According to the research report released by Guosen Securities, it maintains a rating of "outperform" for Ppop Mart (09992). Due to the company's better-than-expected growth in domestic and international revenue in the first half of 2024, profit forecasts have been raised. It is expected that the net income attributable to shareholders will be 2.11/2.56/2.93 billion from 2024 to 2026, adjusted (originally 1.93/2.32/2.67 billion). The company's flagship IPs continue to perform well, new product launches are stable, and the ability to create and operate IPs is being continuously validated. Overseas channels continue to expand and become a new growth driver for the company. At the same time, there is potential to enhance the depth of IP operations for IP parks, game products, building blocks, and trading cards, and the ability to create, operate, and commercialize IPs is expected to increase continuously.

Guosen Securities' main points are as follows:

Overseas expansion and category expansion have driven a 62% increase in the company's revenue and a 93% increase in profit in the first half of the year.

The company's revenue in the first half of the year was 4.56 billion yuan, a year-on-year increase of 62%. Among them, revenue from China excluding Hong Kong/Macao/Taiwan and overseas regions was 3.21/1.35 billion yuan, with year-on-year growth rates of +31.5%/+259.6% respectively. The net income attributable to shareholders was 0.92 billion yuan, a year-on-year increase of 93.3%, mainly due to the strengthening of supply chain management and the scale effect of overseas business. The profit margin remains high, with a gross margin of 66.9% in the first half of the year, an increase of 6.6 percentage points compared to the same period last year. The expense ratio continues to be optimized, with sales/management/financial expenses decreasing by 0.2/1.8/0.5 percentage points to 31.0%/10.0%/-2.1%.

Looking at the IPs, THEMONSTERS and Hirono, produced by PDC, have also shown impressive growth.

1) In terms of mature IPs, the revenues of MOLLY, THEMONSTERS, SKULLPANDA, and DIMOO were 7.8/0.63/0.57/0.38 billion yuan, with year-on-year growth rates of 90.1%/292.2%/9.2%/4.4% respectively. THEMONSTERS is extremely popular in Thailand. 2) In terms of new IPs, several IPs under PDC have achieved excellent results. The revenues of Hirono, Zsiga, and HACIPUPU were 0.25/0.12/0.09 billion yuan, with year-on-year growth rates of 124.3%/169.5%/37.3% respectively.

The new product has significantly broken through the circle, with the proportion of figurines dropping to less than 60%.

1) In terms of theme parks, in April 2024, the company jointly held the "2024PTS Beijing International Trend Festival" with the theme park, generating synergetic effects. 2) In terms of games, on June 27th, the first self-developed mobile game "Dream Home" was launched, ranking in the top three in the simulation business category in the first week of its launch. 3) In the first half of the year, the company also launched plush, building blocks, and card products. Currently, the proportion of figurines has dropped to 58.3%. The expansion of categories has enhanced the stickiness of IP among fans while expanding the fan base.

Southeast Asia and North America have experienced rapid growth, with plans to add 30-40 new overseas stores in the second half of the year.

The company's revenue from Southeast Asia/East Asia and Hong Kong, Macao and Taiwan/North America/Europe and Australia were 5.6/0.48/0.18/0.14 billion yuan, with year-on-year increases of 478.3%/153.7%/377.7%/158.8% respectively. Overseas will continue to advance the DTC strategy, and in the second half of the year, it will continue to add 30-40 stores on the basis of the existing 92 stores.