POP MART (stock code: "9992") released its first-half 2026 financial results yesterday, revealing a sharp deceleration in growth. Revenue for the period reached RMB 17.17 billion, up 23.8% from RMB 13.876 billion in the same period last year, while operating profit rose 11.3% to RMB 6.725 billion, and net profit increased 8.9% to RMB 5.1 billion.

Adjusted net profit for the first half of 2026 came in at RMB 5.156 billion, a 9.5% increase from RMB 4.7 billion a year earlier, with the adjusted net margin contracting 3.9 percentage points to 30%. Compared to the stellar performance of the first half of 2025, this year's results appear lackluster.

Just a year ago, in August 2025, CEO Wang Ning confidently showcased a LABUBU figure during an earnings call, declaring, "Hitting RMB 30 billion in revenue this year will be easy." At that time, the company's market value had soared past HK$400 billion, and owning a LABUBU had become a status symbol. During the 2025 first-half results, revenue had surged 204.4% year-on-year to RMB 13.876 billion.

This time, however, Wang's tone was far more subdued. He admitted that while the first half delivered over 20% growth, the pressure in the second half is expected to be even greater, and the company will likely miss its full-year 20% growth target set at the beginning of the year. The reason cited was the exceptionally high revenue base in the third quarter of 2025, which puts immense pressure on second-half 2026 comparisons.

Wang attributed the slowdown to 2026 being designated as a "consolidation year," where sales are not the primary objective. "We clearly recognize that last year involved a degree of luck, with unexpected traffic driving rapid profit growth, but it also exposed numerous internal management issues. So this year, we are prioritizing long-term development rather than adopting overly aggressive sales strategies."

The market was clearly unimpressed. Shares of POP MART plunged over 8% during today's trading session before closing at HK$149, down 3% from the previous day. Based on the closing price, the company's market value has now fallen below HK$200 billion, representing a nearly 20% decline since the start of this year.

Wang announced a share buyback plan ranging from RMB 2 billion to RMB 5 billion over the next six months. However, this does little to address the fundamental issue: when a high-growth consumer company begins to decelerate and becomes one with net profit growth under 10%, why should the capital market continue to award it a premium valuation? As the tide of capital recedes and LABUBU fades from fashion, what justification remains for a HK$200 billion valuation?

LABUBU and MOLLY's Glory Fades

POP MART's proprietary products remain its primary revenue driver, generating RMB 17.061 billion in the first half of 2026, up 24% from RMB 13.753 billion a year earlier. However, THE MONSTERS, the IP behind LABUBU, saw revenue decline 7.5% year-on-year to RMB 4.454 billion, with its revenue share dropping 8.7 percentage points to 26%. MOLLY, the company's original flagship IP, fared even worse, with revenue falling 33.68% to RMB 900 million.

The decline in THE MONSTERS revenue signals that LABUBU's appeal is waning, transforming from a growth driver into a drag on performance. MOLLY, which once propelled the company's early success, has now lost its former glory, contributing less than RMB 1 billion in revenue during the period.

Meanwhile, emerging IPs are picking up the slack. Revenue from Xingxingren surged 581% to RMB 2.65 billion, now accounting for 15.4% of total revenue, up from 2.8% a year earlier. CRYBABY contributed RMB 1.633 billion, up 34% year-on-year, representing 9.5% of revenue. DIMOO generated RMB 1.619 billion, up from RMB 1.1 billion, while SKULLPANDA brought in RMB 1.551 billion, up from RMB 1.22 billion. HIRONO contributed RMB 1 billion, up from RMB 728 million.

Plush Products Near RMB 10 Billion, Dominating Revenue Mix

By product category, plush toys generated RMB 9.825 billion in the first half of 2026, a 60% increase from RMB 6.139 billion a year earlier. This category now accounts for a staggering 57.2% of total revenue, up from 44.2% in the prior-year period, cementing its position as the company's core revenue source. Figures, on the other hand, remained nearly flat at RMB 5.192 billion, up just 0.3% year-on-year, with their revenue share declining 7.1 percentage points to 30.2%. Derivatives and other products saw revenue fall 15.8% to RMB 2.155 billion, representing 12.6% of total revenue, down from 18.5%.

Overseas Hype Cools, Americas Revenue Drops 16.5%

Geographically, revenue from mainland China grew 47.3% year-on-year to RMB 12.2 billion. However, overseas markets showed signs of fatigue: revenue from the Asia-Pacific region declined 9.7% to RMB 2.575 billion, while the Americas saw a more pronounced 16.5% drop to RMB 1.89 billion, down from RMB 2.265 billion a year earlier.

Financial Highlights and Inventory Concerns

Gross profit for the first half of 2026 reached RMB 11.966 billion, up 22.6% year-on-year. Selling and distribution expenses rose 23% to RMB 3.931 billion, while general and administrative expenses increased 20% to RMB 927 million. Other income surged to RMB 300 million from RMB 67.23 million, though other gains swung to a loss of RMB 688 million from a gain of RMB 179 million. Income tax expenses totaled RMB 1.667 billion, up from RMB 1.475 billion.

A notable red flag is the sharp increase in inventory days, which jumped from 123 days in 2025 to 201 days in the six months ended June 30, 2026. Finished goods inventory stood at RMB 6.1 billion as of June 30, 2026, up from RMB 5.473 billion at the end of 2025, primarily due to pre-stocking for overseas market expansion. Trade receivables turnover days edged up from 7 days to 8 days, with trade receivables at RMB 627 million, down from RMB 921 million, reflecting lower revenue from certain online platforms.

Cash and cash equivalents totaled RMB 12.442 billion as of June 30, 2026, down from RMB 13.775 billion at the end of 2025. Operating activities generated net cash inflow of RMB 3.637 billion, while investing activities saw net inflow of RMB 673 million due to redemptions of time deposits, partially offset by purchases of fixed assets and financial assets. Financing activities recorded a net outflow of RMB 5.382 billion, mainly for dividend payments and share repurchases. Trade payables stood at RMB 900 million, down from RMB 1.858 billion at end-2025, as the bulk purchase of inventory to meet sales demand in late 2025 had normalized. Trade payables turnover days declined from 51 days to 48 days.