Finance
China’s slower growth hasn’t dragged down this consumer name
Published
9 months agoon

In a summer of cool consumer spending, Chinese toy company Pop Mart alerted investors to double-digit growth in the first half of the year: it now expects revenue to rise by at least 55% and profits to grow 90% or more. Morgan Stanley and other investment firms raised their price targets on the Hong Kong-traded stock after Pop Mart gave a profit alert on July 18. Shares initially surged, but have since wavered amid a broad decline in Asian stocks. “We think Pop Mart’s expansion is still in early innings, with Rmb7bn ($970 million) sales from China and Rmb3bn from overseas market,” Morgan Stanley analysts said last month, noting “the runway is long” since Lego’s annual global sales are 70 billion yuan. Beijing-based Pop Mart sells collectible figurines based largely on its own intellectual property (IP), along with sets featuring the Minions, Avengers or Disney characters. Each toy costs about $10, sold in a “blind” box so customers won’t don’t know which character they’ve bought. ‘Underlying demand’ “We believe the emotional value with low price sensitivity offered by Pop Mart IP products provide strong support on underlying demand in the China market,” CLSA analysts wrote in a note last month, rating Pop Mart outperform. “We expect 30 retail store openings this year in China and China market sales to grow 21% YoY in 2024.” The CLSA analysts raised their price target to 45 Hong Kong dollars ($5.76), up from 37 previously. They expect high-single-digit growth in Pop Mart’s mainland China same-store sales this year. China’s retail sales grew by 2% in June from a year ago, and major Western brands such as Apple and Starbucks reported lower second-quarter sales in China. When Pop Mart listed in Hong Kong in December 2020, shares immediately doubled in price and went on to hit an all-time high of HK$105.21 in February 2021. The stock then plunged with the Hong Kong market, before a recovery starting this year. Despite the latest pullback, Pop Mart shares have held gains of more than 90% for the year so far — temporarily crossing the 100% mark with a high of HK$41.75 on Wednesday. But even that remained several Hong Kong dollars below analysts’ newest price targets. Raised target Morgan Stanley raised its price target to HK$52, up from HK$45 previously, after Pop Mart’s profit alert. The Wall Street investment bank has an “overweight” rating on the stock. “By market, we estimate China growth accelerated from 20% in 1Q to 40% in 2Q,” Morgan Stanley said. “Strong pickup in online channels and Pop Land were the key drivers, while offline sales growth also accelerated (driven by teens% [same-store sales growth]).” Pop Land is a theme park that Pop Mart opened near a major city park in Beijing in September 2023. The company, which considers intellectual property its core asset, said in its annual report in April it has also opened an art gallery, with plans for gaming and animation products. “Pop Land being part of the earnings beat is encouraging — another example showing the value of management’s determination in doing new projects when they are considered ‘far-fetched,'” the Morgan Stanley analysts said. “Also, bad weather and consumption slowdown in China didn’t deter Pop Mart’s momentum, an evidence of its market share gain in the rising IP product segment.” Pop Mart has yet to announce when it will release full results for the first-half of the year. In 2023 the company published its interim report in late August. Other investment firms are more cautious on Pop Mart shares. China Renaissance rates the stock a “hold,” with a far lower price target of HK$27.39. “Pop Mart’s June 2024 online sales fell 6% YoY possibly because Pop Mart did not provide many discounts during the 618-shopping festival, in our view,” the China Renaissance analysts said in a report last month, referring to a mid-June promotion. Also in mid-July, Nomura analysts upgraded their view on Pop Mart, but only to “neutral” from “reduce,” albeit with an increased price target to HK$41. “The company is well-prepared to sustain its high sales growth momentum into 2H24F, in our view (we estimate 2H24F total sales growth of 39% y-y),” the Nomura analysts said. Growing international business While most of Pop Mart’s stores are in mainland China, the company has a growing international business with stores in countries ranging from Thailand to the U.S. One day after the opening ceremony of the 2024 Paris Olympics, Pop Mart opened a store in the Louvre . “It is very difficult to forecast Pop Mart’s sales momentum from 2025 onward, as its growth driver is not store opening but the pace of IP product launches,” Jefferies analysts said. They rate the stock a buy, with a price target of HK$47.40. “We like management’s strategy of focusing on its core IPs and investing in these IPs through various media,” a Jefferies report said. “Pop Mart’s IPs could be in the form of not just blind boxes but also games, movies and other product categories. It is also looking to expand its retail format using the theme park as the incubator. This could lengthen an IP’s cycle should it be successful.” — CNBC’s Michael Bloom contributed to this report. Disclosure: Comcast is the parent company of NBCUniversal and CNBC. CNBC parent NBCUniversal owns NBC Sports and NBC Olympics. NBC Olympics is the U.S. broadcast rights holder to all Summer and Winter Games through 2032.
You may like
Finance
These are 3 big things we’re watching in the stock market this week
Published
2 hours agoon
April 27, 2025
A security guard works outside the New York Stock Exchange (NYSE) before the Federal Reserve announcement in New York City, U.S., September 18, 2024.
Andrew Kelly | Reuters
The stock market bounce last week showed once again just how dependent Wall Street has become on the whims of the White House.

