An Analysis into Labubu – Pop Mart (9992.HK)
September 2, 2025
This was a equity research report I made for my internship during the peak of Labubu popularity. Numbers are potentially outdated.
Business Description: Pop Mart makes collectible toys, keychains, and figurines with characters like the Labubu and sell primarily through stores, Robo machines, or online in a worldwide market.
Segments/ Geography: In FY 2024 Pop mart derived 61% of sales from Mainland China, with 39% from Hong Kong, Macao, Taiwan, and international markets. 68% of sales came from in store and wholesale sources while 32% came from online sources.
Numbers
| Pop Mart Statistics Table (RMB) | FY 2022 | FY 2023 | FY 2024 | LTM |
| The Monsters (Labubu) Sales | 263.0 Mn – | 367.9 Mn 39.9% | 3,040.7 Mn 726.6% | 7,227.9 Mn 766.0% |
| Sales Growth % | ||||
| Labubu as a % of Revenue | 5.7% | 5.8% | 23.3% | 32.3% |
| Top 8 IPs as a % of Revenue | 62.9% | 63.7% | 74.5% | 78.7% |
| Non-Mainland China Sales | 454.0 Mn 147.0 % | 1,066.0 Mn 134.9% | 5,066.0 Mn 375.2% | 9,623.0 Mn 440.0% |
| Sales Growth % | ||||
| Mainland China Sales | 4,163.4 Mn (3.3%) | 5,234.9 Mn 25.7% | 7,972.1 Mn 52.3% | 12,733.7 Mn 59.7% |
| Sales Growth % | ||||
| Number of global stores | 372 | 443 | 531 | 571 |
| Number of Members (China) | 26.0 Mn | 34.4 Mn | 46.1 Mn | 59.1 Mn |
| % sales from members (China) | 93.1% | 92.1% | 92.7% | 91.2% |
| Member Repeat Purchase Rate | 50.7% | 50.0% | 49.4% | 50.8% |
| Worldwide Search Interest peak | N/A | N/A | 16 | 100 |
COMPANY-SPECIFIC POSITIVES
1. Global Labubu hit brings Pop Mart into international popularity.
The global fame of Labubus initially began when Lisa, a member of K-Pop group Black Pink, posted a picture of her with one as a keychain on her bag in April 2024. Since then, numerous celebrities such as Rihanna, Dua Lipa, and Kim Kardashian have followed suit. Reporting under the character category of “THE MONSTERS”, Labubus saw 7,227M RMB LTM sales, increasing 766% YoY, and representing ~32% of Pop Mart’s revenue. This growth was also demonstrated in Pop Mart’s shares rising ~600% YoY as of Aug 28, 2025. While many consumers initially found the unique design to be both cute and ugly, it was primarily the drive of popular endorsements creating a positive feedback look, with many consumers growing interest as popularity grew. This is further supported by Google trends data which showed that search results for Labubu peaked in July, far eclipsing popular characters like Hello Kitty. While Labubu has already faced a decline in google search popularity, it remains popular on social media and new variations arising.
2.Growing popularity is supporting rapid international expansion while increasing exposure to other figures, sustaining momentum.
a. Overseas growth: While Pop Mart has seen significant success within China, even following the post COVID-19 economic downturn, the increasing global popularization has supported increased expansion, particularly in overseas markets. In H1 2025, they opened 40 new stores for a total of 571 with management stating that over 200 stores will be established overseas, representing a 70% increase YoY. While management does not offer cost of opening a new store directly, summing the lease liabilities in FY 2024 (both leases due within a year and after 1 year = 963M RMB) by the number of average stores (487), results in an average store lease cost of ~2M RMB per year. However, this is not completely accurate for the cost per store but a proxy for leasing costs. Management has also stated that they underestimated the size of the overseas market, with countries like Germany opening their first store in H1 2025. This represents significant opportunity for Pop mart to sustain growth through penetrating into new markets like Europe, the Middle East and South America. This growth has also been supported by their official APP, launched in 34 countries and recording several No.1 in regional app stores and a retention rate at >50%.
b. Growing popularity of other IP: Beyond the drive of Labubu, the popularity has also given growth to other figures as well. By FY2024 they collaborated with 100+ IPs and the top 8 contributed ~75% of FY2024 revenue. These include Molly, Skull Panda, Dimoo, and Cry Baby growing 74%, 112%, 193%, and 249% YoY respectfully. All figures achieved over 1Bn RMB[5]. With a growing pipeline and opportunity for collaborations, Pop Mart has potential to maintain momentum across numerous characters.
3.A large and growing member base shows repeat buyers reinforced by a mystery boxy system.
