To The Moon

Here’s my take on the JPMorgan cut of Pop Mart to HK$300, and where might be decent “dip‐buy” levels, plus key risks and what to watch out for. 

JPMorgan recently downgraded Pop Mart’s rating from Overweight to Neutral, and lowered their target price from HK$400 to HK$300. 

The reasons they cite:

• Valuation is “priced for perfection” — a lot of positive catalysts have already been realized (four of seven in JPM’s list) and many expectations are now built into the current share price.

• Remaining catalyst visibility is low — things like animation release, Labubu 4.0 launch, interactive toys are still planned but with low visibility / uncertain timing

• Risk from small misses — given how high expectations are, even minor disappointments (product, licensing, resale demand, competition) could lead to downside. 

• Strong recent growth & momentum — Pop Mart has posted very strong results recently: sales surging, profitability improving, overseas expansion, etc. But that puts pressure to keep delivering.

Valuation & What Intrinsic Looks Like

Some metrics:

• Trailing P/E and forward P/E are very high compared to more mature consumer / toy companies.

• Price / Sales, Price / Book are also rich.

• The “intrinsic value” (using Discounted Cash Flow / growth exit in some models) is much lower than current market price: one source puts intrinsic at ~ HK$180 vs current ~ HK$309.6. 

• So there's a fair argument that the current price has baked in a lot of “good news.”

So — What price to buy the dip?

If I were positioning myself / advising, here are some levels that seem reasonable as potential entry points, with different risk tolerance:

Risk toleranceEntry ZoneRationaleConservative (🙂 low risk)~ HK$250‑260At this level, you get a decent discount from current, and it starts restoring some margin of safety. It’s still pricey but less so. If any near‐term catalyst misses happen, you have some buffer.Moderate risk~ HK$200‑230At this level, valuation seems more justifiable under current growth assumptions. You’d be buying some dip but also factoring in potential slowdown or weaker catalysts.Aggressive / Long‐term view~ HK$150‑200If you believe that Pop Mart can keep delivering on international expansion, IP monetization, and keep refreshing its hits, this gives room for upside and downside protection. Especially if using multi‐year growth models.

JPMorgan itself thinks HK$300 is reasonable as a target, but implicitly suggests not much margin above, and warns about risk profile.

What could push price down / support levels

Downside risks:

• Weakening demand or popularity fade in their core IP (Labubu etc.), especially if resale market continues to soften.

• Overcapacity / oversupply — if they flood the market or many competitors imitate, value could erode.

• Delays or poor execution of upcoming catalysts (animation, interactive toys, Labubu 4.0). If those underdeliver, expectations may get reset downward.

• Macro risks: discretionary spending in China / globally, weakening consumer sentiment, supply chain, cost pressures.

Support / upside potential:

• Their recent results have been strong: revenue, profits up big Y/Y. Population of fan base, international expansion and IP leverage are all positives.

• If they hit the remaining catalysts well, or surprise to upside, the multiple could expand again.

My view: Where I’d buy

If I personally were looking to buy, I probably wouldn’t at current price (≈ HK$300+) because I think downside risk is real. I’d wait for it to drop into the HK$200‑HK$250 range to build a position (maybe start with some at ~HK$250‑260 to test the waters). If it dipped more, below HK$200, I’d find that very attractive for a longer‐term play.

If you have a higher risk tolerance and believe in their vision, you might nibble earlier, but always make sure you’re comfortable if things don’t go perfectly.

📢 Disclaimer

The information provided above is for informational and educational purposes only and should not be construed as financial advice, investment advice, or a recommendation to buy or sell any securities. The views expressed are those of writer acting in a simulated investment expert capacity, and are not intended as personalized investment advice.