In the summer when consumer spending cooled, Chinese toy company Bubble Mart warned investors of double-digit growth in the first half: Revenue is now expected to grow by at least 55% and profits by 90% or more. After Bubble Mart issued a profit warning on July 18, Morgan Stanley and other investment firms raised their target prices on Hong Kong-listed stocks. Morgan Stanley analysts said last month, “We believe that Bubble Mart’s expansion is still in its early stages, with sales in China of 7 billion yuan (approximately US$970 million) and sales in overseas markets of 3 billion yuan.” , noting that “the runway is very long” as Lego’s global annual sales are US$70 billion. Beijing-based Bubble Mart sells collectible figurines primarily based on its own intellectual property (IP), as well as sets featuring Minions, Avengers or Disney characters. The toys cost about $10 each and are sold in “blind boxes” so customers don’t know which character they are buying. “Potential demand,” CLSA analysts wrote in a report last month, “We believe the emotional value and low price sensitivity provided by Bubble Mart IP products provide strong support for potential demand in the Chinese market. ” and gave Bubble Mart an outperform rating. “We expect to open 30 retail stores in China this year, and sales in the Chinese market will increase by 21% year-on-year by 2024.” Analysts at CLSA raised the target price to HK$45 (US$5.76) from the previous HK$37. They expect Bubble Mart’s same-store sales in mainland China to grow in the high single digits this year. China’s retail sales in June increased by 2% compared with the same period last year, and sales of major Western brands such as Apple and Starbucks fell in China in the second quarter. After Bubble Mart was listed in Hong Kong in December 2020, its share price immediately doubled and hit a record high of HK$105.21 in February 2021. Despite the recent correction, Bubble Mart’s share price has still increased by more than 90% this year, temporarily surpassing the 100% mark on Wednesday, hitting a high of HK$41.75. But even so, it’s still a few Hong Kong dollars below analysts’ latest target price. Raising the target price After Bubble Mart’s profit warning, Morgan Stanley raised the target price to HK$52 from the previous HK$45. Wall Street investment banks gave the stock an “overweight” rating. Morgan Stanley said: “Based on the market, we expect China’s economic growth to accelerate from 20% in the first quarter to 40% in the second quarter.” “The strong growth of online channels and Pop Land are the main driving forces , while offline sales growth has also accelerated (driven by 10% (same-store sales growth)). “Bubble Park is a theme park opened by Bubble Mart in September 2023 near a major city park in Beijing. Gallery, and plans for gaming and anime products. “It’s encouraging that Pop Land has been part of earnings growth and is yet another example of the value of management’s determination to pursue new projects when they are considered ‘far-fetched,'” Morgan Stanley analysts said. “Additionally “The bad weather and consumption slowdown in China have not stopped Bubble Mart’s momentum, which is evidence of its growing market share in the growing IP product segment.” Bubble Mart has not yet announced when it will release the first half. Complete results. In 2023, the company released its interim report in late August. Other investment firms are more cautious about Bubble Mart stock. China Renaissance has a “hold” rating on the stock, with a target price well below HK$27.39. Analysts at China Renaissance said in a report last month, referring to the promotional activities in mid-June: “We believe that the online sales of Bubble Mart in June 2024 will decrease by 6% year-on-year, which may be due to the Mart did not offer many discounts during the 618 Shopping Festival. Also in mid-July, analysts at Nomura Securities upgraded Bubble Mart’s rating, but only from “underweight” to “neutral”, but raised the target price. to HK$41. Analysts at Nomura Securities said: “We believe the company is well-positioned to maintain its high sales growth momentum into 2H24F (we expect total sales to grow 39% year-on-year in 2H24F). ” Growing international business Although most of Pop Mart’s stores are in mainland China, the company’s international business is growing, with stores in countries from Thailand to the United States. It has opened a store in Paris. Jefferies Analysts said: “It is difficult to predict Bubble Mart’s sales momentum from 2025, because its growth driver is not store openings, but the launch speed of IP products. ” They gave the stock a buy rating with a target price of HK$47.40. A Jefferies report said: “We like management’s strategy of focusing on core intellectual property and investing in these intellectual property through various media. “Pop Mart’s IP can not only be blind boxes, but also games, movies and other categories. It also hopes to use theme parks as incubators to expand retail formats. This may extend the IP cycle.” Successful. —CNBC’s Michael Bloom contributed to this report. Revealed: Comcast is the parent company of NBCUniversal and CNBC. CNBC parent company NBCUniversal owns NBC Sports and NBC Olympics. NBC Olympics is the U.S. rights holder for all summer and winter Olympics through 2032.
ABOUT US
Our news website delivers comprehensive coverage on US news, economy, politics, and world events, ensuring you stay informed on the latest developments. We provide timely and accurate news to keep you updated on the most important stories. Stay connected with us for in-depth analysis and breaking news from around the globe.
Contact us: contact@realtimeheadlines.com
© Real Times Headlines - 2024 | All Rights Reserved