Citi Doubles Down On Pop Mart, Calling Growth Fears "Overdone" As LABUBU Goes Hollywood

In a detailed note released on November 16, 2025, following its China Conference, Citigroup has forcefully reiterated its "Buy" rating on Pop Mart, labeling the company a "scarcity growth play" in the Chinese consumer space. The report comes as investors grapple with concerns over slowing growth and the company's perceived dependence on its blockbuster IP, LABUBU. Citi's analysts argue these fears are "overdone," setting a staggering target price of HK$415.00 that implies over 90% upside from its current level. The note provides a critical look into the operational strategy of the art toy giant as it navigates explosive growth and global expansion.

The bank wastes no time in tackling the market's primary anxieties, suggesting that investor confidence is poised for a recovery, driven by the upcoming peak season and the growing international popularity of its diverse IP portfolio.

The LABUBU Juggernaut Is Just Getting Started

Addressing the "single IP risk," Citi contends that the full commercial power of LABUBU is far from being realized. Far from fading, the franchise is being strategically cultivated for long-term momentum, with a major catalyst on the horizon: Hollywood. The bank highlights a recent report that Sony Pictures has acquired the rights for a feature film, a move that could cement LABUBU's status as a global cultural icon.

Citi notes that the IP's pipeline remains robust, even with a tactical delay in its next major release:

"The value of LABUBU is yet to fully unlock, with many initiatives in the pipeline for next year to drive the IP momentum. It originally planned to launch LABUBU 4.0 in 2025 but postponed it to 2026 given production capacity allocation to LABUBU 3.0 to meet market demand. More new products and designs are expected in 2026 while it continues to enrich the content."

Sustainable Growth or A Ticking Clock?

Regarding fears of a quarter-over-quarter slowdown, the bank suggests this is not a sign of weakness but a calculated move by management. Citi views the company’s decision to "proactively control the scale of online presales in 4Q25 in light of sustainability of IP operation" as a prudent measure for long-term brand health. The note projects momentum will rebound during the key shopping months of November and December.

While defending Pop Mart's growth story, which saw revenues of RMB 6,301 million yuan (US$873 million) in 2023, Citi also points to what it considers the more crucial, less-discussed risks: operational execution. The real challenge, according to the report, is not IP creation but managing the complexities of a rapidly scaling global business.

"Instead, how to address the increasing quality issues as scale skyrockets and avoid similar livestreaming incidents in future, in our view, is more crucial, which otherwise could damage the brand equity. It continues to optimize operational procedure, hire more professional talents and frequently gathers feedback from the market and supply chain to improve product quality in future batches."

Beyond LABUBU, Citi emphasizes that other key IPs like SKULLPANDA, CRYBABY, and HIRONO are also "emerging as new growth drivers," underscoring the company's integrated ecosystem for nurturing multiple blockbuster franchises over time.

Global Ambitions and Supply Chain Overhaul

Pop Mart's aggressive international expansion is a cornerstone of Citi's bull thesis. The company is not only growing but also adapting its operations to meet the demands of new markets. With robust growth in the US in 2025, Pop Mart plans to operate over 60 stores there by year-end and has already begun revamping its logistics leadership. Its global push includes store openings in Canada, a digital-first entry into Mexico via Amazon, and a foray into the Middle East with a new store at Doha Airport.

This expansion is supported by a sophisticated supply chain strategy. The company is moving production, with 10-20% of blind box capacity now in Vietnam, a move accelerated by tariff uncertainties earlier in the year. Further, it is innovating on process and materials:

"The company has been expanding production capacity catering to rapid demand growth, it now continues to deploy the strategy where 70% of the projected sales volume is produced initially, followed by agile stock replenishment based on market dynamics... It has established a raw material R&D center in Dongguan, aiming to offer inspiration for artists."

For Citi, Pop Mart's premium valuation is justified by its blistering growth profile, with forecasted EPS growth of over 333% for 2025. If the company can successfully navigate the operational hurdles of its global ambition, the market may indeed be underestimating the long-term potential of this evolving IP machine.