Pop Mart maintains an Overweight rating but is removed from Morgan Stanley's Analyst Top Pick list

Overview

This report is Morgan Stanley's risk-reward update on Pop Mart International Group 9992.HK. The report date is April 20, 2026, and the analyst is Dustin Wei. The report maintains its Overweight rating, HK$278 target price, and earnings forecasts unchanged, but removes the company from the Analyst Top Pick list. The report believes Pop Mart is still in the early stages of growth as a global IP consumer goods company, driven by Labubu popularity, the IP product flywheel, the DTC model, and overseas expansion, with considerable long-term growth potential remaining.

Core views

The core view is that Pop Mart has the opportunity to grow from a domestic Chinese designer toy brand into a globally influential IP consumer platform, with its potential path compared to a combination of Sanrio, Bandai Namco, LEGO, and Disney. Morgan Stanley expects the company's 2025-2027e sales and adjusted net profit CAGR to be 22% and 18%, respectively, and believes its earnings growth exceeds that of large global consumer goods companies. Upside could come from new IPs, new categories, overseas flagship stores, global store expansion, and success in new businesses; downside could come from a weak macro consumer environment, a shorter-than-expected designer toy lifecycle, slower overseas expansion, and a smaller-than-expected addressable market.

Analysis framework

The report uses a risk-reward framework, dividing valuation into bull, base, and bear scenarios, and assesses valuation reasonableness using 2026e P/E and PEG corresponding to 2025-2027e EPS CAGR. The base-case target price is HK$278 using 23x 2026e P/E; the bull-case is HK$419 using 28x 2026e P/E; and the bear-case is HK$129 using 14x 2026e P/E. The report also validates its growth assumptions with data such as store count, regional revenue exposure, sales growth, EPS, and institutional ownership.

Methodology notes

• Valuation frameworkRisk-reward scenario analysis

  Bull, base, and bear target prices

  Upside and downside are estimated through different growth and valuation multiple assumptions, with a base-case target price of HK$278, a bull-case of HK$419, and a bear-case of HK$129.

• Valuation metricsP/E and PEG

  2026e P/E and 2025-2027e EPS CAGR

  The base case uses 23x 2026e P/E, corresponding to about 1.3x PEG; the bull case uses 28x 2026e P/E; and the bear case uses 14x 2026e P/E.

• Earnings forecastMorgan Stanley ModelWare

  Modeled EPS forecasts

  The report states that unless otherwise noted, metrics are based on the Morgan Stanley ModelWare framework; 2026e EPS is Rmb11.21, 2027e EPS is Rmb13.43, and 2028e EPS is Rmb15.52.

• Consensus comparisonConsensus methodology

  Consensus basis

  Some EPS data are labeled as based on consensus methodology and are compared with Morgan Stanley's forecasts.

Asset mapping & comparison

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

• Pop Mart International Group 9992.HK

  Core covered name

  Strengths

  It has a strong IP product flywheel, momentum from blockbuster products such as Labubu, an efficient DTC model, simultaneous expansion in domestic and overseas markets, and new businesses and categories that provide long-term optionality for growth.

  Weaknesses

  Its valuation depends on sustained high growth, the lifecycle of blockbuster consumer products may fluctuate, overseas expansion still needs to be proven, and revenue still depends significantly on the Mainland China market.

  Comparison

  The report compares its long-term potential to a combination of Sanrio, Bandai Namco, LEGO, and Disney, and believes its earnings growth exceeds that of large global consumer goods companies.

  Risks

  Weak macro conditions, uncertainty around new products and new IPs, inability to continue launching popular products, unsuccessful overseas expansion, trade tensions, and a target market size below expectations.

Key data

• RatingOverweightMaintained unchanged.
• Industry viewIn-LineChina/Hong Kong consumer sector view.
• Target priceHK$278.00Base-case target price, implying about 72.78% upside from the current price.
• Current share priceHK$160.90Closing price on April 20, 2026.
• 52-week rangeHK$339.80-HK$140.1052-week price range disclosed in the report.
• Bull caseHK$419.00Uses 28x 2026e P/E and assumes 2025-2027e adjusted earnings CAGR of 33%.
• Bear caseHK$129.00Uses 14x 2026e P/E and assumes 2025-2027e adjusted earnings CAGR of 5%.
• 2026e EPSRmb11.21EPS forecast disclosed in the report.
• 2027e EPSRmb13.43EPS forecast disclosed in the report.
• 2028e EPSRmb15.52EPS forecast disclosed in the report.
• China retail store count422 in 2025, 448 in 2026e, 473 in 2027e, 498 in 2028eKey operating driver.
• Overseas retail store count256 in 2025, 376 in 2026e, 466 in 2027e, 526 in 2028eOverseas expansion is one of the main growth assumptions.
• China sales growth134.6% in 2025, 25.7% in 2026e, 16.1% in 2027e, 13.6% in 2028eForecast sales growth for the China market disclosed in the report.
• Overseas sales growth291.9% in 2025, 20.9% in 2026e, 25.0% in 2027e, 19.5% in 2028eForecast sales growth for overseas markets disclosed in the report.
• Global revenue exposureMainland China 50-60%, North America 10-20%, Europe excluding the UK 0-10%, UK 0-10%, Japan 0-10%, Asia Pacific excluding Japan, Mainland China, and India 20-30%Source: Morgan Stanley Research Estimate.
• Institutional active ownership54.3%Source: Refinitiv and Morgan Stanley Research.

Impact & implications

For investors, the message of the report is that although Pop Mart has been removed from the analyst top pick list, the core bullish thesis has not weakened, and the rating, target price, and forecasts all remain unchanged. The current share price still has substantial upside relative to the target price, but share performance is highly dependent on the company's ability to keep developing strong IP, sustain Labubu's popularity, execute overseas store expansion efficiently, and maintain a stable consumer environment. The risk-reward range shows that if global expansion and new businesses succeed, the company could continue to rerate; if the designer toy lifecycle shortens or overseas expansion fails, downside valuation risk would be significant.

Risks

• Weak macro consumer environment.
• Uncertainty around new products and new IPs.
• The company may be unable to continue creating attractive products.
• Overseas expansion may fall short of expectations.
• Trade tensions may affect the globalization process.
• The designer toy lifecycle may be shorter than expected.
• The pace of overseas market expansion may slow.
• The potential serviceable market size may be smaller than expected.

What to watch

• Whether Labubu's popularity can persist and convert into stable sales.
• Whether sales momentum in the China market can be maintained.
• Expansion in overseas store count and same-store performance.
• Success rate of launches for new IPs, new categories, and new series.
• Progress of new businesses such as Pop Land, Pop Block, accessories, cake shops, and trading cards.
• Changes in the global consumer environment and trade frictions.
• After the historical target price cuts, the market's repricing of growth and valuation.