Zhongshan Securities lowers Pop Mart's profit forecast by 25%, recommends selling

CITIC Securities International published a report indicating that Pop Mart (09992.HK) reported earnings in the first half of the year that were 15---20% below market expectations, mainly due to a 10% decline in sales in the Americas. An unfavorable product mix eroded gross margins, exacerbating margin pressure. The firm has lowered its average earnings expectations for Pop Mart for 2026---2028 by 25%; the target price is set at HKD 121, based on a projected price-to-earnings ratio of 14 times for 2027; it recommends "Sell."

The firm also lowered its average sales forecasts for Pop Mart for 2026---2028 by 17%, reflecting further downward adjustments in overseas sales expectations following disappointing performance in the first half of 2026, and has reduced the gross margin expectations for 2026/2027 by 0.2 percentage points/1 percentage point, respectively, to reflect the structural decline in the proportion of overseas business and the pressure from raw material costs.