China Merchants Securities Cuts Pop Mart Profit Forecast by 25%, Recommends Sell

China Merchants Securities International said in a report that Pop Mart's (09992.HK) first-half profit fell 15-20% below market expectations, mainly due to a 10% decline in sales in the Americas region. An unfavorable product mix eroded gross margins, intensifying margin pressure. The firm cut its 2026-2028 profit forecasts for Pop Mart by an average of 25%; the target price is HK$121, based on 14 times the forecast 2027 price-to-earnings ratio; it recommends a "Sell." The firm also cut its 2026-2028 sales forecasts for Pop Mart by an average of 17%, reflecting further downward revisions to overseas sales expectations following weaker-than-expected first-half 2026 results, and lowered its 2026/2027 gross margin forecasts by 0.2 percentage points/1 percentage point, respectively, to reflect a structural decline in the overseas business mix and raw material cost pressures.