With the expansion of businesses such as amusement parks, games, and animation, Bubble Mart, which has grown with Generation Z, is gradually emerging from the definition of "trendy play" and becoming a powerful IP operation group.
On the noon of March 20th, Bubble Mart released its 2023 annual report, which showed that Bubble Mart achieved a revenue of 6.3 billion yuan in 2023, a year-on-year increase of 36.5%; Net profit was 1.089 billion yuan, a year-on-year increase of 128.8%; The gross profit margin was 61.3%, a year-on-year increase of 3.8%; The net profit margin is 18.9%, a year-on-year increase of 6.5%.
While maintaining rapid development, operational indicators such as gross profit margin, net profit margin, and inventory turnover continue to be optimized. According to the financial report, in 2023, Bubble Mart's gross profit margin increased by 3.8% to 61.3%; The net profit margin is 18.9%, an increase of 6.5%; The inventory turnover days were 133 days, a decrease of 23 days, further highlighting the refined operational capability.
Considering the excellent performance of the company, the management of Bubble Mart has decided to distribute 35% of the net profit attributable to the parent company, with an expected total dividend amount of RMB 379 million and a dividend amount of RMB 28.21 per share. The management also stated that "we are very optimistic about our own development and have been actively repurchasing stocks under suitable opportunities." Since going public, Bubble Mart has cumulatively repurchased nearly HKD 1.19 billion.
The overseas market plays an indispensable role in the significant increase in performance
The performance has made rapid progress, with both revenue and net profit reaching historic highs. Bubble Mart's financial performance last year was inseparable from the recovery of the consumer market. Bubble Mart stated in its financial report that with the effective implementation of various policy measures to expand domestic demand and promote consumption, the release of consumer demand by residents is accelerating, the foundation of the service consumption market is constantly consolidating, service retail maintains rapid growth, and trendy toy categories also show huge market potential.
Among them, the overseas market has performed excellently. In 2023, the revenue of Bubble Mart's Hong Kong, Macao, Taiwan, and overseas business exceeded the 1 billion yuan mark, reaching 1.066 billion yuan, a year-on-year increase of 134.9%, accounting for 16.9% of the revenue; Mainland China achieved a revenue of 5.235 billion yuan for the year, a year-on-year increase of 25.7%.
2023 is the fifth year for Bubble Mart to expand into overseas markets. Starting from February, Bubble Mart's offline stores have successively entered France, Malaysia, Thailand, and the Netherlands, breaking global daily sales records several times. As of the end of 2023, the number of Pop Mart stores in Hong Kong, Macau, Taiwan, and overseas reached 80 (including joint ventures), and the number of robot stores reached 159 (including joint ventures and franchisees).
At present, Southeast Asia and East Asia are the key regions for Bubble Mart to go global in overseas markets. During the performance exchange meeting, Wen Deyi, President of Pop Mart International Business, mentioned that the East Asian market, as its longest entered overseas market, had already accounted for about half of its overseas business by the end of 2023, with a total of 43 offline stores.
Southeast Asia is the fastest-growing market, with 15 offline stores as of 2023. There are 22 offline stores in other overseas markets, including 6 in North America, 6 in Europe, and 10 in Australia.
In terms of promotion, Bubble Mart held multiple large-scale fashion exhibitions and artist signing events overseas last year. In September 2023, Bubble Mart held its first overseas large-scale fashion exhibition in Singapore, showcasing over 90 artists with diverse styles from around the world. Over 20000 visitors visited the exhibition in three days. This exhibition has opened a door for trendy fans in Southeast Asia, allowing them to have zero distance access to their favorite trendy IP and the imaginative creators behind the IP.
Deepening the DTC strategy and promoting the global recognition of the Bubble Mart brand and its IP is the core idea of Bubble Mart's global business in recent years. Wen Deyi pointed out that the importance of building and optimizing local organizations and organizational structures is the most critical link in the execution of DTC strategy.
At present, there are over 700 employees from overseas, Hong Kong, Macao, and Taiwan, with the vast majority of them coming from the local area. Wen Deyi stated that among the 15 countries and regions where Bubble Mart conducts DTC business, "we have divided them into mature regions, rapidly developing regions, and newly established regions based on their respective business maturity, and have adopted differentiated organizational structure construction strategies for these different maturity levels."
Top 10 IPs exceeding 100 million, the first IP themed park in China has landed
Compared to its overseas business, Bubble Mart's domestic business has rapidly rebounded, reaching a growth rate of 25.7%. In 2023, it achieved a revenue of 5.235 billion yuan, compared to 4.163 billion yuan in the same period last year. From the perspective of sales channels, offline channel revenue accounts for 48.1% of the company's total revenue, online channel revenue accounts for 27.1%, and wholesale and other revenue accounts for 7.9%.
