Pop Mart stock rose over 5% in Hong Kong market on Thursday. Morgan Stanley issued a research report saying that it attended POP MART's Pop Toy Show earlier in Beijing. The broker observed that Twinkle Twinkle booth attracted a large crowd, with its products, including figures, paintings, bags and accessories, selling out quickly.

Morgan Stanley believed that Twinkle Twinkle is likely to start contributing significantly to the Company's sales in 2025 and beyond, beginning with limited sales in 2024. Crybaby products were also popular, including t-shirts, baseball caps, cushions and slippers, with an average price exceeding RMB250.

The broker believed that POP MART's platform value may be underestimated, and noted that the Company currently sells products in 4 regions, but its proprietary IP mainly originates from Greater China, with exceptions like Crybaby from Thailand and Peach Riot from the US. Morgan Stanley saw great potential for POP MART to tap into the rich artistic resources in the US, Europe, Japan and Southeast Asia.

The success of its IPs seems unpredictable, but POP MART is a company capable of achieving success. Morgan Stanley believed that POP MART's intrinsic value far exceeds its owned IPs, a point underestimated by the market.

POP MART remains the broker's top pick. Morgan Stanley kept rating at Overweight on POP MART, with a target price of $365, equivalent to a projected 2025 PE ratio of 46x.