From Labubu to Bubble Tea: How Emotional Spending is Fueling Big Gains?
This year, the consumption sector in Hong Kong's stock market has shown robust performance, becoming a focal point for investors.
Three companies have been spearheading the rally in new consumer stocks, consistently hitting new highs this year:
$MIXUE GROUP (02097.HK)$ and $POP MART (09992.HK)$ have both surged over 140% year-to-date. $LAOPU GOLD (06181.HK)$ has outperformed even further, soaring more than 232% since the beginning of the year. Pop Mart is now worth more than the makers of Barbie, Hello Kitty and Transformers combined.
The investment logic behind these emerging consumer stocks increasingly points to one key concept: emotional spending.
In recent years, the rise of consumption driven by emotional value and self-indulgence reflects changing consumer habits and diversifying demands. Consumers now seek more than just basic functionality, prioritizing emotional experiences and satisfaction in their purchases.
Media reports suggest that engaging in blind box social interactions, or acquiring gold jewelry that expresses individuality and collectible value, all cater to the desire for self-gratification.
Clearly, emotional resonance leads to product premiums, and young people's emotional spending has reshaped company valuation models.
What other opportunities are worth watching?
Wu Yuanyi, fund manager at GF Value Core, notes that in the new consumption sector, innovative models are emerging across various fields.
New trends in beauty products and domestic brands are flourishing, highlighting the evolution and progress in the consumer sector driven by societal development.
While demand for many traditional consumer goods has been well met, there's still significant untapped potential in self-indulgence categories, which we are actively monitoring.
Based on relevant reports, we've compiled a list of consumer companies in the Hong Kong stock market for investors' reference:
It's noteworthy that most discretionary consumer goods companies have seen substantial gains this year. Besides $POP MART (09992.HK)$ and $MIXUE GROUP (02097.HK)$, $NAYUKI (02150.HK)$ and $BLOKS (00325.HK)$ have risen over 160%, $WL DELICIOUS (09985.HK)$ has increased by 125%.
Investment Bank View
Morgan Stanley has raised $POP MART (09992.HK)$'s target price to HK$224, corresponding to a P/E ratio of about 40 times this year and 30 times for next year, maintaining an "Overweight" rating. Their analysis cites three main reasons:
1. Strong global demand for LABUBU 3.0, especially in the U.S. market, which could drive new store openings in the U.S. and other regions, becoming a major growth driver for the next two years.
2. Pop Mart's rapid establishment of a well-performing supply chain in Vietnam, with most exports to the U.S. shipping from Vietnam starting Q3 this year, potentially mitigating the impact of cooling U.S.-China trade relations.
3. A 12-27% price increase for new products in the U.S. market, which appears to be accepted by consumers, potentially improving long-term profit margins for the U.S. business.
Daiwa Securities initiated coverage on $MIXUE GROUP (02097.HK)$ with a target price of HK$539 and an "Outperform" rating, citing favorable growth prospects based on economies of scale, leading position in the mass market, and overseas expansion potential.
Daiwa projects same-store sales growth of 5%, 3%, and 3% for 2025-2027, with net profit growth of 22%, 20%, and 18% respectively. Competition on delivery platforms is expected to benefit Mixue's same-store sales growth, with April same-store sales growth exceeding 10%, supporting recent stock performance.
Regarding the strong performance of Hong Kong stocks this year, we believe the technology, consumer, and healthcare sectors are the most attractive, considering both national policy support and their inherent profit growth and valuation potential.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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vaporwavenihilist : Labubu Labu Labu Labubuuuuu
sunwu79 :![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
103157939 : emotional spending is a fickle feeling ..not sure this can go on for a long time..
for the moment yes...
PW6187 : i cannot understand the logic. something sold in the millions how can it be a collectible when there is nearly an unlimited supply?