Pop Mart’s revenue rose by 245-250% YoY in 3Q25, exceeding marketexpectation. Regionally, revenue growth in China accelerated to 185-190% YoY, while growth in overseas markets moderated to 365-370%YoY due to higher comparison base. We believe the booming popularityof Twinkle Twinkle and the well-executed retail store expansion inoverseas markets will continue to drive strong top-line growth in 4Q25.
　　Furthermore, the potential impact of lingering US tariff risks can bemitigated through strategic pricing adjustments and productioncapacity relocation. We raised TP to HK$405.6 and maintain BUY.
　　Key Factors for Rating
　　Revenue growth in domestic market accelerated while that inoverseas trended down. In 3Q25, Pop Mart’s total revenue expanded 245-250% YoY, faster than 204% YoY in 1H25. By region, revenue surged by 185-190% YoY in China and 365-370% YoY in overseas markets, compared to YoYincreases of 135% and 440% in 1H25, respectively. In China, revenue fromoffline and online channels grew by 130-135% and 300-305% YoY, marking anacceleration from 1H25. We attribute this growth primarily to the launch ofLabubu 4.0 and the instant success of Twinkle Twinkle. In overseas markets,revenue skyrocketed 1,265-1,270% YoY in the US and 735-740% YoY in Europein 3Q25, compared to 1,142% and 725% respectively in 1H25. However, growthin Asia Pacific slowed from 258% YoY in 1H25 to 170-175% YoY in 3Q25, largelydue to the higher base.
　　Twinkle Twinkle, rising star. In 3Q25, Twinkle Twinkle (1H25: 2.8% ofrevenue) became a breakout sensation. Newly launched collections in 3Q25,such as the Sweet Dreams Forecast Series Plush Toys, remained consistentlyout of stock since their release, with prices in the secondary market commandinga 100% premium. We anticipate that the Fresh-Baked Mini Cookies Series PlushToys and Savor the Moment Series Figure Toys, both launched in lateSeptember, will support robust top-line growth in 4Q25. The diversified IPsdevelopment should help alleviate investor concerns about potential decliningpopularity for Labubu.
　　Tariff risks resurface but largely remain manageable. In October, USPresident Trump threatened to impose an additional 100% tariff on all Chineseimports, effective 1 November. While it remains uncertain if the proposed tariffswill be implemented, we believe that long-term trade tensions between the USand China are likely to persist. Any increase in tariffs would impact GPM, but webelieve Pop Mart is well positioned to mitigate these effects. The successful priceadjustments made in the US during 1H25 demonstrated the strong appeal ofPop Mart’s products. In addition, the company is accelerating its efforts torelocate production capacity to Vietnam to meet the surging demand in the US.
　　Key Risks for Rating
　　Downside risks: (i) fierce competition and change in consumer preference; (ii)deteriorated brand equity; (iii) inability to secure popular IPs and (iv) tariff hikesand other regulatory uncertainty.
　　Valuation
　　Given the impressive growth momentum in 3Q25, we revised up our 2025/26core net profit forecasts by 20%/23%. However, we lowered the target multiplefrom 45x/32x 2025E/26E P/E to 38x/27x 2025E/26E P/E as we expect thecompany’s revenue growth to gradually decelerate due to higher base, implyinga 0.6x 2026E PEG ratio. Considering all these, our TP is raised to HK$405.6.
　　Reiterate BUY.