Questioning AI · Profit decline but GMV growth, where does TOP TOY’s listing confidence come from?

Author | Jolene

Last September, Miniso announced the spin-off of its trendy toy brand TOP TOY, preparing for an independent listing on the Main Board of the Hong Kong Stock Exchange. On March 26, the prospectus submitted by TOP TOY to HKEX officially expired, marking its first IPO failure, but just five days later, it quickly refiled.

Returning to the capital market at this moment is not exactly perfect timing—over the past week, the trendy toy sector has faced cold reception in the capital markets, with Master Master’s IPO breaking below the issue price, and Bubble Mart, once dubbed the “trendy toy Moutai,” experienced a sharp stock price correction after releasing its earnings. Market enthusiasm for trendy toys is visibly cooling.

Investors are beginning to reassess this track—when they start questioning whether Labubu’s popularity can be replicated and sustained, blind boxes and IPs are no longer unquestioned reasons for rising valuations. What story does TOP TOY need to tell to make the discerning capital market buy in again?

Unlike Bubble Mart’s heavily reliant “closed system” centered on its own core IP, TOP TOY positions itself as a platform for secondary creation and aggregation of IPs. With over 40% of its products sourced externally, it still bears the label of a “trendy toy retailer,” which may not be conducive to achieving high P/E ratios in the capital market, but it provides stable store and revenue growth.

In this second half of the trendy toy battle, it is delivering a different answer from Miniso and Bubble Mart.

Opening the updated prospectus, the most eye-catching aspect is its profit performance in 2025—dropping sharply from nearly 300 million RMB last year to just over 100 million. This looks like a warning sign, but TOP TOY’s growth has not stalled.

In 2025, TOP TOY’s GMV in Mainland China reached 4.2 billion yuan, with a compound annual growth rate of over 50% from 2023 to 2025, with revenue and gross profit nearly doubling year-over-year, and adjusted net profit of 522 million yuan.

The real drag on profits was a round of financing before last year’s IPO. Public reports show that in July 2025, the company signed a financing agreement with four Series A investors, issuing 47.6328 million Series A preferred shares at the issuance price for a total of $59.43M, which after a significant increase in valuation, resulted in a redemption liability of up to 574 million RMB for the preferred shares.

Accounting liabilities do not necessarily indicate operational deterioration, but the real challenge TOP TOY faces is not in profit figures but in valuation inversion.

The Series A financing in July last year gave TOP TOY a high valuation of about HKD 10.2 billion, corresponding to a roughly 20x P/E based on adjusted net profit in 2025. This was reasonable during the hype of trendy toy IPOs last year, but in the current context of industry-wide revaluation, it feels awkward.

As an industry benchmark, Bubble Mart’s current P/E ratio is around 14x. This means that, if priced in the current cooling market sentiment, TOP TOY’s IPO valuation might actually be lower than its Series A valuation.

This pressure points to a dilemma in TOP TOY’s business model: as a retail-based company, its growth trajectory is linear. To increase profits, it can only open stores one by one, unlike content companies centered on native IPs that can achieve explosive growth through a hit IP—like Molly and Labubu did for Bubble Mart. TOP TOY must prove to the market that the certainty of a retailer is also valuable.

Financial reports show that the ecosystem of TOP TOY’s single stores is subtly evolving: the average price of goods inside stores is gradually rising, from 21.8 yuan in 2023 to 28.7 yuan, while the average GMV per store and same-store growth rates have slightly declined. However, the flip side is that the membership repurchase rate is steadily increasing.

These data points together signal a subtle shift: TOP TOY is gradually moving from the broad consumer traffic that Miniso excels at, toward cultivating a loyal, high-engagement membership base in the deep waters of trendy toys.

TOP TOY’s trump card has always been the barriers created by Miniso: strong factories, supply chain resources, and formidable R&D capabilities. After obtaining IP licenses, TOP TOY can quickly develop a rich variety of SKUs, further enabling it to leverage more international big IPs.

Take Sanrio as an example. Sanrio’s IP licensing is almost ubiquitous in China’s trendy toy industry, not a scarce resource, but TOP TOY has made it one of its main engines.

The reason is simple. Sanrio has only 63 official stores in Mainland China, mostly concentrated in high-tier cities’ core commercial districts and airports, with limited coverage. Many licensees simply print the standard artwork provided by the copyright holder on their products—leading to severe homogenization, where consumers see similar products in any store.

TOP TOY’s approach is different. Leveraging its R&D ability, it can develop product forms that are absent in Japan but popular domestically—such as soft vinyl plush series, which have quickly become hits. The prospectus shows that in the past three years, TOP TOY’s retail sales of Sanrio soft vinyl plushes exceeded 358 million yuan.

TOP TOY’s Sanrio Latte Baby series plush

TOP TOY’s British Afternoon Tea series plush

With retail genes, “Miniso/TOP TOY version” Sanrio products are characterized by affordability, quick refresh cycles, and extremely rich categories. They can rapidly penetrate the vast lower-tier markets that Sanrio’s official stores do not reach, and meet the multi-category needs of OEM licensees who cannot cover everything. When a platform can produce enough exclusive derivative products, its dependence on a single external IP is greatly alleviated.

Data confirms this: the proportion of self-developed products’ revenue to GMV has already exceeded 55%. According to Frost & Sullivan, this ratio ranks first among Chinese trendy toy collection brands.