Working in line with a growing online presence and app strategy, Pop Mart’s Chinese membership has seen a growing base with 59.1M registered members in China as of H1 2025, growing from 46.1M in end of FY2024. Similarity to many other store chains, their app strategy offers incentives to consumers like deals or coupons, encouraging repeat behavior while also offering a source of advertising. Pop Mart also launched their overseas membership in June 2024, exceeding 1.7M users in end of FY2024 for the US. Management have not released new numbers on overseas membership in 2025. In the Chinese member base, Pop Mart recorded ~51% repeat purchases from members, driving 91.2% of sales in China in LTM. This primarily due to mystery box system for characters and Labubus. Like how Pokémon cards come in sealed packs, Labubus offer a similar gambling like strategy to attract consumers, oftentimes leading to repeat purchases in attempts to secure a color they favored. This is a classic “collect-to-complete” strategy, hooking consumers and influencing them emotionally, targeting primarily younger adult females with higher emotional buying habits.
4.Margins remain strong during expansion, with a growing overseas margin and optimizing supply chains.
Pop Mart has continuously expanded their margins, with gross margin increasing from 57.2% in 2022 to 70.3% in H1 2025 and operating margin increasing from 24.7% to 43.6% in H1 2025 YoY. This was primarily driven by the visible quality mix in the regional split. Overseas markets offer a higher gross margin of ~71% vs China at ~64%, making every overseas sale accretive for Pop Mart. This is likely due to higher pricing power in overseas markets compared to China and is also supported in part by a growing presence of ~2500 Robo shops (vending machines) and online sales, maintaining fixed costs. Their pricing power was demonstrated during May 2025 when they increased the price of a US Labubu keychain by 27%, from $22 to $28. In the H1 2025 report management also said to have focused on “optimization of product design, the strengthening of cost control, the enhancement of bargaining skills against suppliers, and a gradual decrease in the proportion of externally procurement products”. Put simply, management made their products cheaper and easier to build while tightening purchasing and quality control and using their scale to get more favorable deals with manufacturers. They are also selling less third party (bought in / consigned) goods, which have a lower margin, and shifted towards proprietary IP. In 2023 third party products accounted for 7.0% of revenue but only 0.9% in H1 2025.
COMPANY SPECIFIC RISKS
1.Rapid growth is primarily driven by hit driven consumer tastes and license dependent.
a. Hit driven cyclicality: Pop Mart’s growth is highly tied to a few popular IPs, with the Labubu (The Monsters), accounting for the largest portion of revenue for a single IP at 32.3% of LTM sales. Comparingly, the top 8 IPs, including Labubu, account for 78.6% of FY2024 revenue. While the absolute dollar value of other IPs outweighed Labubu sales, the growth is likely due to the popularity of Labubus bringing more awareness onto other IPs, demonstrating reliance on one item to drive the reach of other IPs. It is also almost certain that the popularity cannot maintain the same momentum into perpetuity, with the google search data already showing signs of decline12. Future potential signs of consumer fatigue can also be shown in inventory write downs, arising if seasons over ship or re-issue misses. This can already be seen with inventory impairments at ~4.3M RMB for H1 2025 compared to ~1.1M in H1 2024. This is only expected to grow as potential Labubu or older IPs fail to sell and fall out of season, leading to growing write-downs. While Pop Mart continues to broaden their IP base to increase diversity in sales away from a Labubu driven growth, the business remains highly cyclical, dependent on each drop and consumer trends. Management itself have also flagged re-issue cadence and season spacing as areas to manage carefully to avoid over-consumption of a hit.
b. License Dependent: The Labubu was created by Kasing lung in 2015 and officially collaborated with Pop Mart in 2019. This means Labubus are exclusively licensed to Pop Mart, like other popular IPs. While the agreements are exclusive, they are term sensitive, typically between 4-6 years) and Pop Mart is required to pay a ~5-8% royalty in Gross merchandise Value (GMV). This means the Labubu and other popular IPs are facing upcoming renewal terms, bringing risk in potential royalty step ups and demanding terms, affecting margins. To mitigate, Pop Mart has looked to own the IPs, but 3 of the top 8 selling IPs are still exclusive licenses. However, the majority of existing (100+)and new IPs are collaborated and owned by Pop Mart.
2.Pop Mart faces potential execution risk from rapid global rollout.
With Pop Mart scaling fast in both offline and online channels, site quality, staffing, and localized merchandising must also keep pace. With each region having potentially slightly different consumer tastes, Pop Mart faces the challenge of catering to those needs, which raises execution stakes as the network stretches. This is especially important in new overseas markets with higher margins than mainland China. To maintain this advantage, Pop Mart must have disciplined roll out. This is also important to establish new member bases overseas. If similar data from the Chinese member base is replicated in overseas markets, Pop Mart can continue to see return behavior and a loyal fanbase in new markets.
