Actions of the Labubu doll manufacturer on a powerful upward wave. Beijing will play with investors?
A frenzy on Labubu dolls led to the launch of their manufacturer – POP Mart present on the floor in Hong Kong. The company's shares could earn more than the qualities of the largest European arms companies, i.e. Airbus, Rheinmetall, Thales and Leonardo, taken together. The only question is whether the China Communist Party will join the play.
Last Friday, June 20, Pop Mart's shares fell by 5%, closing the week in which the Labubu doll manufacturer's ratings lost about 14%. A sharp criticism of mysterious boxes brought to the sale, brought by the newspaper “People's Daily” led by the communist party of China. The article published on Thursday warned that such a sales strategy is addictive and can be harmful to children.
Although the name of Pop Mart did not appear in the text, it was a clear reference to its “blind boxes”. The company sells unmarked boxes to clients, in which they can find a random Labubu doll. Some of them are much rarer and more expensive than others, which encourages customers to buy larger purchases. Such blind sales have been banned in China since 2023 in relation to children up to 8 years old.
Last week, Marta's POPs also had a decision of Morgan Stanley analysts, who informed in Wednesday's note, without giving a reason that they remove the company from their focus list for China and Hong Kong. A week earlier, the investment bank raised the target price for the toy manufacturer's shares up to 302 HKD (USD 38.47) from earlier 224 HKD.
The current price of Martu POP shares is 252.20 HKD (as of 24 June). Despite the declines from the previous week, the company's quotations are still 14% higher than a month ago and 176% above the course from the beginning of the year. Over the past 12 months, the company's qualities have been able to earn an impressive 560%. For comparison, at the same time, the best cope with the arms companies mentioned at the beginning, i.e. Rheinmetall gained 170%, Bitcoin 53.6%and gold 42%.
The market capitalization of the Labubu manufacturer is currently 338.69 billion HKD, i.e. USD 43.15 billion, which makes it the most expensive company from the toy sector in the world. Mattel, known due to Barbie dolls, is valued at USD 6.17 billion, the capitalization of Sanrio, the owner of the Hello Kitty brand, is USD 1.72 billion, and the estimated LEGO value (private company) was USD 13 billion last year.
The stock market success of Chinese dolls
Before the “Financial Times” described Pop Mart as a company that “raised the purchase of toys to the rank of a fashionable connoisseur among young and wealthy consumers in China” and “The creator of the market of so -called designer toys”, the company began, being a multi -branch shop in Beijing, reminiscent of the format “All PLN 5 for PLN 5”. Soon, the company has developed to 288 toy sales points and 1,800 vending machines throughout the country.
When the “mysterious boxes” began to be successful in China, the creator of Wang Ning decided to enter this trend. In 2016, Pop Mart began to sell Molly dolls – figurines reminiscent of children created by the Hong Kenny Wong artist. Labubu dolls brought him real success.
Labubu, which was created in 2015 as the work of another Hong Card – Kasing Lunga as part of his series “The Monsters” – initially appeared in picture books and as a toy line, produced by How2work. In 2019, the brand established cooperation with Pop Mart and began a global conquest.
The sales success of dolls in “Blind Boxes”, led the company to a debut on the floor in Hong Kong. In December 2020, POP Mart obtained USD 676 million under IPO, which then translated into market capitalization of USD 7 billion. On the first day of quotations, the company's shares doubled their valuation. In February 2021, the company's qualities reached a record just below 100 HKD.
Later disappointment with its results and a clear slowdown in revenues, however, meant that POP Martu's quotations began to roller down and a few months after entering the stock exchange fell below the price from the debut. In the second year after IPO, the company's shares could be bought for just over 10 HKD. The bad luck lasted until 2024, when Labubu dolls began to appear in photos with celebrities.
In February 2024, when Martu's Pop share price was less than 20 HKD, the singer Rihanna was photographed with a doll manufactured by the company. Two months later, photos with various Labubu dolls began to publish the star of K-Pop Lisa on her Instagram, whose profile on this platform is observed by over 100 million people.
Also in April, Kim Kardashian joined the promotion of Labub, who showed her fans on Instagram a collection of 10 Labubu dolls, and Martu's POP share exceeded 30 HKD. In May, the photos of Labubu, which his daughter reportedly gave him, was also posted on his Instagram footballer of the England captain Sir David Beckham.
Since then, Labubu has been mastered by social media, where thousands of reports from the opening of mysterious boxes are published every day. In the United States itself, 37 stationary service stores and 52 machines with company toys operated in June. Pop Mart has so far entered 30 countries and outside North America has its physical sales points, including in South Korea, Japan, Australia and Great Britain.
Smiling Beijing/Beijing sad
On the one hand, the success of Labub dolls met with great enthusiasm from Chinese state media. The Xinhua press agency indicated that they show the attractiveness of Chinese culture and creativity, “in a language that can understand the world.” In this sense, toys produced by Pop Mart can be the so -called Beijing Soft Power.
On the other hand, the last criticism in the press tells you to ask whether China will go further in their ban on selling mysterious boxes. From 2023, they cannot be sold to children under the age of eight, and the consent of the guardian is required in the case of older juvenile. The proposal to introduce a price limit to 100 SGD (78 USD) on the “Blind Boxes” was put forward by the Singapore Ministry.
The authorities in Beijing have proved in the past that they were able to put any sector with one decree. A great example was forcing the holy listed triumphs of companies from the private education sector to change in non-profit organizations. POP Mart currently generates 60% of revenues on the domestic market. Any regulatory change to the disadvantage of the company, so it will affect its listings.
https://www.youtube.com/watch?v=rfcqtjeyybpm
Labubu dolls have achieved success that is difficult to rationally explain (as is usually the case with trends). We will not find (so far) the success of her listing in its results. As she pointed out in the note from last week, the IG Group “despite the fact that the price indicator to profit the company oscillates at level 42, analysts justify the current valuations of the company with forecasting increased revenues by nearly 80%, driven by new products and global expansion.”
Does Pop Mart, who achieved USD 1.8 billion last year and profit of USD 468 million, cope with these expectations and will the communist authorities join in playing with investors? – All this remains in a mysterious box.
