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Analysts warn of overheating amid possible tighter controls on the sale of "blind" toy boxes in China
Chinese company Pop Mart expects a threefold rise in profits thanks to global excitement around Labooboo toys. But analysts warn of signs of overheating: in June, shares fell sharply after a Chinese newspaper article called on authorities to tighten rules on the sale of collectible toys in closed packages.
Details
China's Pop Mart International, maker of viral Labooboo toys, expects profit growth of at least 350% and revenue growth of at least 200% for the first half of the year, wrote Bloomberg. Pop Mart said that in addition to growing brand awareness, cost optimization and cost control also helped boost profitability.
Hong Kong-traded Pop Mart shares rose 1% on July 15 and are up 194% YTD.
What are the analysts saying?
Stephen Leung, an analyst at Singapore-based brokerage firm UOB Kay Hian Hong Kong, warned of signs of overheating in Pop Mart's business in June. The occasion was the stock's sharp drawdown in June - amid an article in the Renmin Zhibao, the official newspaper of the Communist Party of China. The article called on the authorities to tighten control over the sale of collectible toys in sealed packages, where buyers don't know in advance what they're getting.
After the article was published, Morgan Stanley replaced Pop Mart shares on its list of priority investments for investment in China and Hong Kong with securities of insurance company PICC P&C.
Jefferies analyst Ann Lin warned that quotes for the entire pop-toy (collectible toys) segment will come under pressure in the short term - "especially those companies whose stocks have been performing the best since the beginning of the year."
Context
Labooboo, a plush monster with pointy ears and teeth, has become the center of a global collecting frenzy. Such toys are flaunted by celebrities like Rihanna and Fox from the band BLACKPINK. Last month, a human-sized toy was sold at an auction in Beijing for $150,000.
Labooboo's popularity has turned Pop Mart into a company worth more than $40 billion. Last year, when "Labooboo-mania" began, the company's securities rose 340%, becoming one of the fastest-growing on the Hong Kong exchange, the WSJ noted earlier.
This article was AI-translated and verified by a human editor
