HSBC significantly raised its target price for Pop Mart in its latest research report, stating that the company is more than just Labubu, with its multi-IP strategy showing results, and the price reduction of Labubu being a healthy adjustment.

On Wednesday, HSBC Bank upgraded Pop Mart's rating in its latest report, raising the target price from HKD 215.50 to HKD 331.50, representing a 53.8% increase, which implies a 32% upside from the current stock price.

This aggressive adjustment is primarily based on the strong performance of Labubu 3.0 in overseas markets and a significant upward revision of 2025 profit forecasts. HSBC stated that Pop Mart's success does not rely solely on the Labubu IP, as new series releases and other IPs can consistently spark consumer interest.

Additionally, HSBC noted that the resale price of Labubu 3.0 is normalizing, which helps maintain the IP's image, and the company's long-term growth prospects remain healthy. The bank raised its 2025 net profit forecast by 24%.

Overseas Market Achieves Key Breakthrough, Multi-IP Strategy Shows Results

HSBC stated that after the launch of the Labubu 3.0 series in April 2025, promotions by international celebrities and KOLs on social media in June triggered an unprecedented wave of attention. Given the strong product momentum, HSBC raised its 2025 overseas revenue forecast by 34% to RMB 14.325 billion, representing a year-on-year increase of 183%.

Notably, the U.S. market saw a significant revision, with HSBC raising Pop Mart's revenue forecast from RMB 3.547 billion to RMB 5.509 billion. Driven by improved expectations for the overseas market, HSBC raised its 2025 net profit forecast by 24%.

Research shows that Pop Mart's success is not solely dependent on the Labubu IP. In markets like Thailand and other Asian regions, which account for over 40% and 30% of overseas revenue, respectively, data indicates that new series releases and other IPs can consistently engage consumers.

For example, the Google search index for Crybaby (the company's fourth-largest IP in 2024) surged one or two quarters after Labubu's search peak. Moreover, driven by Labubu 3.0, Hong Kong and Taiwan experienced a second wave of search interest in Labubu in June 2025, further validating the sustainability of the company's IP operations.

Labubu Price Reduction is a Healthy Adjustment, Significant Earnings Forecast Upgrade

After Pop Mart began releasing Labubu 3.0 inventory to the market on June 16, its secondary market prices started returning to normal levels (retail price: RMB 99). HSBC believes this normalization of resale profits is beneficial for maintaining the healthy development of the IP brand, as it reduces speculative hoarding, while the company's growth prospects remain intact.

Pop Mart's stock price fell about 10% after peaking at HKD 275 on June 16, but HSBC believes this adjustment does not reflect a change in the company's fundamentals.

Based on strong overseas performance, HSBC significantly raised its earnings forecasts, increasing 2025–2027 net profit estimates by 22–24%. It now expects 2025 non-IFRS net profit to grow 131% year-on-year to RMB 7.856 billion, 23% higher than previous forecasts.

The bank's current 2025 net profit forecast is 17% higher than market consensus, with revenue forecasts 18% higher. The stock trades at a 2026 P/E of 30.0x, with a PEG ratio of 1x, and expects a 29% EPS CAGR from 2025 to 2027. The new target price is based on a DCF model, using an 8.3% WACC assumption and a 3.0% terminal growth rate, implying 2026/2027 P/E multiples of 39.8x/31.4x.