On September 26, TOP TOY officially submitted its listing application to the Hong Kong Stock Exchange, with JPMorgan Chase, UBS Group, and CITIC Securities serving as joint sponsors.

According to the prospectus, TOP TOY plans to use the fundraising proceeds to enrich its diversified IP portfolio, deepen omnichannel deployment in global markets, brand building, consumer engagement and marketing initiatives, enhance supply chain capabilities and strengthen end-to-end digitalization, as well as working capital and general corporate purposes.

In recent years, TOP TOY has experienced rapid business growth with revenue and net profit reaching new highs year after year. However, multiple concerns lurk beneath its impressive performance.

On one hand, TOP TOY's sales revenue is highly dependent on licensed IP-developed products and externally procured products, which together account for nearly 100% of total revenue. While licensed IP can be used directly, it is limited by licensing terms and non-exclusivity, making it difficult to support premium pricing. Meanwhile, proprietary IP product sales amount to only several million yuan, contributing negligibly to overall performance, with original content capabilities significantly lagging behind POP MART.

On the other hand, distributors account for the highest proportion in TOP TOY's sales structure. Products sold through distributors are recognized as revenue at factory prices rather than retail prices, further reducing gross margins to less than half of POP MART's level.

Additionally, inventory held by distributors belongs to the distributors rather than TOP TOY. Theoretically, TOP TOY has the capability and flexibility to push inventory to distributors. More critically, TOP TOY's largest distributor is its parent company MINISO Group Holding Limited.

If POP MART built an independent IP universe as an "entertainment company," then TOP TOY is more like a buyer for a trendy toy boutique. Whether it can replicate the former's capital success story appears rather pessimistic based on current circumstances.

**High Dependence on Licensed IP with External Procurement Exceeding Half**

According to Frost & Sullivan, TOP TOY is China's largest and fastest-growing pop toy collection brand, with a product portfolio covering figures, 3D assembly models, and vinyl plush toys.

In July 2025, TOP TOY completed strategic financing led by Singapore's sovereign wealth fund Temasek, with a post-investment valuation soaring to $1.3 billion, equivalent to approximately HK$10.2 billion.

As of filing, parent company MINISO Group Holding Limited holds approximately 86.9% of TOP TOY's shares. The couple Ye Guofu and Yang Yunyun hold 63.5% of MINISO Group Holding Limited's shares through several offshore holding entities (MiniInvestment, YGF MC, YGF Development, YYY MC, and YYY Development), forming a controlling shareholder group together with MINISO Group Holding Limited.

2020 marked an important milestone for Ye Guofu's expansion into the pop toy sector. On December 11 of that year, POP MART's Hong Kong listing ignited industry enthusiasm. Just one week later, TOP TOY's first global pop toy factory store opened in Guangzhou's Grandview Mall, achieving over one million yuan in sales in its first three days.

Over five years, TOP TOY's domestic store count grew rapidly, breaking through 100 stores to reach 117 in 2022, then adding a net 124 stores in 2024 to total 272 stores, marking the fastest year of store expansion. From a geographic perspective, TOP TOY primarily operates in over 100 major commercial districts across more than 80 cities including Beijing, Shanghai, Guangzhou, Shenzhen, and Chengdu, where the main pop toy consumer demographic is located.

TOP TOY CEO Sun Yuanwen stated at the global brand strategy conference in March this year that TOP TOY would add 100 domestic stores, expecting 380-400 domestic stores by year-end. Over the next five years, TOP TOY plans to cover core commercial districts in 100 countries globally, open 1,000 stores, and establish the "China Pop Toy Going Global Alliance" with upstream and downstream industry partners for comprehensive overseas market expansion.

Store expansion has been the key driver of TOP TOY's rapid revenue growth, with revenue increasing from 679 million yuan in 2022 to 1.909 billion yuan in 2024, representing a compound annual growth rate of 67.7%. Revenue grew from 858 million yuan in the first half of 2024 to 1.36 billion yuan in the first half of 2025, a year-over-year growth rate of 58.51%. During the reporting period, adjusted net profit was -38.2 million yuan, 213 million yuan, 294 million yuan, and 180 million yuan respectively, showing rapid year-over-year growth.