U.S. brands are rapidly losing their appeal in China as locals increasingly prefer competitive homegrown players, especially as economic growth slows, according to a TD Cowen survey released Thursday. While overall preference for Western brands dropped to 9%, down from 14% last year, certain American companies face higher risks than others, the report said, citing in-person interviews of 2,000 consumers with varied income levels in larger Chinese cities. TD Cowen partnered with an unnamed Beijing-based advisory firm to conduct the survey in February 2025, following a similar study in May 2024. The analysts see Apple ranking among the better-positioned brands in China. But they warned that several other American companies face high regional risks despite management optimism. China’s top leaders on Friday acknowledged the growing effect of trade tensions, and pledged targeted measures for struggling businesses. The official readout stopped short of a full-on stimulus announcement. “This year’s survey was conducted before the US-China trade war intensified, though threats were on the horizon,” the TD Cowen analysts said. “Add this factor to the equation, and it’s easy to see why uncertainty will remain elevated and households are likely to remain cautious going forward.” The survey found income expectations declined, with the share of respondents expecting a decline in pay over the next 12 months rising to 10% from 6%. In particular, Chinese consumers plan to spend less on a beauty items over the next six months, the survey showed, while increasing their preference for Chinese brands. U.S. cosmetics giant Estée Lauder retained first place in terms of highest awareness among Western beauty brands in China, but preference among consumers dropped to 19.6% of respondents, down from 24.3% last year. That contrasted with increases in respondents expressing a preference for the second and third market players Lancome and Chanel, respectively. In the quarter that ended Dec. 31, Estée Lauder said its Asia Pacific net sales fell 11%, due partly to “subdued consumer sentiment in mainland China, Korea and Hong Kong.” Asia Pacific accounted for 32% of overall sales in the quarter. In the lucrative sportswear category, Nike “lost meaningful preference in every category” versus last year, while local competitors Li-Ning and Anta saw gains, the survey found. TD Cowen’s analysis showed that among U.S. sportswear brands facing the most earnings risk relative to consensus expectations, Nike has the highest China sales exposure at 15%. “The China market is one characterized as a growth opportunity for sport according to Nike management in its recent fiscal Q3:25 earnings call in March 2025,” the analysts said, “but that the macro offers an increasingly challenging operating environment.” It’s not necessarily about slower growth or nationalism. While the survey found a 4-percentage-point drop in preference for foreign apparel and footwear brands, it also showed a 3-percentage-point increase in the inclination to buy the “best” product regardless of origin. “The implied perception here is that Western brands are offering less in the way of best product or value,” the TD Cowen analysts said. Starbucks similarly is running into fierce local competition while trying to maintain prices one-third or more above that of competitor Luckin Coffee, the report said. The survey found that the U.S. coffee giant “lags peers in terms of value and quality perception improvement.” Other coffee brands such as Manner, Tim’s, Cotti, %Arabica and M Stand have also expanded recently in China. Starbucks’ same-store sales in China fell 6% year on year in the quarter that ended Dec. 29, bringing the region’s share of total revenue to just under 8%. More worrisome is that a highly anticipated coffee boom in China may not materialize. “We note daily and weekly frequency of purchase among coffee drinkers are decreasing, suggesting the coffee habit seen in the U.S. is not taking hold in China,” the analysts said. They noted a new ownership structure for Starbucks‘ China business would be positive for the stock given the lack of near-term catalysts. TD Cowen rates Starbucks a buy, but has hold ratings on Nike and Estée Lauder.
Finance
Apple iPhone assembly in India won’t cushion China tariffs: Moffett
Published
1 day agoon
April 26, 2025

