FAST NEWS: Pop Mart profit soars on cost cuts, interest income

The latest: “Blind box” collectible toy seller Pop Mart International Group Ltd. (9992.HK) said on Wednesday it expects to report its revenue rose 18% or more in the first half of the year, while its profit rose 40% during the period.

Looking up: The company boosted its profitability by optimizing production costs, earning higher gross profits on newly launched products, and implementing strict cost controls.

Take Note: The profit gain was partly due to an increase in interest income on bank deposits, which was unrelated to its business.

Digging Deeper: Founded in Beijing in 2010 as a trendy grocery store, Pop Mart gradually transformed into a “blind box” collectible toy seller in 2015 after acting as an agent for Japanese character doll Sonny Angel. The company was listed on Beijing’s thinly traded National Equities Exchange and Quotations (NEEQ) market in 2017 but delisted two years later, then moved to the Hong Kong Stock Exchange in November 2020 in an IPO that raised about HK$5 billion ($640 million). The company has increasingly looked overseas in recent years, betting that consumers in the U.S., Europe and Southeast Asia will pay even bigger premiums for its trendy collectible toys than their counterparts in China. Last month, it announced the acquisition of U.K. partner Mogic Ltd., and some analysts have suggested it may use its $700 million in cash reserves for more similar deals.

Market Reaction: Pop Mart shares fell on Wednesday, closing down 3.5% at HK$18.78 by the midday break. The stock now trades in the middle of its 52-week range.

Translation by A. Au

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