By Jiaxing Li and Casey Hall
HONG KONG/SHANGHAI (Reuters) -Pop Mart chief executive Wang Ning said on Wednesday his toy company was on track to meet its targeted revenue goal of 20 billion yuan ($2.78 billion) in 2025, and that “30 billion ($4.18 billion) this year should also be quite easy.”
Wang, who founded the company in 2010, was speaking with analysts after Pop Mart announced record half-year results on Tuesday, with the makers of the ugly-cute Labubu doll reporting net profit soared nearly 400% as demand for the toys surged, particularly in higher-margin overseas markets.
Pop Mart shares were up more than 5% in early Wednesday trading in Hong Kong.
Executives also said on Wednesday that expansion in emerging markets in the Middle East, Central Europe and Central and South America was being explored.
“I think for overseas markets we’re still very positive, and we also believe there’s still very broad space for growth,” Wang said, adding that sales from North America and Asia Pacific this year would together equal China sales in 2024.
In the United States, where Pop Mart currently has about 40 stores, Wang said the company will begin a phase of “relatively rapid store openings” over the next year or two, with 10 more U.S. shops expected to open by the end of this year.
Pop Mart’s primary business is producing and selling collectible toys, many of them developed with artists and sold in “blind boxes”, packages consumers buy for around $10 to $20 without knowing exactly which iteration of the toy is inside.
Labubu, a toothy-grinned member of “The Monsters” series of toys designed by Kasing Lung, has become a favourite of celebrities including Rihanna and David Beckham and has sold out around the world.
Until now most popular as a charm for handbags, Pop Mart says it will this week launch a mini version of Labubu that can be attached to phones.
Pop Mart said on Tuesday “The Monsters” raked in 4.81 billion yuan ($669.88 million) in the first half, accounting for 34.7% of total revenue. Four other toy series’ earned more than 1 billion yuan during the period, including “Molly” and “Crybaby”, it added.
“We expect more restocking of existing series and launch of new editions to drive earnings expansion in the second half. That said, shares likely remain overpriced as investors are overlooking the high business risk in the long run, in our view,” said Morningstar analyst Jeff Zhang.
Shares in the company have risen more than 230% year-to-date, making Pop Mart more valuable than traditional industry giants like Barbie-maker Mattel, and Hello Kitty parent company Sanrio.
Next in Pop Mart’s sights is a Disney-esque empire with executives saying the firm is optimistic about opportunities for Pop Mart characters to star in animated films and theme park attractions, though these are not expected to contribute a large amount of direct revenue in the short term.
($1 = 7.1866 Chinese yuan renminbi)
(Reporting by Jiaxing Li in Hong Kong and Casey Hall in Shanghai; Editing by Jacqueline Wong and Kate Mayberry)