In 2023, Pop Mart opened 55 new offline stores in mainland China through offline channels, with the number of stores increasing from 329 as of the end of last year to 363 at the end of this reporting period. 123 new robot stores have opened in mainland China, with the number of robot stores increasing from 2067 at the end of last year to 2190 at the end of this reporting period.
In terms of online channels, the small program of Bubble Mart box extractor achieved revenue of 729 million yuan in 2023, the revenue of Tmall flagship store was 322 million yuan, and the revenue of Tiktok platform was 283 million yuan, an increase of 43.1.2% year on year.
With the expansion of channels, the user base of Pop Mart continues to expand. As of December 31, 2023, the total number of registered members in mainland China has increased from 26.04 million as of December 31, 2022 to 34.354 million, with 8.35 million new registered members. In 2023, members contributed 92.1% of sales revenue, with a member repurchase rate of 50%.
From a specific business perspective, Bubble Mart's business includes four major sectors: IP incubation and operation, trendy toys and retail, theme parks and experiences, and digital entertainment. As a company that started with "trendy gameplay", IP incubation and operation have always been one of the core businesses of Pop Mart. Bubble Mart divides its IP business into artist IP and authorized IP.
In 2023, the revenue of artist IPs was 4.822 billion yuan, accounting for 76.5% of the revenue, a year-on-year increase of 32.5%. The IP revenue of SKULLPANDA and MOLLY both exceeded 1 billion yuan, achieving 1.025 billion and 1.02 billion respectively, with a year-on-year increase of 20.3% and 27.2%. In terms of sales proportion, SKULLPANDA and MOLLY both have a sales proportion of around 16%. Last year, the sales revenue of 10 IPs under Bubble Mart exceeded 100 million.
The company's authorized IP revenue reached 1.036 billion yuan, a year-on-year increase of 88.2%.
In addition to IP incubation and operation, theme parks and experiential businesses are also highly valued. As a company that has transitioned from a "trendy" business to a theme park, Bubble Mart City Park landed in Beijing Chaoyang Park in September 2023, becoming the industry's first immersive IP theme park.
"I am confident in achieving a revenue growth of no less than 30% in 2024"
At the Central Economic Work Conference held at the end of 2023, the concept of "trendy domestic products" as a new consumption growth point was first proposed at the conference. The meeting stated that efforts will be made to expand domestic demand and actively cultivate new consumption growth points such as smart homes, entertainment and tourism, sports events, and domestic trendy products.
The 2024 Government Work Report reiterated the above statement. Chinese trendy products, as an important source of consumer growth for residents, are highly valued, and the trendy toy market has broad prospects. According to the "Development Report of the Chaoyu Industry (2023)", the global market size of Chaoyu is expected to approach $40 billion in 2023 and reach $44.8 billion in 2024. In China, with the continuous popularity of trendy toys, it is expected that the industry's compound annual growth rate will reach 24% between 2022 and 2026, and the retail sales will reach 110.1 billion yuan in 2026.
As a leading enterprise in the industry, the management team of Bubble Mart is also full of confidence. Chairman and CEO Wang Ning stated that many people previously believed that trendy toys were non essential products, and sales would decline with economic pressure. From last year's annual performance, it can be seen that the trendy toy market is anti cyclical. When people are happy, they need toys, and when they are unhappy, they also need toys. trendy toys have strong demand at any time.
He further stated, "The company's development is becoming more and more mature, and the growth of overseas markets has brought strong momentum to the company, planting many seeds that can be expected. In addition, the company's performance in the first quarter of this year exceeded the expectations of the management, especially the sustained growth of overseas markets. We are confident that we can achieve revenue growth of no less than 30% and overall overseas growth of no less than 100% in 2024."
For the domestic market, Wang Ning stated that in the future, the company will continuously adjust its operational strategies based on the domestic economic situation. Maintain restraint in store expansion and hope that each individual store or business is relatively healthy and sustainable. On the basis of existing business, actively explore other new businesses and categories, whether it is building blocks, amusement parks, or games, to further expand the commercial value of IP.
For the foreign market, he believes that the expansion of overseas markets is still in its early stages and there is still great potential for the future. Currently, Pop Mart stores can be seen in core business districts in Asia and European and American countries. According to the performance report, by the end of 2023, Bubble Mart had 80 stores in overseas markets. It is expected to add 50 to 60 stores by 2024, and the total number of stores will reach 130 to 140 by the end of the year. The proportion of stores in Eastern countries (East Asia, Southeast Asia) and Western countries (Europe, America, and Australia) will be adjusted from 7:3 to around 6:4.
Industry insiders analyze that when Bubble Mart went public in 2020, everyone was frantically exploring what category "trendy toys" belong to and how to achieve explosive growth. After three years of listing, the word "trendy toy" is no longer enough to define Bubble Mart. It is transforming from a trendy toy company to an international IP operation group.
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