From 'not understanding it' to taking a major position—why did Duan Yongping invest HK$2.2 billion to back Pop Mart?

Source| Tech Planet

Text| Zhai Yuanyuan

Duan Yongping continues to significantly increase his stake in Pop Mart.

In the past half-month, Duan Yongping, renowned for his value investing approach, has made two large-scale purchases of Pop Mart shares, investing over HK$2.2 billion in total. According to Hong Kong Stock Exchange disclosures on June 3, Duan’s stake in Pop Mart’s H-shares rose from 5.69% to 6.04%. Based on the market value that day, his holding was worth approximately HK$14.4 billion.

At the end of May, Duan Yongping and his company H&H International Investment, LLC acquired a 5.69% stake in Pop Mart, making them the second-largest shareholder after founder Wang Ning, with a holding value exceeding HK$11 billion.

As recently as the end of last year, Duan Yongping had openly stated, 'I don’t understand Pop Mart; I won’t invest.' His shift from 'not understanding' to taking a significant position has compelled the market to reassess Pop Mart.

However, after experiencing explosive growth in 2025, Pop Mart entered 2026—a year marked by a sharp drop in traffic and popularity—and now faces considerable challenges: its ability to consistently create hit IPs, whether a 'next Labubu' can emerge, inventory reduction capabilities, and whether its cross-sector 'IP+' ventures in jewelry, home appliances, and other categories can become profitable.

There remains uncertainty over whether collectible toys can sustain consumer enthusiasm over time, and Pop Mart must continually prove its worth. Founder Wang Ning has defined 2026 as the company’s 'reset year' and significantly lowered its annual revenue growth target. Compared to the 184.7% revenue surge in 2025, Pop Mart’s new target for this year is set at 'no less than 20%.'

Shrinking market cap and declining profits

In 2025, Labubu made a killing.

Labubu, which sparked buying frenzies across multiple global markets last year, generated over RMB 14 billion in annual revenue, becoming China’s first collectible toy IP to surpass RMB 10 billion in yearly sales. Riding the wave of Labubu’s popularity, Pop Mart’s market valuation soared to as high as HK$450.423 billion.

However, after market enthusiasm peaked, Labubu prices began to collapse, dragging Pop Mart down with it. Amid waning consumer demand and the company’s deliberate slowdown, both Pop Mart’s market value and financial performance have started to decline noticeably. As of this writing, Pop Mart’s market capitalization stands at HK$235.315 billion, down more than HK$210 billion from its peak.

Shifting gears from high-speed to low-speed growth inevitably creates a sense of letdown.

During Pop Mart’s 2025 annual earnings presentation, founder Wang Ning explained that the company needed a reset period akin to an F1 race car entering the pit stop. He admitted that 2025 was the most stressful year he’d experienced, with the worst sleep quality. Pop Mart’s Chief Operating Officer, David So, noted during the Q1 business update call that a significant portion of last year’s high growth stemmed from luck and favorable market conditions.

Even after the luck ran out, sales at some stores continued to grow. An employee at a Pop Mart store revealed to Tech Planet that her store generates monthly revenue of approximately RMB 1.8–2 million, reaching as high as RMB 2.8 million this year.

However, there remains a significant performance gap. According to financial reports, Pop Mart’s total revenue in Q1 2026 increased by 75% to 80% year-over-year. Revenue from the China market surged by 100% to 105%, while online channels grew by 150% to 155%. Overseas growth slowed, with the Americas, Europe, and other regions posting growth above 55%, while the Asia-Pacific region excluding China saw only a 25% to 30% increase.

Notably, Pop Mart’s China market performance in Q1 this year exceeded expectations, but its overseas growth rate dropped from triple digits to double digits.

Compared to last year, Pop Mart’s 2025 annual report, released in March this year, showed full-year revenue of RMB 37.12 billion, up 184.7% year-over-year, and adjusted net profit of RMB 13.08 billion, a 284.5% increase. Overseas revenue reached RMB 16.27 billion, up 292.0% year-over-year, accounting for 43.8% of total revenue. Among overseas markets, the Americas grew fastest (+748.4%), followed by Asia-Pacific (+157.6%) and Europe and other regions (+506.3%), all achieving triple-digit growth.

Both gross margin and net profit margin declined. Specifically, Pop Mart reported a gross margin of 71%, net margin of 34%, and attributable net profit of RMB 2.55 billion in Q1 2026. In Q4 2025, its gross margin was 71.5%, net margin 36.2%, and attributable net profit RMB 3.38 billion. Although the declines were modest, they did impact profitability.

