Annual sales of 400 million units! Can Pop Mart sustain its high growth in the "post-Labubu era"?

$POP MART (09992.HK)$Announcements on February 9 indicated that the company’s global sales of all IPs and product categories would exceed 400 million units in 2025, with global sales of THE MONSTERS-branded products surpassing 100 million units.

In 2025, Pop Mart experienced a typical 'single super IP + category breakthrough' surge, with revenue nearly tripling year-on-year. The core driver was Labubu's global breakout, alongside plush toys significantly amplifying IP monetization efficiency. The latest operational data has shifted market focus to what comes 'after the hit.'

In her report, Lina Yan, an analyst at HSBC Global Research, noted that 'the hypergrowth brought by Labubu will fade, but the platform’s capabilities will continue,' defining 2026 as a year of 're-baselining.' UBS Group stated that the data helps ease market concerns about reliance on a single blockbuster, while the new IP Twinkle had a strong start in early 2026, offering a window to observe ongoing growth.

HSBC will$POP MART (09992.HK)$HSBC lowered its target price from HKD 392.5 to HKD 354, while UBS Group maintained its target at HKD 326; both institutions retained their 'Buy' ratings. Based on the closing price of HKD 257.2 on February 9, this corresponds to implied upside potential of approximately 38% and 26.7%, respectively. However, the shared premise is that the explosive growth seen in 2025 is unlikely to be fully replicated.

For investors, the key variable is shifting from 'panic-buying acceleration' to 'normalized retail expansion + new product cadence.' HSBC revised downward its forecasts for revenue and profit growth in 2026, pointing to a decline in repeat purchase intensity and decelerating growth. However, it emphasized that valuations already factor in some IP lifecycle risks, with future focus on execution in new product incubation and global deployment.

2025 Breakdown: Labubu and Plush 'Rebuilt from Scratch,' but the foundation is not hollow.

HSBC attributed the high growth in 2025 to two main levers. By IP segmentation, The Monsters (Labubu) revenue surged approximately 582% year-on-year, with its contribution estimated to rise to 47% (from around 23%). By product category, plush toy revenue grew about 720% year-on-year, contributing up to 60% (from around 22%). This brought Pop Mart closer to a consumer goods-style hit cycle, where IP popularity combined with new category scaling resulted in higher-frequency, higher-ticket, and more easily shareable products.

However, HSBC also highlighted the 'base excluding blockbusters.' Under its estimation framework, even after excluding The Monsters, revenue in 2025 still grew approximately 106% year-on-year; excluding plush toys, revenue still grew about 51%. This indicates that while 2025's incremental gains were highly concentrated, the company's existing business base did not stagnate.

In mainland China, the most easily overlooked source of incremental growth is the ARPU of repurchasing members. HSBC stated that$POP MART (09992.HK)$in 2025, the contribution of ARPU growth from repurchasing members (annual purchase frequency > 2 times) to mainland revenue growth will be 'close to half.' Structural data indicates strong purchasing intensity during the 'supply tightness' phase: by 2025, sales contributed by mainland members are expected to account for approximately 91%, with repeat purchases accounting for about 55.8%, and repeat purchasers contributing approximately 83% of total sales. This slope driven by scarcity determines that once supply-demand mismatches ease, a decline in growth rates becomes almost an inevitable logical outcome.

2026 Rebaselining: Normalizing ARPU, Growth Returning to an 'Expansion Year' Framework.

HSBC's core forecast for 2026 is that after the 'rush-to-buy' effect recedes,$POP MART (09992.HK)$the ARPU of repurchasing members will normalize, pulling growth back from explosive levels to the steady track of retail expansion. Based on this shift, HSBC has revised its 2026 revenue growth forecast downward from 30.6% to 23.7%, and its net profit growth forecast from 29.1% to 21.3%, while cutting earnings forecasts for 2026-2027 by 11%-13%. The reduction in target price primarily stems from the downward revision of earnings forecasts rather than a change in valuation framework, as key DCF assumptions (WACC at 10%, terminal growth rate at 3%) remain unchanged.

In terms of regional structure, HSBC expects PRC revenue growth to be approximately 13.0% in 2026, with overseas growth at about 35.7%. Overseas markets are seen as a core buffer against the domestic ARPU decline, but the logic is shifting from "volume-driven" to "expansion-focused," relying more on offline execution: the number of overseas retail POS is projected to increase from 218 in 2025 to 331 in 2026. For the market, this means visibility of growth will increasingly depend on details like site selection, supply matching, product launch timing, and localized operations.

Risks are thus more skewed towards the "execution side." HSBC identifies potential disruptions including supply chains unable to keep up with demand, scalpers driving up prices and crowding out genuine consumers, shareholder placements creating short-term stock price pressure, counterfeit products affecting the brand, risks associated with renewing exclusive licensing agreements with collaborating artists, and capital misallocation due to entry into new businesses or acquisitions. Additionally, there are industry-level risks such as intensified competition and fluctuations in offline foot traffic.

Valuation and Transition: Can New IPs Fill the Post-Labubu Growth Gap

At the valuation level, HSBC believes the market has already factored in the risk of 'Labubu lifecycle' through valuation compression. Its basis is that since early 2025,$POP MART (09992.HK)$one-year forward EPS has risen by approximately 394%, but one-year forward PE based on consensus estimates has declined by about 45% compared to the average level in 2025 and by about 65% compared to the peak in 2025. Against this backdrop, HSBC places greater emphasis on whether 'platform capabilities' can sustainably incubate and globalize new IPs, rather than solely relying on extending blockbuster popularity.

UBS Group’s "relay observation" focuses on new product launches and overseas interactions. It notes that the newly introduced IP Twinkle performed strongly in early 2026, with Valentine’s Day editions selling over 30,000 units on Tmall and more than 46,000 units on Douyin, while the Spring Festival plush toys sold over 20,000 units on their first day on Tmall. Overseas, the Skull Panda x My Little Pony collaboration series sold out in North America’s home delivery channel, with Instagram previews garnering 460,000 likes. UBS also highlights the need to strengthen consumer engagement, local IP development, and brand building in overseas markets like the United States, where new employee ratios are high, and user recognition of multiple IPs is still being cultivated.

Both institutions consider subsequent data as verification points. UBS states that annual reports and Q1 2026 sales data will be used to test performance in China and overseas markets, particularly the U.S., on a quarter-over-quarter basis. For investors, the core issue in the "post-Labubu era" is not whether 2025 was brilliant, but whether, starting from 2026, the company can sustain growth transitioning from explosive to normalized via a matrix of new products, overseas expansion, and more sustainable membership management.

Editor/Melody