TOP TOY's overseas expansion began in late 2024, with overseas revenue of only 11.81 million yuan that year. In the first half of 2025, overseas revenue surged to 52.484 million yuan, accounting for 3.9% of total revenue. As of September 19, 2025, TOP TOY operates 299 stores and has opened 15 overseas stores covering Thailand, Malaysia, Indonesia, Japan, and other markets.

At MINISO Group Holding Limited's earnings conference in August, founder Ye Guofu systematically outlined the "International IP + Proprietary IP" dual-engine strategy for the first time, stating: "POP MART's performance is excellent, and we're very pleased to see it. Good performance indicates two things: first, consumers are buying, and second, the capital market is buying, showing that the pop toy market in China is just emerging."

Notably, TOP TOY and POP MART currently have fundamental differences in business models, with the former positioned as a "pop toy collection retailer" and the latter as a "proprietary brand retailer."

Since establishment, TOP TOY remains highly dependent on licensed IP, with both quantity and revenue significantly exceeding proprietary IP. As of filing, TOP TOY owns 17 proprietary IPs and 43 licensed IPs, with 9 proprietary IPs acquired through acquisition in August this year.

In 2024 and the first half of 2025, products developed from TOP TOY's proprietary IP generated revenue of 6.8 million yuan and 6.1 million yuan respectively, contributing negligibly to overall performance. During the same period, licensed IP generated revenue of 889 million yuan and 615 million yuan respectively, consistently accounting for roughly half of company revenue.

Besides selling self-developed products (including licensed and proprietary IP), TOP TOY still derives over half its revenue from externally procured products. During the reporting period, sales revenue from externally procured products accounted for 60.4%, 46.4%, 50.9%, and 52.8% of total revenue respectively.

Industry insiders point out that IP issues are a common problem across the exceptionally hot pop toy market in recent years. Proprietary IP development costs and difficulty are significantly higher than licensed IP, while licensed IPs like Disney and Hello Kitty, though directly usable, are limited by licensing terms and non-exclusivity, making it difficult to support premium pricing. POP MART, for example, initially relied on licensed IP but shifted to self-research due to higher margins from proprietary IPs like Dimoo and Cry Baby.

In the first half of 2025, sales revenue from POP MART's licensed IP-developed products and externally procured products combined accounted for only 11.9% of total revenue. For TOP TOY, this proportion is nearly 100%, with proprietary IP-developed products contributing less than 1% to revenue.

In essence, POP MART and TOP TOY have vastly different capabilities in creating original IP, with the latter resembling more of a boutique buyer, having relatively shallow brand moats and being prone to homogeneous competition. If unable to incubate proprietary IP with market appeal, TOP TOY's long-term profit margins and pricing power may be constrained.

With TOP TOY's listing, the "deep competition" between it and POP MART will fully escalate. On one hand, there will be close channel combat, with both sides engaging in prime commercial districts; on the other hand, there will be overlapping global expansion plans, as TOP TOY plans for overseas sales to exceed half of total sales, directly challenging POP MART's established overseas presence.

**Parent Company as Largest Distributor: Profitability and Liquidity Significantly Lagging**

TOP TOY's sales model can be divided by channel into online (Tmall, JD.com, Douyin, Pinduoduo, etc.) and offline categories, with the latter further subdivided into three business lines: directly-operated store retail sales, sales to franchisees, and sales to offline distributors.

As the name suggests, directly-operated stores are TOP TOY's own stores, including flagship stores, mainstream stores, and pop-up stores. As of June 30, 2025, TOP TOY had 38 directly-operated stores, down 2 from the beginning of the year. In the first half, directly-operated store sales revenue was 169 million yuan, accounting for 12.4% of total revenue and 12.82% of pop toy product sales revenue.