Leading analyst Craig Moffett suggests any plans to move U.S. iPhone assembly to India is unrealistic.
Moffett, ranked as a top analyst multiple times by Institutional Investor, sent a memo to clients on Friday after the Financial Times reported Apple was aiming to shift production toward India from China by the end of next year.
He’s questioning how a move could bring down costs tied to tariffs because the iPhone components would still be made in China.
“You have a tremendous menu of problems created by tariffs, and moving to India doesn’t solve all the problems. Now granted, it helps to some degree,” the MoffettNathanson partner and senior managing director told CNBC’s “Fast Money” on Friday. “I would question how that’s going to work.”
Moffett contends it’s not so easy to diversify to India — telling clients Apple’s supply chain would still be anchored in China and would likely face resistance.
“The bottom line is a global trade war is a two-front battle, impacting costs and sales. Moving assembly to India might (and we emphasize might) help with the former. The latter may ultimately be the bigger issue,” he wrote to clients.
Moffett cut his Apple price target on Monday to $141 from $184 a share. It implies a 33% drop from Friday’s close. The price target is also the Street low, according to FactSet.
“I don’t think of myself as the biggest Apple bear,” he said. “I think quite highly of Apple. My concern about Apple has been the valuation more than the company.”
Moffett has had a “sell” rating on Apple since Jan. 7. Since then, the company’s shares are down about 14%.
“None of this is because Apple is a bad company. They still have a great balance sheet [and] a great consumer franchise,” he said. “It’s just the reality of there are no good answers when you are a product company, and your products are going to be significantly tariffed, and you’re heading into a market that is likely to have at least some deceleration in consumer demand because of the macro economy.”
Moffett notes Apple also isn’t getting help from its carriers to cushion the blow of tariffs.
“You also have the demand destruction that’s created by potentially higher prices. Remember, you had AT&T, Verizon and T. Mobile all this week come out and say we’re not going to underwrite the additional cost of tariff [on] handsets,” he added. “The consumer is going to have to pay for that. So, you’re going to have some demand destruction that’s going to show up in even longer holding periods and slower upgrade rates — all of which probably trims estimates next year’s consensus.”
According to Moffett, the backlash against Apple in China over U.S. tariffs will also hurt iPhone sales.
“It’s a very real problem,” Moffett said. “Volumes are really going to the Huaweis and the Vivos and the local competitors in China rather than to Apple.”
Apple stock is coming off a winning week — up more than 6%. It comes ahead of the iPhone maker’s quarterly earnings report due next Thursday after the market close.
To get more personalized investment strategies, join us for our next “Fast Money” Live event on Thursday, June 5, at the Nasdaq in Times Square.

These are 3 big things we’re watching in the stock market this week

As Real ID deadline approaches, there are ‘workarounds,’ experts say

These U.S. consumer stocks face higher China risks

New 2023 K-1 instructions stir the CAMT pot for partnerships and corporations

The Essential Practice of Bank and Credit Card Statement Reconciliation

Are American progressives making themselves sad?
Trending
-
Personal Finance1 week ago
IRS’ free tax filing program is at risk amid Trump scrutiny
-
Economics1 week ago
Trump’s approval rating on economy at lowest of presidential career
-
Blog Post1 week ago
Documenting Bookkeeping Processes and Procedures
-
Economics1 week ago
‘He should bring them down’
-
Economics1 week ago
Donald Trump wants a certain kind of immigrant: the uber-rich
-
Economics7 days ago
Trump tariffs could cause summer economic slump: Chicago Fed president
-
Economics1 week ago
Checks and Balance newsletter: The Democrats’ future is up for grabs
-
Personal Finance5 days ago
Consumers are making different financial choices in response to tariffs