On July 15, Pop Mart released a bullish earnings forecast marking its strongest half-year performance since going public in 2020.
According to the report, revenue in the first half of 2025 is expected to grow by at least 200% year-on-year, with net profit, excluding changes in the fair value of certain financial instruments, rising by no less than 350%. This puts estimated revenue at over RMB 13.6 billion (USD 1.9 billion) and net profit above RMB 4 billion (USD 560 million).
Yet the Hong Kong stock market’s response was unexpectedly muted. The day after the announcement, Pop Mart’s shares fell by 4% and have continued to drift lower since.
If the numbers are so strong, why the skepticism? And can Pop Mart sustain its momentum?
Stellar earnings, but long-term concerns linger
Investors in Hong Kong and mainland China tend to react differently to earnings events. Hong Kong’s market typically trades on actual results, often triggering rallies post-report. Mainland investors, by contrast, trade on anticipation, with earnings often signaling the end of a run.
Pop Mart’s prior rallies in March and August 2024, and again in March 2025, coincided with earnings reports, suggesting a direct link between results and stock price. But this time, even the company’s best-ever performance failed to drive a rally.
Two factors likely explain the subdued reaction: early investors taking profits and doubts about the sustainability of Pop Mart’s growth relative to its valuation.
Assuming net profit for the first half reaches RMB 4 billion (USD 560 million), the annualized figure could exceed RMB 8 billion (USD 1.1 billion), implying a forward price-earnings (P/E) ratio around 40 and a trailing P/E near 50.
Historically, Pop Mart’s P/E ratios have remained below these levels. Between March 2022 and March 2025, its trailing P/E was generally under 50, with the forward P/E usually below 40. Wind data puts its median trailing P/E since listing at 49.32.
Looking at post-earnings valuations: the March and August 2024 reports saw P/E ratios of 25 and 35, respectively, well below the historical median, suggesting those rallies were valuation corrections. In March this year, a strong report pushed the trailing P/E to 50, peaking above 100 shortly after, placing it in the top 20% of historical valuations. That run-up reflected bullish expectations rather than fundamentals, a pattern more typical of mainland trading behavior.
This latest forecast resets the trailing P/E to around 50. But investors appear unwilling to bet on higher multiples again.
To justify a P/E of 40–50 under a model pegged against growth, Pop Mart would need to deliver 40–50% compound annual profit growth for 3–5 years. That’s a significant challenge for a company of its current size.
A key concern: much of the 2025 first-half surge seems driven by the virality of its Labubu IP. Whether this success can be sustained, and replicated with future products, remains unclear.
Labubu brought in over RMB 3 billion (USD 420 million) in 2024, accounting for 23% of revenue. According to People’s Daily, CEO Wang Ning said monthly sales could hit ten million units starting in September. In China, a blind box typically sells for RMB 59–99 (USD 8.3–13.9); in Europe, starting prices are EUR 15 (USD 17.1). Even conservatively estimated, monthly sales could range from RMB 600 million to RMB 1 billion (USD 84–140 million), putting first-half sales at RMB 3.6–6.0 billion (USD 500–840 million), or 26–44% of total revenue.
That’s a heavier reliance than in 2024. For context, Pop Mart’s previous flagship character, Molly, generated 27% of revenue in 2019 but fell to 14.2% in 2020.
In short, this breakout year hinges on a single IP. But Labubu’s longevity remains untested, and investors are right to be cautious, especially with rising valuations.
Not copying from the China playbook for overseas expansion
Since the 2024 rally, Pop Mart’s international ambitions have come into sharper focus. Has this growth meaningfully reshaped the business?
Two indicators suggest it has:
- Overseas revenue is growing faster. From 2021–2024, revenue from Hong Kong, Macau, Taiwan, and international markets surged, nearly matching domestic sales. Mainland offline revenue grew from RMB 2.1 billion (USD 294 million) to RMB 4.5 billion (USD 630 million), a 28% CAGR (compound annual growth rate). Overseas offline revenue jumped from RMB 5 million (USD 700,000) to RMB 3.1 billion (USD 434 million). CEO Wang has said overseas sales will “very likely” exceed domestic revenue in 2025.
