Financial Report 2024 | Overseas Market Revenue Exceeds 1 Billion, POP MART's Overseas Expansion "Acceleration"

Chairman and CEO Wang Ning of POP MART (9992.HK) once said that the toy industry is counter-cyclical because "people will buy toys when they are happy and unhappy."

Now, with the continuous expansion of POP MART's overseas market, this statement by Wang Ning is being validated in more regions around the world.

On March 20, POP MART released its 2023 financial report, achieving a full-year revenue of 6.301 billion RMB, a year-on-year increase of 36.5%; achieving a net profit of 1.231 billion RMB, a year-on-year increase of 111%, both revenue and net profit reaching historical highs.

During the performance briefing, the management of POP MART stated that they expect a revenue growth of no less than 30% in 2024, with overseas market revenue growth not less than 100%.

Benefiting from the fall in raw material prices and cost control, POP MART's overall gross profit margin increased by 3.8 percentage points to 61.3% in 2023.

In terms of intellectual property (IP), POP MART had 10 IPs with revenue exceeding one billion RMB last year.

Among them, SKULLPANDA, MOLLY, and DIMOO achieved revenues of 1.025 billion RMB, 1.02 billion RMB, and 738 million RMB respectively. Molly, who is already 17 years old, remains one of the important revenue pillars of POP MART, accounting for 16.3% of revenue.

The management of POP MART stated that the company currently has three new IP categories in incubation, and a new category of building block products will be launched in June this year.

In terms of market segmentation, in the mainland Chinese market, POP MART achieved a full-year revenue of 5.235 billion RMB, a year-on-year increase of 25.7%.

Due to the recovery of offline consumption in the mainland Chinese market, POP MART opened 55 new offline stores and established 123 robot stores, contributing a total revenue of 3.028 billion RMB, accounting for 57.88% of the revenue in the mainland Chinese market;

Online channels achieved a revenue of 1.711 billion RMB, accounting for 17.1% of total revenue.

Among them, the blind box machine mini-program, Tmall flagship store, and Douyin are POP MART's three major online channels, contributing revenues of 729 million RMB, 322 million RMB, and 283 million RMB respectively. Douyin channel is the only online channel among the three that achieved growth, with a year-on-year increase of over 4 times.

Regarding POP MART's overseas expansion, Wang Ning called out the slogan of "rebuilding" another POP MART and achieving revenue exceeding 1.8 billion RMB in 2024 last year.

POP MART is gradually approaching this goal.

In 2023, POP MART achieved a revenue of 1.066 billion RMB in the Hong Kong, Macau, Taiwan, and overseas markets (referred to as "overseas markets" below), a significant year-on-year increase of 134.9%, with the revenue share increasing by 7.1 percentage points to 16.9%.

In the overseas market, POP MART's main channel still remains offline In 2023, the offline channels in overseas markets contributed revenue of 640 million RMB, a year-on-year increase of 324.7%, accounting for over 60% of the total revenue in overseas markets, higher than the mainland China market.

In 2023, the number of POP MART's overseas offline stores increased by 42 to 80, while the number of robot stores increased by a net of 50 to reach 159, and they first entered France, Malaysia, Thailand, and the Netherlands.

In September last year, POP MART opened its first store in Thailand at Central World, the largest shopping center in Bangkok, with sales exceeding 2 million RMB on the first day.

Compared to the mainland China market, the gross profit margin of POP MART's overseas market business is 3.6 percentage points higher, reaching 64.9%. With the increase in the proportion of direct operations in overseas markets, there is still room for further improvement in the gross profit margin of overseas markets.

According to Zheshang Securities analyst Shi Fanke, the proportion of POP MART's overseas market direct revenue increased from 25% in 2021 to 53% in 2022.

Xin Feng (ID: Trade Wind01) inquired with relevant personnel at POP MART about the proportion of direct operations in overseas markets last year, but as of the deadline, no response was received.

Along with the financial report, there was also an announcement of personnel changes at POP MART.

POP MART announced that Vice President Yang Tao resigned as an executive director to focus on IP operations and product development. Another Vice President responsible for overseas business, Wen Deyi, was appointed as an executive director. The other three executive directors at POP MART are founder Wang Ning, CFO and China Region President Si De, and Vice President Liu Ran.

Wen Deyi joined POP MART in 2018, and prior to that, he worked in the business development department of CJ Group in South Korea, the global strategic department of CJ ENM, and the planning management department of Lotte Cinema.

Wen Deyi's extensive global business experience has made him the key player in POP MART's overseas business. As of now, Wen Deyi holds 1.4446 million shares of POP MART, with a market value of approximately 35.68 million HKD.

On March 20, after the financial report was released, POP MART opened high and closed higher at 24.7 HKD per share, up 7.39% at midday