Some have resorted to stealing.
Others have been scammed.
Even more have started businesses selling custom accessories, and even fakes.
We even had to call police to stop arguments and prevent escalations of fights at the latest Pop Toy Show. 🫠
From governments (ahem, PAP) to celebrities and my neighbour’s teenagers, almost everyone seems to be hankering after this ugly doll…
What is Labubu?
Labubu is a quirky collectible figure featuring pointy ears and a wide smile with serrated teeth.
It was created by artist Kasing Lung in 2015 as part of a character set called “THE MONSTERS”, inspired by Nordic fairy tales.
Labubu’s latest virality has been attributed to a post by BLACKPINK’s Lisa. Since Lisa’s post back in April 2024, Labubu has been mentioned by a slew of celebrities, influencers and even Thai royals.
The craze has now taken on a new life of its own, going on tour in Thailand and now gaining a following in the Philippines. And yes, it often remains sold out:
If you’ve never heard of the Labubu craze, then you’re in the right place. Because we hadn’t either, until we saw this 👀
Even if you’ve not heard of the Labubu dolls, you’ve probably heard of the company that sells these dolls:
Pop Mart (9992:HK): The next big China stock?
You’ve probably seen Pop Mart stores or vending machines around Singapore. Pop Mart retails collectable toys, often sold in the form of a ‘blind box’
Pop Mart raised US$674 million in its IPO back in 2020 and has a presence in China, across South East Asia, the United States, Canada and the UK. Most of Pop Mart’s clients are between 18 – 35 years old with disposable money to spend.
Like most China stocks, its share price took a hit in the past couple of years:
However, the company has been growing consistently with profits on the rise:
Pop Mart: Opportunity or Hype?
After delivering 200% return year to date, will Pop Mart be able to continue its streak? Or will the Labubu craze merely be just a short term hype?
Let’s find out.
1. Pop Mart’s has been growing steadily
Pop Mart sells toys, and it has been selling more toys than ever, since its IPO. The company has managed to grow its gross profit steadily while managing its costs of sales:
As a retail business, the more touch points Pop Mart has, the more they will be able to sell. Hence, the company has also been increasing the number of retail stores and online sales channels over the years.
While toys remain the key business segment for Pop Mart, the company is actively exploring other avenues as well. For example, the company launched its first theme park – POP LAND at Beijing in 2023 to offer an immersive experience for its visitors.
Pop Mart also curates and organise exhibitions and tours that increase the interaction between their consumers and products featuring their IPs.
But can it sell even more toys in the years to come?
2. Pop Mart’s long standing challenge
To keep growing, Pop Mart not only has to sell more toys. The company also has to secure new IPs. And if you’ve taken a closer look at the half year revenue table above, you would have noticed a key challenge that Pop Mart has been struggling with since its IPO.
Only its MOLLY series has been growing strongly. Although the company has secured new IPs over the years, it has yet to develop a second IP that can match MOLLY’s growth.
Although SKULLPANDA did well in 2023, its revenue in 1H24 suggests that the series may struggle to grow as well as it did in previous years. The sustainability of THE MONSTERS (and Labubu)’s revenue growth remains in question.
That said, different IPs do better across different regions. For example, Pop Mart’s CRYBABY series had been popular in Thailand before the Labubu craze, there was even a CRYBABY themed store in Bangkok.
The company also collaborates with well-known Licensed IPs like Marvel and Naruto, however these would tend to come with higher costs.
As Pop Mart expands and collaborates with more IPs, its Cost of Sales will definitely increase. It would be key to watch their gross profit growth trends over time.
3. Is Labubu the only reason for Pop Mart’s 200% gain?
Prior to the Labubu craze, THE MONSTERS series only accounted for 5.8% of revenue in Pop Mart’s range of IP, bringing in RMB 367M in 2023.
In 2024, in terms of revenue, THE MONSTERS was the 4th in terms of revenue:
Looking at their interim report, it is no surprise that that THE MONSTERS raked in RMB 636.8 M in the first half of 2024, making it the 2nd highest revenue generating IP for Pop Mart, coming in just behind Molly as of June 2024:
For a clearer idea, here’s the breakdown of their revenue by top 4 IPs taken from interim reports since 2020. Keep in mind that these figures reflect revenue for the six months ending 30 June.
| Artist IP | 2024 | 2023 | 2022 | 2021 | 2020 |
| MOLLY | 782,160(17.2%) | 411,433 (14.6%) |
404,347 (17.1%) |
203,900 (11.5%) |
112,064 (13.7%) |
| THE MONSTERS | 626,806 (13.7%) | 159,829 (5.7%) |
134,887 (5.7%) |
145,789 (8.2%) |
70,052 (8.6%) |
| SKULLPANDA | 574,562 (12.6%) |
526,383 (18.7%) |
461,766 (19.6%) |
183,042 (10.3%) |
– |
| DIMOO | 377,838 (8.3%) |
362,032 (12.9%) |
298,442 (12.7%) |
204,993 (11.6%) |
117,466 (14.4%) |
Although the Labubu craze has more than doubled the revenue of THE MONSTERS, and it is on trend to becoming the top IP by revenue in 2024, MOLLY remains the key driver of revenue among Pop Mart’s proprietary products.
4. Tough competition
Growth isn’t the only challenge that Pop Mart faces. The blind box market is huge, it is estimated to reach RMB 42.4B in 2026, in China alone:
Pop Mart is currently one of the biggest players and has to fend off competitors who are hungry for its share of the pie.
Hot on its heels are brands like MINISO (HK:9896) which has collaborated with Sanrio and Disney to release its own range of blind box in China and across its international markets, and other smaller players like Kule Chaowan (酷乐潮玩) which is collaborating with Sesame Street, Crayon Shin chan and others to release blind boxes in China.
Is Pop Mart a Buy?
Pop Mart popped in 2024, mostly thanks to the rejuvenation in popularity of its Labubu dolls. However, the business faces tough competition in a market with a relatively low barrier of entry.
While the company is exploring new avenues of revenue, sales of toys remains its main revenue driver. Hence, Pop Mart’s future success depends on its ability to continually develop profitable IPs that can sell.
Personally, I don’t buy blind boxes nor am I convinced that Pop Mart can defend its pole position as the top blind box maker over the long run. To top it off, this market is known to be fickle. Pop Mart seems to be stuck in a Red Queen’s race currently hence it isn’t a buy for me.
But if you’re in the unfortunate situation where you can’t get your hands on the Labubu you’ve promised your spouse or child, maybe you can scoop up some 9992 for them as a consolation 🫠
p.s. if you want to learn how to analyse and find the best stocks to buy, Alvin shares our strategy at this live webinar.