3.Tariff risks can potentially disrupt supply chain relationships and impact FX rates.
a. Tariffs and Supply China: While tariff volatility has largely cooled from the United States, they still present a risk with the US still imposing a ~57% tariff on Chinese exports. This impacts the potential for a growing US market since for FY 2024 Pop Mart’s top 5 suppliers accounted for 73.5% of the group’s total purchases and the largest supplier accounted for 35.1%, all located in China. While the company has a moat through their pricing power as mentioned in positives 4, it still presents challenges for their margins. Pop Mart has also looked to diversify production, with Vietnam handling ~10% of exports in FY2024 and is expecting to handle ~20% in FY2025. However, management’s sentiment has been less focused on tariffs, with the word not even appearing on the Q2 2025 report.
b. FX Rates: With the past volatility in tariffs, FX rates have also been changing, especially for the US dollar. In FY 2024, the ±10% USD/RMB move changed post tax profits by ±6.8M. However, management has stated that Pop Mart is “not exposed to any significant FX risk since the financial assets and liabilities of the group are denominated in currencies other than the respective functional currency of their operating entities are insignificant”. Essentially, Pop Mart does not hold or owe much money in foreign currencies, so exchange rate swings aren’t a huge impact to their balance sheet. They have also said that Pop Mart does not hedge against these fluctuations but keep a close eye on it to take steps when needed.
4.A growing counterfeit market can potentially steal revenue.
A growing counterfeit market can take revenue from Pop Mart, both diluting the rarity of products and taking hurting top line growth. As of FY 2024, Pop Mart owned 1,608 copyrights, 1,218 trademarks, and 45 patents, of which 327 copyrights were registered and 470 trademarks and 7 patents were applied for in 2024. To protect these rights, in FY 2024 Pop Mart identified more than 10 forged authorization letters, took down the domain names of 5 overseas websites selling infringing products, initiated 3 infringement lawsuits, and successfully intercepted over 1.3 million infringing products at customs. While demonstrating serious intent on combating this issue, it is almost impossible to stop the entire counterfeit market.
Market Leadership – Pop Mart is a market leader in pop toy / designer toys. See Positive 1.
Competitors
| Main IPs | Revenue (Mn) | Market Cap ($USD, as of Aug 29, 2025) | Operating margin (FY2024) | |
| Sanrio | Hello Kitty, Cinnamoroll Gudetama, Kuromi | 951 | 13.0 B | 35.3% |
| LEGO | Lego blocks, many collaborations | 10,780 | N/A | N/A |
| Miniso | Sanrio, Disney, Chiikawa, Harry potter, Barbie (Sells them) | 2,360 | 7.7 B | 19.5% |
| Hasbro | Monopoly, Dungeons and Dragons, Magic: The Gathering, Peppa Pig | 4,136 | 11.4B | 19.1% |
| Bandai Namco | Dragon Ball, Gundam, One Piece | 8,150 | 23.0 B | 15.5% |
| Mattel | Barbie, Uno, Hot Wheels, American Girl, Thomas & Friends | 5,380 | 5.9 B | 13.7% |
History of Profitability – Pop Mart was founded in 2010 and went public in 2020. While they remained profitable during the post COVID-19 depression in China, they have not been tested with a large-scale pullback in consumer favorability. Their margins have grown. Refer positives 3.
Strong Balance Sheet – Pop Mart has a strong balance led by a cash and cash equivalent balance of ~11.9B RMB as of H1 2025, with current assets of ~17.9B RMB and current liabilities of ~5.9B RMB. They currently have a Debt-to-Equity ratio of 9.78% and net debt / EBITDA of 0.15 with most liabilities stemming from inventory and increasing number of leases due to the rapid expansion.
Quality Management – In the Hong Kong Corporate Governance Code, it states that CEO and Chairman should be segregated and should not be performed by the same individual. Pop Mart’s board has disregarded this and let the founder, Mr. Wang Ning, to maintain position as Chairman and CEO, demonstrating strong management and trust from the board in management.
Historical capital allocation – In FY 2024 they spent 35% on capex, 34% on leases, 25% on dividends, 5% on share buybacks, and 1% for debt. This translates to 517M, 505M, 378M, 78M, and 15M RMB respectively. Management stated in FY 2024 that they intent to distribute dividends to their shareholders on an annual basis of no less than 20% of their distributable net profit[1]. Capex and lease spending saw similar numbers in 2023 but had significantly more capital spent on share buybacks (333M RMB) and less on dividends (121M RMB).
- Scale economies: Yes – Positives 3.
- Network Economies: Yes – Positives 1
- Counter-positioning: N/A
- Switching costs: N/A
- Branding: Yes – Positives 1.
- Concerned Resource: Exclusive artist IP that competitors cannot easily replicate. Positives 2.
- Process power: N/A
Management guidance:
Management did not offer quantitative guidance. Rather, they emphasized how IP is at the core of their business, they are looking to expand their IP base, expand into new global markets, and enhance consumer experience. IP is at the core.
Assumptions:
