Shares of manufacturer Labubu are up 180% this year. Is it too late to buy them?

Analysts at HSBC and Citi remain optimistic about China's Pop Mart, the maker of viral Labubu toys. Despite the recent correction, they believe that the company still has growth potential thanks to the launch of new toy series and strong positions in Asia.

Two analysts at once recommend buying the securities of Chinese company Pop Mart, believing that despite the stock's 9% pullback over the past month, both the company and its shares still have upside potential, writes Barron's.  

Pop Mart can continue to keep consumers interested in its brands by launching new series and toys, says Lina Yan, an analyst at HSBC Global Research. According to her, in addition to the Labooboo monsters that have gone viral, the company has about a dozen other characters that can be used to create new products and stimulate demand. Yan gave Pop Mart shares a "Buy" recommendation.

Citi analyst Lydia Lin also considers the company's valuation attractive, especially given the recent pullback in quotes.

"Valuations have become attractive following the stock's recent correction, providing an improved entry opportunity. We expect positive stock performance on the back of forecast earnings growth," wrote Lydia Lin.

Pop Mart on July 15 announced that it expects a threefold increase in first-half profit thanks to the global hype surrounding Labooboo. In the same period last year, the company recorded revenue of 4.56 billion yuan ($635 million) and profit of 964 million yuan ($134 million). 

The company's shares fell nearly 1% on the Hong Kong Stock Exchange on July 17. But since the beginning of the year they have risen by about 180%, and over the last 12 months have added 565%. Now the market capitalization of Pop Mart is about $43 billion - this is significantly more than the U.S. toy manufacturers Hasbro ($10.49 billion) and Mattel ($6.29 billion).

Amid investor concerns that the current trend may be peaking, Pop Mart shares have fallen 9% over the past month. Indeed, a year from now, it may be difficult for the company to surpass the success of the current wave of popularity, Barron's writes.

Pop Mart, which is looking to expand in North America, may struggle because of a new duty regime that imposes high levies on Chinese imports - and most of the company's products are made in China, the publication notes.

This article was AI-translated and verified by a human editor