- Stores abroad generate higher revenue. In 2024, 401 stores in mainland China generated RMB 4.5 billion, while just 130 stores overseas (including joint ventures) brought in RMB 3.1 billion. According to Sinolink Securities, overseas stores generate nearly three times more revenue per location than domestic ones.
What explains this?
- Prices are higher overseas. In 2024, gross margins were 66.4% in China, versus 72.3% abroad. Assuming equal costs, that implies a 20% premium in pricing. In Germany, a Molly blind box sells for about RMB 143 (USD 20), compared to RMB 90–120 (USD 12.6–16.8) on Chinese marketplaces. Southeast Asia prices are closer to those in China.
- Store saturation is lower overseas. Of the 401 stores in China, 241 are concentrated in 19 upper-tier cities. Overseas, Pop Mart has just 130 stores.
- Online sales are rebounding. In China, online sales dipped after pandemic restrictions eased in 2023 but began to recover in 2024. Overseas, online sales as a share of total revenue also fell as brick-and-mortar presence expanded, but that trend reversed starting in 2024. This suggests that offline stores serve as traffic drivers for online channels.
Together, these patterns suggest that international markets are not just a sideshow, and the company’s future may depend on expanding its overseas footprint.
Pop Mart plans to open 100 new international stores in 2025, focusing on North America and Europe and upgrading current store locations. As of July 26, the company had about 163 overseas stores. They include 32 in Hong Kong, Macau, and Taiwan; 37 in Southeast Asia; 19 in Japan and South Korea; 43 in the US; 19 in Europe; and 13 in Oceania.
As of March, Sinolink Securities counted only 23 stores in the US, underscoring Pop Mart’s pace of growth in North America and Southeast Asia. With about 30% of its 2025 expansion goal already met, the company will likely accelerate launches in the second half, suggesting store growth had limited impact on first-half earnings.
Can international markets absorb this influx? Early signs say yes. In 2024, Southeast Asia generated RMB 2.4 billion (USD 340 million), nearly equal to Pop Mart’s total 2020 revenue. North America, Europe, and Oceania together contributed RMB 1.3 billion (USD 182 million), close to 2019 levels. These regions are growing faster than historical averages.
Demographics are in Pop Mart’s favor. It targets the Gen Z demographic and young professionals. Per Sinolink’s estimates, the 15–45 age bracket includes about 3.2 billion people in Southeast Asia, 134 million in the US, 278 million in Europe, and 13 million in Oceania. That’s about 745 million in total, nearly matching China’s 600–700 million.
Given higher spending among Western consumers and stronger collectibles enthusiasm in Southeast Asia, international markets may eventually surpass China in scale. If overseas revenue overtakes domestic figures in 2025, the gap may keep widening.
How should investors time their moves?
The tepid reaction to Pop Mart’s latest guidance likely reflects the market’s prior pricing-in of Labubu’s performance. Despite strong numbers, there was little surprise. And with valuations already elevated, the earnings boost only returned the P/E ratio to historical norms.
This wariness reflects deeper concerns. Pop Mart’s recent gains are tied closely to a single IP. Until the company proves it can diversify its product success, skepticism will persist. The result: investors hesitate.
Going forward, Pop Mart may settle into a traditional stock cycle: muted sentiment, strong earnings, upside surprise, rally. Until then, the stock may trade sideways as it proves it can sustain rapid growth.
That said, near-term downside appears limited. Most investors agree on the company’s short-term strength, while disagreements lie in its long-term prospects. This consensus likely caps immediate downside risk.
Wind consensus forecasts estimate Pop Mart’s net profits at RMB 7.35 billion (USD 1 billion) in 2025, RMB 10.48 billion (USD 1.5 billion) in 2026, and RMB 13.75 billion (USD 1.9 billion) in 2027. This implies annual growth of 135.2%, 42.5%, and 31.2%, with a forward P/E ratio of around 22 by 2027.
For context, mature IP-driven firms like Disney and Bandai Namco maintain average P/E ratios near 25. Even with slower growth, Pop Mart’s valuation could remain in line with peers, providing a potential price floor.
In short, the market may simply be waiting for proof: can Pop Mart turn a one-hit wonder into a repeatable success?
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Fan Liang for 36Kr.