From Labubu to Ne Zha: toy craze powers Pop Mart market-beating stock rally

Fresh from its success with Labubu, Pop Mart International is on another hot streak in intellectual property (IP) merchandising as consumers snap up its toys based on China’s highest-grossing Ne Zha 2, leading US investment bank Morgan Stanley to name the stock among its top picks.

Pop Mart’s Ne Zha toys sold out days after their release on January 30 as the animation broke local box-office records, according state-run China Movie Database on Thursday. The sequel also overtook The Battle at Lake Changjin in all-time ticket sales following its stellar Lunar New Year holiday run.

“We expect Pop Mart to become one of the go-to partners for global major IP owners that intend to monetise and extend IP popularity through IP toys,” Morgan Stanley analysts including Dustin Wei and Carol Xia said in a report. Its success underlines its influence in the IP strategy, they added.

Third-party IPs like Ne Zha only counted for 15 to 20 per cent of Pop Mart’s revenue, but they helped the brand gain new customers effectively, the analysts said.