JPMorgan downgraded POP MART (09992.HK) to Underweight from Neutral, cutting its price target 27% to HKD120 after 2Q revenue fell 11% year-over-year, the first quarterly decline since 2023. The broker trimmed FY2026-28 revenue forecasts by 17-18% and adjusted net profit forecasts by 14-22%.
JPMorgan downgraded POP MART (09992.HK) to Underweight from Neutral, cutting its target 27% to HKD120 after 2Q revenue fell 11% year-over-year, the first quarterly decline since 2023.
"2Q marked a real turning point," the broker said in a report, noting the business is shifting from hypergrowth to normalization. The downgrade follows 1H26 results that missed expectations across both revenue and profit lines.
POP MART's 1H26 revenue reached RMB17.2 billion, up 24% year-over-year but 11% below JPMorgan's forecast. Implied 2Q revenue sank 11% year-over-year versus buy-side expectations for flat growth, dampened by overseas operations. Adjusted net profit rose 11% to RMB5.1 billion, below the broker's RMB5.7 billion forecast; excluding FX losses, results were broadly in line. The stock fell 4.1% (6.30 HKD) on the news.
JPMorgan trimmed FY2026-28 revenue forecasts by 17-18% and adjusted net profit forecasts by 14-22%, projecting FY2026 profit of RMB9.5 billion, down 26% year-over-year and below the pre-results consensus of around RMB10 billion. The broker still sees overseas expansion room and expects a return to moderate growth in 2027, but the first quarterly revenue slide since 2023 marks a structural shift for the Labubu maker.
Short selling data showed HK$401.08 million in short interest at a 24.1% ratio, reflecting bearish positioning. The downgrade puts the stock at risk of further de-rating as other sell-side firms may follow with downward revisions. POP MART shares have been among the most heavily traded HK consumer names this year, with the stock riding the global popularity of its Labubu collectible figures before momentum began to fade.
While the 2025 boom will be difficult to replicate, JPMorgan's view is that POP MART can return to moderate growth in 2027 as overseas expansion continues. The company's 1H26 net profit rose 10.1% year-over-year to RMB5.04 billion, behind expectations. The broker noted that excluding FX losses, results were broadly in line, suggesting the core business performed as expected but currency headwinds and slowing momentum weighed on the headline numbers.
The revenue slowdown raises questions about whether POP MART can sustain the growth rates that made it one of the standout consumer stocks in the region. The company's reliance on the Labubu IP for a significant portion of sales creates concentration risk, and the fading momentum in that franchise is now visible in the quarterly numbers. JPMorgan's downgrade reflects a view that the market had priced in continued hypergrowth that is no longer materializing.
The downgrade marks a structural shift from hypergrowth to normalization for a stock that was among the best performers in the HK market. Investors will watch for further broker revisions and 2H26 earnings for confirmation of the slowdown trajectory.
This article is for informational purposes only and does not constitute investment advice.
