Toy rally: who on the stock market will compete with the manufacturer Labooboo

Labubu toys sold in surprise boxes are not the only ones causing excitement among buyers. Last year, the designer toy Wakuku appeared in China, and since March this year it has been sold in the Miniso chain. Buyers are also definitely queuing up for these dolls, and shares in QuantaSing, the company that owns the rights to Wakuku, are up more than 340% since the beginning of the year. Will they be able to disrupt the business of Pop Mart, the company that produces Labba?  

Wakuku is a collectible designer toy. The doll has the face of a child with round cheeks, big eyes and disheveled hair. 

In March 2025, Wakuku in the form of a panda first began selling at a Miniso chain store in Beijing - and the store's daily revenue jumped more than 90%. On May 17, the launch day of the Fox and Rabbit series at Miniso's flagship stores in Shanghai and Nanjing also set daily sales records for these toys. And at the opening of Miniso Space in Nanjing on June 18, Wakuka sold out in two hours;

These toys are also sold in surprise boxes, just like Labooboo, a super popular doll from Pop Mart.    

The creator of Wakuku  is the collectible toy studio Letsvan. It was founded in the year 2020. It has a total of 10 characters. They include You Li - a Chinese princess, Animal Party series with soft animal figures and Ramy Pajamas Party - toys in pajamas. 

In the first few years, Letsvan relied on partnerships with leading retailers and e-commerce sites. This allowed it to rapidly expand its sales network in China and Southeast Asia.

On March 24, 2025, Chinese leisure and education products and services company QuantaSing announced an investment in Shenzhen Yiqi Culture (Letsvan brand) - it bought a 61% stake in it for 235 million yuan (about $33 million). The main purpose of the takeover is to enter the fast-growing collectible toy market, the volume of which in China, according to estimates by Frost & Sullivan, will exceed 91 billion yuan by 2028 (more than $12.7 billion). 

For Miniso, the partnership is a good bet: Wakuku dolls are causing a stir and gathering long lines at flagship stores across China, wrote Bloomberg. In the first quarter of 2025, revenues at Top Toy, a subsidiary of Miniso that sells toys including those in surprise boxes, rose 59 percent year on year to 340 million yuan ($46.8 million).

QuantaSing's net profit rose more than 181% year-on-year to ¥41.1 million ($5.7 million) in the third fiscal quarter of 2025 (coinciding with the first calendar quarter). Revenue for the same period totaled 570.7 million yuan ($78.6 million), down 39.6% year on year. The company's revenue in its education courses segment fell sharply - by 44%  - due to lower demand for professional development, financial literacy and leisure courses.

At the same time, the company's business has an ultra-high gross margin of 83.1%. This is its main competitive advantage. By comparison, Pop Mart has a gross margin of 63.9%. The expansion of QuantaSing s business into the toy segment may lead to a decline in profitability, and investors will closely monitor how much the financial indicators will change in the coming quarters, writes the financial portal Bamboo Works, specializing in the Chinese market.

On June 6, Zacks Investment Research raised QuantaSing's target price from $5.5 to $7, then implied an upside of more than 25% to the June 5 closing price. As of the close on June 25, their price is already more than 37% above the target. 

Zacks analysts believe the Letsvan purchase is a key driver of the company's long-term growth, as the toys will be popular not only with children, but also with adults. They also point to the company's 45% reduction in operating expenses in its fiscal third quarter (it slashed spending on research and administrative costs). This, according to Zacks, should support QuantaSing s operating margins in the medium term.

The geography of Letsvan sales is also expanding, Zacks analysts note. After entering the markets of Southeast Asia, the management intends to gradually enter the North American market, where there is a steady growth of the collectible toys segment;

As for Miniso, UBS on June 26 reiterated a "buy" recommendation and a target price of $25.5 on the company's shares, which is 33% above the closing price on July 25. The investment bank notes that in China, Miniso's decline in comparable sales (excluding new stores) has slowed: while in the first quarter sales fell 5-9%, in the second quarter the decline will be at 1-4%. This was possible because Miniso stopped opening too many new outlets and focused on improving the performance of existing stores. The company also has large flagship locations with themed collections - characters from the cartoons "Lilo and Stitch" and "Zveropolis." In popular locations, the share of franchised goods has grown to 50-60%, while in other locations it does not exceed 20%;

Miniso has 36% of its sales in foreign markets. In the U.S., it has revised its approach to expansion: instead of scattered locations across the country, it has grouped new stores close to each other to optimize logistics, reduce costs and obtain favorable lease terms;

Among the risks for the company, UBS analysts emphasize the slowdown in the Chinese economy, increased competition from Internet retailers, and the fact that China may restrict the sale of "surprise boxes" to minors. Also among the risks is a new U.S. trade policy. All of these could slow down Miniso's global expansion.

Jefferies Bank on June 10 reiterated a target price of $18.5 per share and a "hold" recommendation for Miniso, down about 3.6% from the closing price on July 25. In early June 2025, Miniso announced an imminent pre-market valuation for the Top Toy IPO. Jefferies believes that Top Toy going public will increase transparency for investors. In addition, a potential IPO would provide an opportunity to raise new funds to expand sales and develop new products. For Miniso, it is also a chance to alleviate potential pressure from competitors who are also planning to go public. 52 Toys is preparing to go public, and Bloks recently launched.

There are concerns that copycats could undermine Laboubou's brand image, which underpins Pop Mart's high profitability, accounts Bloomberg. The agency includes not only Wakuka, but also Lafufa. That's what collectors call fake Laboubou, which are sold in large numbers on online marketplaces. These dolls with crooked faces and asymmetrical limbs are experiencing their own moment of popularity, competing with the original in the degree of "ugliness";

While they may take a bit of a bite out of Labooboo's market share, neither is capable of collapsing its position, Bloomberg writes. Wakuku still operates in the more lucrative niche of designer toys and doesn't dump against Pop Mart. And Lafufu owners often end up buying the original Labooboo.  

What really poses a threat to Pop Mart is the reseller market. This year, on June 18, the company held its first online presale of the new series of Labubu. The revenue from the promotion is expected to exceed 500 million yuan, which is a great success. But at the same time, the average price at resellers dropped by as much as 40% amid concerns that the company will now sell out of stock faster and more often than before. Before that, a 99 yuan toy could be resold on the secondary market for 200-500 yuan. In other words, resellers were making more money on Labuba than the manufacturer itself. It is difficult to estimate the volume of the secondary market for these toys. But now it is likely to normalize, which will be accompanied by a drop in prices, Bloomberg writes.

Acadian Asset Management portfolio manager Owen Lamont in his blog wonders whether we can generally talk about a bubble in the Laboubou market. He thinks not, despite the outward similarity of the situation to the collectible toy market bubble of the '90s - back then, prices of Beanie Babies rose and fell quickly in a short period of time.

A speculative bubble implies that there is a sustained price increase, leading to speculative trading in a clearly overvalued asset. In Laboubou's case, most buyers are rather looking to emphasize social status and aesthetic pleasure and do not plan to resell the toys for profit, he writes. 

"But if you see the charlatans at TikTok recommending a 60/40 portfolio where 60% is cryptocurrency and 40% is Labubu, then it's safe to say we've entered Beanie Babies territory," he sneers.

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