Sales to franchisees involve selling goods through stores established by franchisees (referred to as TOP TOY partners in the prospectus). Unlike typical franchise models, TOP TOY's franchisees are responsible for store setup investment and pay management consulting fees but don't handle inventory management. Store inventory opened by franchisees belongs to TOP TOY, with franchisees not bearing inventory capital costs or potential inventory losses. Correspondingly, franchisee store sales revenue is shared between franchisees and TOP TOY.

In the first half of 2025, revenue from sales through franchisees accounted for 25.2% of total revenue. However, average sales revenue per franchisee store (revenue divided by the average of beginning and ending store counts) was 1.36 million yuan, far below the 4.33 million yuan level of self-operated stores.

The largest portion of TOP TOY's sales structure is offline distributors, generating 51.6% of total company revenue in the first half of 2025, reaching as high as 58.5% in 2023.

Offline distributors refer to third-party retailers, typically large chain retail networks. TOP TOY's settlement method with distributors differs from franchisees. Franchisee store inventory belongs to TOP TOY, meaning TOP TOY only recognizes revenue when franchisee stores sell goods to end customers (calculated based on sales revenue sharing ratios with franchisees).

However, distributor settlement follows a "sell to distributor" model, where TOP TOY sells products to distributors, who then sell to end customers. Inventory held by distributors belongs to distributors, not TOP TOY. Theoretically, TOP TOY has the capability and flexibility to push inventory to distributors.

As of June 30, 2025, TOP TOY had 53 offline distributors, with the largest being parent company MINISO Group Holding Limited. During the reporting period, MINISO Group Holding Limited's distribution proportions were 6.8%, 53.5%, 48.3%, and 45.5% respectively. If the denominator is changed to revenue from offline distributor sales, MINISO Group Holding Limited's proportions are even higher at 88.91%, 91.34%, 91.53%, and 91.11% respectively.

From the above revenue structure, TOP TOY's operations heavily depend on parent company MINISO Group Holding Limited, while its proprietary sales network is primarily franchise-based with self-operation as supplementary.

TOP TOY's sales model is a double-edged sword, reducing sales expenses while also lowering profit margins.

On one hand, franchisees and distributors—mainly parent company MINISO Group Holding Limited—bear substantial off-balance-sheet sales expenses. During the reporting period, TOP TOY's sales expense ratios were 21.94%, 10.40%, 10.58%, and 11.76% respectively, significantly lower than POP MART's sales expense ratios (31.86%, 31.82%, 28.00%, and 23.01%) for the same periods.

On the other hand, products sold through distributors are priced at factory prices for revenue recognition rather than retail prices, significantly compressing profit margins. During the reporting period, TOP TOY's gross margins were 19.9%, 31.4%, 32.7%, and 32.4% respectively, while POP MART's gross margins were 57.49%, 61.32%, 66.79%, and 70.34%, approximately 2-3 times TOP TOY's gross margins for the same periods, showing rapid year-over-year growth.

Notably, besides significantly lagging profitability, TOP TOY's liquidity also falls far behind POP MART.

During the reporting period, TOP TOY's asset-liability ratios were 127.93%, 121.30%, 107.90%, and 106.03% respectively, remaining in technically insolvent territory for extended periods. As of June 30, 2025, TOP TOY's current ratio and quick ratio were 1.11 and 0.6 respectively, with the latter falling below theoretical safety levels.

During the same period, POP MART's asset-liability ratios were 18.82%, 21.95%, 26.80%, and 32.44% respectively, showing healthy financial condition. As of June 30, 2025, POP MART's current ratio and quick ratio were 3.01 and 2.63 respectively, significantly higher than TOP TOY.

TOP TOY faces multiple risks including dependence on licensed IP, external procurement exceeding half of revenue, and parent company MINISO Group Holding Limited as its largest distributor. As a pop toy buyer, can it replicate POP MART's capital success story?