Deutsche Bank maintains Sell on Pop Mart: weak initial performance of new Labubu product, rising IP momentum risks
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Deutsche Bank maintains Sell on Pop Mart: weak initial performance of new Labubu product, rising IP momentum risks
Deutsche Bank believes that the first-day sales, secondary-market pricing, and social media feedback for THE MONSTERS Hair Salon series were all weaker than expected, which may weaken market confidence in the sustainability of Pop Mart's future IP cycle.
- The Hair Salon series was launched online in China on June 25 and offline on June 26, with an official blind box price of RMB159.
- On the first day, only 2-3 of the 7 styles carried a premium in the secondary market, while some regular styles fell below the official retail price; two weaker styles were around RMB107.
- The report roughly estimates that first-day sell-through on Douyin and Taobao/Tmall was only about 30-50% of major new IP launches earlier in 2026.
- Social media feedback turned negative, with users mentioning weaker design and limited innovation, indicating that collectors may be acting more rationally and selectively in their purchases.
- Deutsche Bank maintains its Sell rating and HKD140 target price, implying about -10.3% downside from the current share price of HKD156.
Report interpretation
Overview
This report is Deutsche Bank's company event commentary on Pop Mart 9992.HK, focusing on the THE MONSTERS Hair Salon series, which the market also views as an important new launch possibly close to Labubu 4.0. The report notes that despite marketing support before the launch, including World Cup-related exposure and endorsement from Lisa, sales, secondary-market pricing, and social media feedback during the initial launch window all indicated weaker-than-expected demand, suggesting that Labubu's recent IP cycle may be entering a more fragile stage.
Core views
The core view of the report is that the scarcity and secondary-market premium of Labubu-related new products are weakening, and investors' previously optimistic expectations that Pop Mart could continue replicating blockbuster IP momentum face downside revision risk. Deutsche Bank expects the company's 2026 revenue to decline by about 2% YoY, with more evident operating leverage pressure, and forecasts net profit of about RMB11.5bn; therefore it maintains its Sell rating and HKD140 target price.
Analysis framework
The report mainly analyzes market feedback during the initial launch period of the new product, observing official pricing versus secondary-market transaction prices, first-day sell-through in online channels, social media reviews, and comparisons with the premium and sell-out performance of previous hit IP launches. It also uses DCF valuation and cross-checks the target price with a P/E approach.
Methodology notes
Discounted cash flow valuation
The report uses DCF to value Pop Mart, with assumptions including a 2% risk-free rate, 1.1 beta, 6% market risk premium, and 7.9% WACC.
P/E cross-check
The report uses the P/E method as a cross-check, and the DCF target price implies about 14x 2026E P/E.
Assessing IP popularity through first-day sell-through, secondary-market pricing, and social media feedback
The report compares Hair Salon's launch feedback with previous popular new products such as THE MONSTERS and Twinkle Twinkle to identify risks of demand fatigue and declining scarcity.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Pop Mart 9992.HKThe company covered in the report, with Deutsche Bank maintaining a Sell rating.
- Strengths
- The company is a leader in China's designer toy market, with proprietary products accounting for more than 90% of revenue, strong IP development capabilities, and a global retail network; by the end of 2025, its store network exceeded 700 locations.
- Weaknesses
- The report believes that after Labubu's high base, demand momentum has weakened, new product launch performance has fallen short of expectations, and secondary-market premium and scarcity have declined, potentially leading to operating deleverage.
- Comparison
- Unlike previous hot IP launches such as Twinkle Twinkle, where most styles traded at a premium, only a few Hair Salon styles carried a premium on the first day, and some regular styles were below the official price.
- Risks
- Future new product sales continue to weaken, restocking pressures secondary-market prices, same-store sales decline, and the market does not fully price in operating leverage pressure.
- THE MONSTERS / Labubu IPPop Mart's flagship IP and the core focus of this event commentary.
- Strengths
- It previously performed strongly in 2024-2025 and gained global recognition and exposure at sporting events.
- Weaknesses
- The report says social media feedback on the new series has weakened, with consumers believing design and innovation are insufficient, and collectors may no longer buy new products indiscriminately.
- Comparison
- Compared with previous major IP launches that sold out quickly and carried high premiums, Hair Salon's online sales and secondary-market performance were clearly weaker.
- Risks
- IP cycle fatigue, declining scarcity, and weakening future new product sales and premium pricing power.
Key data
- RatingSellDeutsche Bank maintains its sell rating.
- Target priceHKD 140.0012-month target price.
- Current priceHKD 156.00As of June 26, 2026.
- Implied return-10.3%Calculated based on target price HKD140 relative to current price HKD156.
- Hair Salon official priceRMB 159Launched online in China on June 25 and offline on June 26.
- Secondary-market discounted price约 RMB 107Two less popular regular styles were significantly below the official retail price.
- First-day sell-through约为此前 2026 年主要 IP 新品的 30-50%Based on the report's rough estimates for Douyin and Taobao/Tmall.
- 2026E revenue growth-1.7%2026E sales growth in the financial table; the main text describes it as about -2% YoY.
- 2026E net profitRMB 11,286mDB net profit in the financial table; about RMB11.5bn in the main text.
- 2026E EPSCNY 8.51Deutsche Bank forecast EPS.
- 2026E ROE42.9%Key operating metric.
- 2026E EBIT margin41.1%The report expects operating margin to decline versus 2025.
Impact & implications
If subsequent restocking increases and online/offline supply becomes more ample, secondary-market prices may come under further pressure, reinforcing the market perception that Labubu scarcity is declining. This would not only affect the Hair Salon series itself, but could also weaken investor confidence in Pop Mart's future IP launch cadence, premium pricing power, and same-store sales resilience.
Risks
- Upside risks include faster-than-expected global sales momentum for existing IP.
- If a new blockbuster IP is launched earlier, it could improve revenue and market sentiment.
- If the Labubu movie and other innovative product categories progress strongly, they could support valuation.
- The report also notes that if subsequent restocking leads to further declines in secondary-market prices, it may intensify market concerns about declining scarcity.
What to watch
- Subsequent restocking pace for the Hair Salon series and inventory digestion online and offline.
- Whether sell-through improves on channels such as Douyin and Taobao/Tmall.
- Whether secondary-market prices continue to stay below the official retail price of RMB159.
- Changes in social media evaluations of design, innovation, and collectible value.
- Whether future THE MONSTERS/Labubu new products can restore launch premiums and quick sell-outs.
- Changes in revenue, same-store sales, and operating margin in 2026 under a high base.