Goldman Sachs Maintains Pop Mart at Neutral, Cuts Target Price to HK$164

Overview

This is Goldman Sachs' 1Q26 operating update note on Pop Mart (9992.HK). The report points out that the company's 1Q revenue growth was slightly better than lowered market expectations, and China still maintained strong momentum, but near-term uncertainty remains high, including a tougher base from 2Q onward, more pronounced pressure in 3Q, softer overseas traffic, IP popularity cycle changes, and margin pressure from costs and expenses.

Core views

The core view is that long-term operating quality can improve, but near-term earnings visibility is insufficient. Goldman Sachs recognizes management's efforts in organizational capability, store operations, store location and space optimization, new category development, and new IP exploration, and believes these initiatives help the company achieve healthy long-term growth. However, factors such as IP fashion cycles, an immature overseas team and ecosystem, rising fixed costs, and higher raw material and freight costs may weigh on near-term profits. Goldman Sachs therefore maintains a Neutral rating and lowers the target price.

Analysis framework

The report combines 1Q operating updates, management call information, regional operating performance, gross margin and net margin guidance, store network adjustments, new business progress, and valuation modeling. Valuation uses 15x 2027E P/E and discounts back to 2026 at a 12% cost of equity to derive a 12-month target price of HK$164.

Methodology notes

• Valuation methodsP/E valuation

  Discounted valuation at 15x 2027E P/E

  Goldman Sachs maintains the 15x 2027E P/E assumption and discounts back to 2026 using a 12% cost of equity to derive a 12-month target price of HK$164.

• Factor analysisGS Factor Profile

  Growth, financial return, valuation multiples, and composite factors

  Goldman Sachs' factor framework evaluates a company's growth, financial returns, valuation multiples, and overall attractiveness by comparing it with covered stocks and industry peers.

• M&A scenarioM&A Rank

  M&A likelihood score

  Goldman Sachs scores covered companies from 1 to 3 based on the probability of acquisition. Pop Mart has an M&A Rank of 3 in the Greater China retail coverage universe, which typically indicates a low probability and an immaterial impact on the target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Pop Mart 9992.HK

  Research coverage name

  Strengths

  The China market delivered strong 1Q performance, while the mature retail system, membership base, sell-through rate for new products, and lifecycle of older products all performed well; the company is also improving store quality, IP operations, and global organizational coordination.

  Weaknesses

  The overseas market operating history is short, and the team and ecosystem are not yet mature; recent new customer traffic has softened, while rising fixed costs, rent, labor, raw materials, and logistics costs are putting pressure on margins.

  Comparison

  The report compares the company within the Greater China retail coverage universe and the Asia ex. Japan coverage universe, and notes that it sits alongside covered companies such as Anta, Miniso, Haidilao, Li Ning, Xtep, and Yum China in the rating comparison set.

  Risks

  Single-IP risk, slower-than-expected IP portfolio expansion, intensifying competition, poor cost and expense control, and overseas growth below expectations.

• Hang Seng China Ent.

  Market reference index

  Strengths

  Used to compare share price performance and help gauge Pop Mart's relative performance versus the market.

  Weaknesses

  The index is only a market benchmark and does not directly reflect changes in company fundamentals.

  Comparison

  The chart shows that 9992.HK underperformed the Hang Seng China Enterprises Index over 3-month, 6-month, and 12-month horizons.

  Risks

  Overall market volatility may affect valuation and relative-return judgments.

Key data

• RatingNeutralGoldman Sachs maintains a Neutral rating.
• 12-month target priceHK$164.00Cut from the prior HK$184.
• Current priceHK$162.90Price disclosed in the report.
• Implied upside0.7%The total return upside versus the current share price is limited.
• 2026 sales revenue forecastRmb 42.4bnThis corresponds to 14% YoY growth, below management's guidance of over 20% growth.
• 2026 adjusted net profit forecastRmb 13.3bnGoldman Sachs expects net margin to contract by 3.3 percentage points YoY.
• 2026 gross margin guidanceDown 1-2 percentage pointsMainly due to raw materials, freight and fuel costs, and a lower mix of high-gross-margin overseas markets.
• Market capHK$213.9bn / US$27.3bnMarket data disclosed in the report.
• Enterprise valueHK$188.2bn / US$24.0bnEnterprise value disclosed in the report.
• 3-month average daily turnoverHK$3.7bn / US$467.2mnLiquidity metric disclosed in the report.
• Revenue contribution from IP-themed small appliancesApproximately Rmb 6mnStill at an early stage, with a small revenue contribution.

Impact & implications

In terms of investment implications, Pop Mart's long-term story still comes from IP operating capability, product cadence, membership system, store quality, and overseas expansion efficiency, but the current valuation implies limited upside. If the company can demonstrate stable overseas demand, stronger awareness of non-Labubu IPs, and effective cost control, the stock may re-rate. Conversely, if IP popularity declines, overseas operations deleverage, or expense ratios rise, earnings forecasts still face downside risk.

Risks

• A decline in popularity of a single IP or failure to successfully expand the IP portfolio.
• Intensifying competition leading to pressure on sales growth or margins.
• Cost, rent, labor, and operating expense control falling short of expectations.
• A slowdown in overseas traffic, with immature teams and ecosystems leading to slower growth.
• Rising raw material, packaging, transportation, and fuel costs compressing gross margin.
• Growth slowing after 2Q due to a high base, with 3Q pressure likely to be more pronounced.

What to watch

• Changes in revenue growth in 2Q and 3Q 2026 under a high base.
• Whether sell-through rates, repeat purchase rates, and membership activity in China remain strong for new products.
• The share of local overseas consumers, awareness of non-Labubu IPs, and the diffusion of regional IP preferences.
• Whether the 2026 gross margin declines by 1-2 percentage points as guided, and whether the net margin contraction is manageable.
• Whether post-upgrade productivity per square meter improves at flagship stores, standard stores, and existing stores, and whether nearby store cannibalization appears.
• The rollout effect of the global membership system, HQ centralization, dynamic inventory allocation, and supply chain optimization.
• Progress in Pop Land renovation, films, picture books, World Cup collaborations, two new product series in 2H26, and small appliances as new businesses.