Tuan Yongping Buys Pop Mart Shares Before Earnings Report, While Deutsche Bank Urges to Sell

Driven by the purchase of well-known investor Duan Yongping, the Hong Kong stock Pop Mart has risen nearly 8% for two consecutive days.

Duan Yongping sold put options in April at strike prices ranging from 145 to 150 Hong Kong dollars, corresponding to a position size of about 3% of Pop Mart's total share capital. After the expiration of the options, he further sold 155 Hong Kong dollar puts and on May 7th announced the clearance of other Hong Kong stocks and a direct purchase of Pop Mart's common shares. This series of operations has driven the inflow of southbound capital and retail investors, becoming the main driving force for Pop Mart's short-term rebound.

First Quarter Year-on-Year Eye-catching, Quarter-on-Quarter Worrisome

Pop Mart will disclose first-quarter operational data in mid-May and hold its first quarterly management teleconference. Deutsche Bank expects total revenue of about 8.9 billion yuan for the first quarter, a year-on-year increase of 73%, but this growth rate is highly dependent on the low base of the same period last year.

Looking at the markets, domestic growth is expected to be 85% year-on-year, with holiday seasons and low bases being the main drivers. What really worries Deutsche Bank is the quarter-on-quarter trend in overseas markets, with an overall expected decline of 27%, with Europe falling by 41%, North America down by 36%, and Asia being relatively mild but also showing a quarter-on-quarter drop of 18%. The 60% year-on-year growth in overseas markets is more of an illusion of the base rather than an improvement in real demand.

IP Cycle Inflection Point, Secondary Market Has "Voted"

More alarming than short-term sales fluctuations is the cooling signal of the core IP in the domestic market. Deutsche Bank points out that recent series such as "The Monsters" and "Twinkle Twinkle" have seen a noticeable softening in prices on the secondary market. The Monster and Sanrio's co-branded products have a discount of up to 40%, and the latest "Twinkle Twinkle" series is also sold at below the issue price, failing to replicate the premium situation of the previous Labubu series.

More critically, if the monthly trend of e-commerce in March this year is extrapolated to the end of the year, Deutsche Bank estimates that domestic e-commerce sales in the second half of the year may decline by 17% year-on-year, which means that the structural slowdown of Pop Mart's domestic market may have quietly started in the first quarter.

Full-Year Forecast: Significantly Deviating from Market Consensus

Deutsche Bank's judgment on Pop Mart in 2026 is significantly different from the market mainstream. The bank expects full-year revenue of about 36.5 billion yuan, a slight decrease of 2% year-on-year, which is about 20% lower than the market consensus of 45.5 billion yuan; adjusted net profit of about 11.5 billion yuan, a year-on-year decrease of 12%, lower than the market expectation by about 24%. The net profit forecast for 2026 to 2028 has been reduced by 16% to 28%.

In terms of quarterly rhythm, Deutsche Bank expects quarter-on-quarter growth in the domestic market to be -19%, -2%, +14%, -9%, and overseas -27%, -4%, +12%, -5%. The temporary recovery in the third quarter is hoped to be driven by the release of "Labubu 4.0" and the World Cup effect, but it is difficult to reverse the trend for the whole year.

The reversal of operating leverage is another pressure. Pop Mart's EBIT profit margin in 2025 is as high as 45%, far exceeding the retail industry, but with the slowdown in same-store sales growth, coupled with the high fixed costs of flagship stores in the core business districts of Europe and the United States, the contraction of profit margins is almost inevitable. The significant increase in inventory at the end of the year also adds to the concerns of inventory reduction and brand discounting.

Four Suspenses to Be Solved

At the upcoming management teleconference, the market is most concerned about four questions: the real quarter-on-quarter trend of each overseas region (the company usually only discloses year-on-year data), the latest sales dynamics for April to May, whether the full-year profit margin can be maintained (the management previously said that it narrowed by only 1 percentage point in the first two months