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CMSI Reiterates Underweight on POP MART (09992.HK); Lacks Blockbuster IP After LABUBU Craze
Recommend 7 Positive 8 Negative 14 |
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China Merchants Securities International (CMSI) issued a report stating that POP MART (09992.HK)'s first-quarter results met lowered expectations, but full-year profit margins are expected to come under pressure. The report noted that the company plans to accelerate capability building in overseas markets over the next one to two years, including enhancing retail and membership systems, accumulating fans, deepening IP culture, and strengthening team maturity. CMSI cited the companys margin guidance, indicating that due to the international environment this year, raw material costs such as PVC and fabric packaging rose by 3 to 5 ppts YoY, which are expected to drag overall gross margin by about 0.5 ppts. Fluctuations in international oil prices and shipping rates have led to higher sea freight charges, fuel surcharges, and warehousing costs, exerting pressure on overseas gross margins. In addition, changes in overseas sales mix (a lower contribution from high-gross-margin regions) and higher import tariffs are expected to have a combined impact of 1 to 2 ppts on gross margin. Net margin is facing phased pressure due to the decline in gross margin and a slight increase in fixed expense ratios (including labor and rent). CMSI maintained its Underweight rating on POP MART, noting that after the explosive popularity of LABUBU, the company lacks another blockbuster IP as a second growth driver, with revenue growth decelerating significantly. Contributions from theme parks, dessert shops, and small home appliance businesses remain limited, while full-year profit margins are expected to be under pressure. The broker believes the current share price has yet to fully reflect the slowdown in growth and uncertain growth prospects. (da/u) Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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