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Popmart (9992.HK)

Pop Mart (9992.HK) seems to have a boom on 11th Dec 2020, the first trading day of IPO, the company ended up by increasing 79% and the market cap reach to HKD95.3bn when market close on that day.


Let's have a deep dive into this toy company.


Popmart is the largest and fastest-growing pop toy company in China, in terms of

retail value in 2019 with a market share of 8.5% and revenue growth from 2017 to

2019, respectively, according to the Frost & Sullivan Report.


IP is at the core of their business.


Popmart have established an integrated platform covering the entire industry chain of pop toys, including artists development, IP operation, consumer access and pop toy culture promotion, through which popmart light up the passion of fans and bring

them joy.


As a pioneer and key promoter of pop toy culture in China, popmart have inspired

people’s passion for pop culture and pop toy, and led the rapid development and

large-scale commercialization of pop toys in China.


Behind this crazy tides to chase those little toys is that young people want to have a tag of 'pop' or , in other word is , cool symbol. And that's why young people are so passionate their products.


So, generally, they are selling a special kind of toys to adults and children, like below:



Their total revenue increased by 225.4% from RMB158.1 million in 2017 to RMB514.5 million in 2018, and further increased by 227.2% to RMB1,683.4 million in 2019. (boom! )


Their total revenue increased by 50.5% from RMB543.4 million in the six months ended June 30, 2019 to RMB817.8 million in the six months ended June 30, 2020.


They recorded net profit of RMB1.6 million, RMB99.5 million, RMB451.1 million, RMB113.6 million and RMB141.3 million in 2017, 2018 and 2019 and for the six months ended June 30, 2019 and 2020, respectively. Their net margin ratio even larger than real estate industry in China.


You may wonder, those kind of toy is not new things, why popmart? and why they so popular in China?


Strong IP Creation and Operation Capabilities


Top artist development: They have gathered top artists in the pop toy industry

and formed in-depth cooperation with them. Working with the artists, they

have created blockbuster IPs favored by fans including “Molly,”

“PUCKY,” “Dimoo” “The Monsters”. As of the Latest Practicable Date, they

maintained close relationships with more than 350 artists, among whom they

had cooperation with 28 talented artists across the world through licensing or

cooperation arrangements under intellectual property transfer agreements.


Excellent track record of IP development and operation: As of June 30, 2020,

they operated 93 IPs. In 2019, revenue generated from each of their top 4 IPs

exceeded RMB100 million. With strong IP development and operation

capabilities, popmart have launched 16 new IPs in the first half of 2020, and

expect to launch 14 or more new IPs in the second half of 2020.


Extensive consumer access: Popmart have established a comprehensive and

extensive sales and distribution network. They have a membership

program, with 3.6 million registered members as of June 30, 2020, to build

fans community, enhance their stickiness, and incentivize repeat

purchases through a variety of membership benefits. Their omni-channel

sales and distribution network and marketing initiatives enable popmart to

accommodate consumer needs, effectively reach out to their target

consumers and provide consumers with a convenient and entertaining

shopping experience.


Pop toy culture promotion: Popmart are dedicated to promoting pop toy culture and have attracted a fast-growing and passionate fan base. Their BTS and STS have become the largest pop toy conventions in China in terms of visits,

according to the Frost & Sullivan Report. In the absence of large scale pop

toy events in China, they launched their first pop toy convention, BTS, in

September 2017. Since then, popmart host two pop toy conventions each year,

namely BTS and STS. 2019 BTS attracted more than 270 artists from 14

countries and regions, more than 200 pop toy brands, and over 100,000

visits. They launched Paqu, a self-developed online community mobile app for fans to access pop toy culture information and updates, trade pop toys and engage in social interaction with other fans alike. Other than pop toy community and

conventions, they have hosted a total of 51 exhibitions and artist autograph

sessions across China as of June 30, 2020. They also organize design competitions and collaborate with top art colleges in China to give lectures and courses to engage more fans into pop toy culture and to cultivate emerging artists.


As of June 30, 2020, popmart had 136 retail stores in 33 cities in China, primarily

located at major commercial districts in first-tier and second-tier cities. Retail

stores are primary sales channel which provides the widest selection of products

to meet the needs of different customers. And are also an important channel for to establish brand image and build connections with fans.


As of June 30, 2020, popmart also had 1,001 roboshops. Compared to retail stores, roboshops incur lower upfront costs and ongoing operating expenses in terms of rental fees, personnel expenses and maintenance fees. As a result, popmart are able to efficiently and quickly expand their roboshop network, which can reach regions not covered by our retail stores. The sales performance and market feedback generated by roboshops provides valuable data insight for retail store expansion strategies. Popmart may open retail stores to replace roboshops with high sales volume.


Vibrant Fan Base with High Stickiness


Popmart have attracted a vibrant fan base with high stickiness through multi-channel membership program and frequent, efficient and real time communications with their fans through various online and offline channels. Their fans share the fun and art they enjoy from popmart products with their friends and families, which further expands their fan base. The number of registered members experienced rapid growth during the Track Record Period from 0.3 million as of December 31, 2017 to 0.7 million as of December 31, 2018 and further increased to 2.2 million as of December 31, 2019. As of June 30, 2020, popmart had 3.6 million registered members.


As with other discretionary consumer companies, the driver of the company are:

unit price and sales volume, as revenue= unit price * sales volume.


If unit price is constant is a relative period, what we need to closely monitor is sales volume or production volume, which can be forecast from companies' retail stores


In recent years, amid the backdrop of promoting diversity and personality, a growing population around the world become more passionate about various forms of pop toy culture. As a result of increasing acceptance of pop toy culture, the market size of the global pop toy retailing market grew from US$8.7 billion in 2015 to US$19.8 billion in 2019, representing a CAGR of 22.8%, and is expected to further increase to US$41.8 billion in 2024, representing a CAGR of 16.1%.


Specifically, the Chinese pop toy retailing market has experienced more rapid growth, from RMB6.3 billion in 2015 to RMB20.7 billion in 2019, representing a CAGR of 34.6%, and is expected to further increase to RMB76.3 billion in 2024, representing a CAGR of 29.8%.




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