in one second. The team initially thought the website had crashed. Pop Mart pioneered an industry and put food on many people’s tables—they deserve their success.
But now, the copycats have arrived. Who knows if one of them might outshine the original? "Daring to follow the crowd" is an investor’s nightmare.

4. In the long run, the "IP + blind box" combo requires both elements to be top-tier and remain that way.
If a beloved IP is turned into a beautifully crafted doll and sold individually, you’d still check the price and think twice. Robot stores and mini-program lottery machines are brilliant scenarios. If another new scenario or channel emerges, Pop Mart can’t afford to miss it—that would be dangerous.
A blind box without a desirable IP? You wouldn’t even bother opening it.

5. Valuing Pop Mart
The blind box mechanic is easy to copy. Launching a new, hit IP is highly unpredictable. In contrast, evergreen games like Honor of Kings benefit from more stable network effects due to their user base—selling skins is just a bonus. The width of the moat? My conclusion is clear.
Now, valuation. Pop Mart is the industry leader, possibly by a wide margin. Overseas expansion and rapid industry growth should continue smoothly into next year. I fully agree.
But if you accept the moat comparison above, consider the P/E ratios given to Tencent and NetEase. Multiply that by Pop Mart’s projected profit growth, and you’re close. Just remember to leave enough margin of safety.