According to a market observer who has long followed Pop Mart, besides slowing overseas growth, the company currently faces issues including an overly high proportion of online sales and inventory levels in Q4 that outpaced sales growth—with inventory being the biggest concern.

Pop Mart’s financial report shows that inventory at the end of 2025 stood at RMB 5.473 billion, up 258.9% from RMB 1.525 billion a year earlier—far exceeding its 184.7% revenue growth rate. Inventory turnover days lengthened from 100.98 to 121.63, and inventory turnover ratio fell from 3.56 times to 2.96 times, indicating slower inventory turnover and mounting pressure on product sales.

Burning cash on new business ventures, it has lowered its performance targets amid growing anxiety

Pop Mart needs to prove to the outside world how it can create a second—or even more—Labubu following the fading of the Labubu phenomenon.

The new IP 'Xing Xing Ren' (Star People) is seen as another potential dark horse. An industry insider noted that many people have shifted their social currency from Labubu to Star People, making it fashionable to showcase Star People collectibles. Pop Mart is also actively pushing Star People into the mainstream—from top down. Founder Wang Ning recently brought a Star People figure with him during an interview with the State Council Information Office. Additionally, a large-scale Star People exhibition has been set up in Beijing’s Chaoyang Park, reflecting substantial marketing efforts.

However, Xing Xing Ren’s breakout popularity is far less than that of Labubu. Moreover, the revenue generated by Xing Xing Ren also lags significantly behind top-tier IP Labubu. In 2025, THE MONSTERS—the franchise to which Labubu belongs—generated revenue of RMB 14.16 billion, up 365.7% year-over-year, while Xing Xing Ren and five other major IPs together brought in RMB 2 billion.

A former Pop Mart employee told Tech Planet that the company’s pace of launching new IPs has slowed year by year. Aside from hit IPs, many others have failed and disappeared from public view altogether—such as Pan God, Xiao Nuo, Bunny, and Gum Monster, none of which are being produced anymore. In recent years, the company has been expanding into an increasing number of product categories and broadening its business scope.

Around its IPs, Pop Mart has expanded into home appliances, theme parks, dessert cafes, jewelry, films, and more. However, aside from the theme park segment—which turned profitable in 2024—all other ventures remain in a capital-intensive phase requiring continuous investment and contributing little profit.

These cross-sector initiatives remain relatively small in scale: currently, there is only one theme park, though executives disclosed they are actively preparing for a second location in Shanghai. There is just one permanent dessert cafe, with others operating as pop-up stores. Film projects are still in script development. The home appliance business has so far launched only a refrigerated storage unit, with fewer than 2,000 units sold. During an earnings call, Pop Mart executives stated that the home appliance category remains in its early stages and accounts for a very small share of total revenue.

In terms of pricing, Pop Mart’s cross-sector products carry significant premiums. At 10 p.m. on April 30, Pop Mart’s first refrigerator went on sale simultaneously on JD.com and Tmall. The THE MONSTERS Lifestyle Series refrigerated units—two versions limited to 999 units each—were both priced at RMB 5,999 and sold out immediately. On secondhand platforms, prices briefly surged to RMB 90,000 before crashing soon after. Currently, some JD.com sellers are listing the product at a RMB 3,000 premium, but sales remain sluggish, with only three units reportedly sold.

The jewelry brand Popop carries even higher markups. Last year, Pop Mart opened Popop stores in prime high-end shopping districts in Beijing and Shanghai. Within a year, Popop expanded to six cities, including Beijing, Shanghai, and Hangzhou. Stores primarily offer silver and gold-plated silver items, priced per piece. A store clerk noted that new products are released weekly on a fixed schedule. This year, Popop has added many gold jewelry pieces, mostly weighing around 2 grams each.

Gold jewelry is also sold per piece and commands even higher prices. The most expensive Molly gold item in Beijing’s Popop store weighs 52 grams and costs nearly RMB 100,000—equivalent to approximately RMB 1,862 per gram.

Pop Mart is reportedly increasing investment in its Popop jewelry business. The segment has added new operational teams, recruiting talent from retailers like IKEA to optimize in-store displays and manage store rollouts. However, whether these cross-sector ventures will ultimately succeed remains to be proven externally.

For Pop Mart, even though founder Wang Ning proactively lowered the company’s performance targets, the underlying anxiety remains evident. Currently, Pop Mart is intensifying efforts on online channels and has granted brand authorization on platforms like Douyin. A brand licensing manager revealed that Pop Mart recently opened up brand licensing, with an annual fee of RMB 250,000 for the Douyin platform alone.

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