Admittedly, TOP TOY’s own IPs have not yet formed an exclusive moat. These IPs serve more as risk-diversification tools—avoiding over-reliance on any single external IP, which could lead to a “all eggs in one basket” situation. Plus, about half of its products are sourced externally, maintaining retail stability. TOP TOY thus leaves room to maneuver between “retailer” and “trendy IP toy.”

This logic also applies to overseas expansion. Last year, Duojiao (Chili Sauce) CEO Sun Yuanwen told TOP TOY’s founder and CEO, Sun Yuanwen, that currently, Sanrio and similar blind box products dominate revenue in TOP TOY’s overseas stores. “I’m seizing the opportunity of new categories. Foreign consumers are familiar with these IPs, but locally, no one supplies trendy toy products, so there’s a huge dividend window.”

Compared to designing from scratch, cross-cultural translation, and launching a new cultural symbol, leveraging globally renowned IPs to enter new markets is obviously more certain. In the half-year since the IPO update, TOP TOY’s overseas stores increased from 10 to 30, and overseas revenue has maintained steady growth.

Unquestionably, Bubble Mart’s model has a very high ceiling. On April 4, investor Duan Yongping shared his impressions after visiting overseas Bubble Mart stores: a 60-square-meter store was bustling, with over 90% of customers being non-Chinese adults. He considers Bubble Mart a “pioneer of Chinese products’ internationalization,” giving it the praise of “right business, right people.”

But on the flip side, when Bubble Mart reports impressive growth figures, the domestic capital market has become somewhat disillusioned with this trendy toy myth born during an economic upswing. Investors are increasingly wary of the “coincidence risk” behind Labubu’s sudden popularity and the company’s single-product structure accounting for 38% of revenue. Labubu is not yet out of fashion, but people are already questioning whether the company can develop the next hit.

In this context, TOP TOY presents a very different logic to the capital market. It emphasizes a single-store model, repurchase rates, and “maximizing IP value,” still carrying the deep Miniso DNA.

In its financial report, TOP TOY’s average category price has risen but remains in the 20-30 yuan range. For store consumers, it might feel slightly higher than Miniso but usually lower than Bubble Mart. Consumers buying a plush toy at TOP TOY are not thinking about value retention or resale premiums—they buy purely for personal liking. This motivation is more everyday, higher frequency, and less susceptible to secondary market hype.

Without paying attention to the secondary market, TOP TOY’s single-store model remains an efficient retail operation, with gross margins around 30%, far below Bubble Mart’s 72.1%, but still in the mid-tier of retail.

The prospectus states: “We focus on maximizing IP value and have built an integrated platform covering all key segments of the industry value chain. … According to Frost & Sullivan, TOP TOY is one of the few brands in the industry that achieves full coverage of the trendy toy industry chain—from IP incubation and operation to direct consumer interaction—and holds a leading position across the entire industry chain.”

“Full coverage” and “integrated platform” imply that what makes TOP TOY attractive today is not betting on a single big IP, but its ability to ensure each IP, each category, and each store makes steady profits.

If we draw a spectrum of China’s trendy toy industry from one extreme to the other, with Bubble Mart on one end and Miniso on the other, TOP TOY stands in the middle—or more precisely, on the dividing line that matches its 60/40 self-developed versus sourced product ratio as stated in its prospectus.

Ning Wang’s analysis of Bubble Mart’s logic is “like a record company”: signing designers, continuously trialing and selecting through a mature system, with the most popular IPs (from Molly to Labubu) delivering market premiums and over 70% gross margins. This model was formed during an economic upswing, based on scarcity and emotional consumption. Its ceiling is high, but volatility is also significant—an IP’s explosion can support quarterly performance, but cooling down is unpredictable, which is why the market is so anxious about Bubble Mart now. Even as Bubble Mart repeatedly proves its mature operational mechanism, people’s panic emotions are hard to quell.

Meanwhile, Miniso’s secondary market narrative is different. For Miniso already listed, the valuation multiples of IP or content companies are much higher than those of retailers. During its earnings call, Ye Guofu emphasized MINISO SPACE located in the high-end Deji shopping mall in Nanjing, and collaborations with “luxury goods influencer” Jennie.

Last year, Ye Guofu told Luo Yonghao in a podcast that their growth path and model are similar to Bubble Mart’s—Bubble Mart started earlier in transforming from general merchandise to its own IP, while Miniso is just beginning. He even predicted that in the future, the two companies’ categories and strategies will become more alike, with the only difference being the IPs.

Of course, TOP TOY has not fully shed its ambiguous identity.

The prospectus admits that, although the team operates separately, the company is still heavily influenced by Miniso: in 2023-2025, revenue from Miniso accounted for 53.5%, 48.3%, and 46.6% of total revenue, respectively.

And that 43% sourced externally also labels it as a “retailer,” which is not conducive to achieving higher valuation multiples in the capital market.

But from another perspective, this ambiguity is also a form of flexibility.

In the current environment where trendy toys are cooling off and investors are seeking “certainty” rather than “imagination,” TOP TOY can leverage its retail DNA’s steady logic to attract funds tired of Bubble Mart’s story. Meanwhile, as the market warms again, its 55% self-developed product ratio and growing proprietary IP matrix will be enough to support a higher-premium story.

In the era of trendy toy cooling, can TOP TOY deliver a third kind of answer?