Citi expects that the diversification of POP MART's IP and other breakthroughs will drive the group's continued growth, making it a top pick in the Chinese consumer sector

Citi published a research report predicting that POP MART (09992.HK) will enhance its ability to withstand IP cyclical risks and revive new demand through its IP-centric diversification strategy. Citi's weekly data tracking shows a recent upward trend in APP downloads, particularly in China and the United States, mainly driven by the launch of its new series Skullpanda x My Little Pony; Citi also observed high consumer interest in the new series on Instagram.

Looking ahead to 2026, Citi forecasts that breakthroughs in the group's IP diversification, product innovation, and monetization capabilities across various fields will drive growth. With the launch of the next hit IP and the popularity of non-LABUBU IP in overseas markets, investor confidence is expected to strengthen; POP MART is one of Citi's top buy stocks in the Chinese consumer sector.

The report mentions that the group's other iconic IP products, such as SKULLPANDA, TWINKLE TWINKLE, and CRYBABY, are becoming new growth drivers and have their own fan bases, not merely serving as substitutes for LABUBU. It predicts that non-LABUBU IP has upward potential this year, and recent global consumer survey results also indicate that interest in non-LABUBU IP in overseas markets may be underestimated.

Additionally, discussions among investors about the sustainability of POP MART's growth are focused on the U.S. market. The vast potential market size in overseas markets, combined with global organizational upgrades, localized operations, and strengthened supply chains, should drive its global expansion this year and beyond.

Citi has given POP MART a "Buy" rating, with a target price of 415 yuan, based on a forecasted 28 times price-to-earnings ratio for 2026; the group trades at a premium compared to most global toy and IP peers, likely due to its rapid growth driven by overseas expansion. Compared to domestic peers, Citi also believes that POP MART should enjoy a premium due to its leading position