In recent months, the spectacular rise of Pop Mart's stock price has captured the attention of investors, driven largely by its successful collaboration with the animated film "Ne Zha 2." Over the past month, Pop Mart's shares on the Hong Kong Stock Exchange have surged by more than 26%, propelling the company back to peak levels last seen in 2021 and reaching record highs.

This surge in stock value highlights the company's robust strategy centered on intellectual property (IP) development and globalizationAnalysts, including Lina Yan from HSBC, have suggested that Pop Mart's potential growth trajectory is reminiscent of that of LEGO, which has shown impressive expansion over nearly a century.

Contrasting the trajectories of the two companies yields fascinating insightsBoth brands have endured periods of downturn; they have successfully transitioned their business models under youthful leadership; and they share a successful blueprint for creating trendy toy IPs that includes a strong emphasis on direct consumer sales, effective global outreach, and robust IP management.

HSBC emphasizes Pop Mart’s ability to create engaging, trendy toys in a manner similar to LEGOThe brand strategically combines internal design teams and external licensing to cultivate popular IPs, while also collaborating with globally recognized intellectual properties to develop themed products that resonate with fans across the world.

Despite existing for almost a century, LEGO continues to witness substantial growth, boasting near $10 billion in sales for 2023 and an impressive compound annual growth rate (CAGR) of 14% from 2019 to 2023. Pop Mart, on the other hand, is predicted to experience a CAGR in net profits of 32% from 2024 to 2026, with its revenue expected to grow at a CAGR of 30%, with 70% of this growth projected to come from international markets.

Since its inception in 2010, Pop Mart has rapidly gained popularity through its unique "blind box" model, which emphasizes the importance of strong IP management

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The company collaborates with various artists, employs its design teams for product development, and engages in licensing agreements, resulting in a plethora of successful IPs such as "Molly," "The Monsters," "Skullpanda," and "Dimoo." These characters have not only dominated the Chinese market but have also captured the hearts of fans worldwide.

For instance, the "Molly" IP has gone through 47 product iterations since its debut in 2016, and its revenue skyrocketed by 90% year-on-year in the first half of 2024. Meanwhile, another popular line, "The Monsters," reported an incredible 292% increase in revenue for the same period, serving as a significant growth engine for the company.

Importantly, Pop Mart’s strategy goes beyond mere salesThe company has diversified its revenue streams through IP licensing, theme parks, and gaming, indicating a robust approach to monetizationAdditionally, its global expansion is accelerating, with business operations now established in over 30 countries and regions, including crucial markets like the United States, Canada, Southeast Asia, and Europe.

Furthermore, Pop Mart stands out as one of the few Chinese brands that have successfully transitioned into international marketsHSBC's report highlights the brand’s growing global fanbase, with overseas sales reportedly increasing almost fivefold by 2024, accounting for 40% of total sales.

Looking ahead, HSBC believes that the ceiling for Pop Mart's globalization potential remains significantly highIn the realm of trendy toys and creative IPs, leading companies' development patterns and commercial outcomes are under great scrutinyFor example, in 2023, Pop Mart achieved a net profit of $155 million, bolstered by the strength of its nine core self-owned IPs amid fierce market competitionThis demonstrates its formidable IP management capabilities and market allure.

In a similar vein, Japan's Sanrio company, which primarily relies on its globally influential IP "Hello Kitty and Friends," also achieved comparable net profits in 2023, showcasing its success in IP operations on an international scale

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