POP MART Sags 2%+ as Citi and CLSA Cut TPs

POP MART (09992.HK) -4.000 (-2.486%) Short selling $1.18B; Ratio 22.570% opened flat today (14th) before edging lower in early trading, hitting a trough of HKD155.7. It is now trading at HKD156.9, down 2.49%, with 5.7967 million shares traded, involving HKD910 million in turnover.Citi said in a research report that, in view of slowing growth momentum in overseas markets and margin pressure from operational deleveraging, it lowered its earnings forecasts for POP MART (09992.HK) -4.000 (-2.486%) Short selling $1.18B; Ratio 22.570% by 16% to 19% for 2026 to 2028. The broker now expects the groups full-year 2026 revenue to grow 10% YoY, below the companys target of over 20%, mainly due to an expected 7% YoY decline in overseas revenue, while China market revenue is projected to grow 24% YoY.The broker forecast the groups overall revenue to increase 7% YoY in 2Q26, decrease 15% YoY in 3Q26 and increase 12% YoY in 4Q26. Overseas revenue may resume its decline from 2Q26. Citi believes that despite short-term challenges from volatility in overseas operations, the groups long-term growth potential remains intact, supported by its strong IP operation and monetization capabilities, as well as enhanced organizational capabilities.Citi cut its TP on POP MART from HKD350 to HKD263 and reiterated its Buy rating. The broker expects the groups gross margin to narrow by 1 to 2 ppts YoY in 2026, mainly due to rising raw material and logistics costs, changes in regional mix and tariffs, while net profit margin will also come under pressure amid lower gross margin and higher labor and rental expenses.***********************************************************************************************CLSA noted in a research report that the market is likely to reflect POP MARTs short-term pressures, including rising raw material costs, surging oil prices and margin contraction due to changes in overseas sales mix. The broker projected that in FY2026, the groups gross margin and adjusted net profit margin will decline by 2 ppts and 2.3 ppts YoY, respectively. For overseas operations, CLSA expects the group to focus on a standardized global store model, membership system, logistics and inventory management to enhance operational efficiency and support long-term growth.In the long run, the broker is positive on its proprietary IP platform, featuring a diversified IP portfolio and broader IP content such as POP MART City Park, to deepen emotional connections and expand consumption scenarios through IP-related products. In the near term, the broker believes the market is assessing managements ability to drive sustainable growth and the extent of gross margin pressure over the coming quarters amid a high base effect. It now forecasts China and overseas sales to grow 14% and 10% YoY, respectively, in FY2026, with overall sales growth of 12%. Gross margin and adjusted net profit margin are projected at 70.1% and 32.9%, respectively.The broker lowered its sales and adjusted net profit forecasts for FY2026 and FY2027 by 10% to 17% and 14% to 20%, respectively, to reflect slower overseas operations, reduced operating leverage and gross margin headwinds. The TP was cut from HKD303 to HKD206, corresponding to 16 times forward 12-month forecast PE (previously 20 times), while maintaining an Outperform rating. (ad/da)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-05-13 16:25.)