1、 Disclosures&Disclaimer This report must be read with the disclosures and the analyst certifications in the Disclosure appendix,and with the Disclaimer,which forms part of it.Issuer of report:The Hongkong and Shanghai Banking Corporation Limited View HSBC Global Research at:https:/ Pop Marts share p

2、rice has returned to its 2021 peak on strong earnings beats;we believe it still has a long runway ahead We use Legos history and strategy to model Pop Marts growth engines of IP and globalisation Initiate at Buy with a DCF-based TP of HKD127.65,implying a 2026e PE of 32.3x;2025e earnings 13%above co

3、nsensus A strong comeback.Pop Marts share price soared 4.5x in 2024 on strong earnings beats(vs HSI up 22%over the same period)returning to its peak level in 2021.If the stock was overhyped in 2021,the current share price is on a firmer footing fivefold growth in profit and revenue in 2024e vs 2020.

4、While the broader industry narrative remains the same cute consumer goods(collectable pop toys)that appeal to young consumers are going from strength to strength Pop Mart has reinvented itself from a pop toy maker to an integrated intellectual property(IP)management platform.We believe this is just

5、the start of a bigger growth story.The Lego model.We believe Lego,the worlds largest toy brick maker,is an excellent growth benchmark for modelling Pop Mart given:(1)they have both experienced a bust cycle;(2)both businesses were turned around under young leadership;and(3)both share the winning form

6、ula for IP pop toys:globalisation,the direct to customer(D2C)sales model,and a robust IP management system.While Lego has been around for nearly a century,it is still generating huge sales(close to USD10bn in 2023 and a CAGR of 14%over 2019-23).Over 2024-26,we expect Pop Marts net profit to rise at