Chinese toy maker Pop Mart International Group, seller of the renowned ‘Molly’ doll and figurines wildly popular among China’s cashed-up millennials, is now worth $14 billion after its stock price doubled in its Hong Kong trading debut on Friday.
The Beijing-based company’s shares opened 100% higher in their first session on Friday, continuing a run of strong first-day performances for deals in the city.
Pop Mart raised $676 million in an initial public offering (IPO) which gave the company a valuation of $7 billion ahead of the trading debut.
With the price doubling, the company is worth at least $14 billion and the firm’s founder Wang Ning, 33, is a now billionaire with his 56% stake.
Pop Mart sells most of its toys in mystery boxes, meaning shoppers at its 136 mainland China stores and 1,001 vending machines do not know which figurine they get until opening the box. The attraction of the toys even lured the normally serious bankers who worked on the deal.
“I bought a lot,” said one dealmaker who could not be identified as he was not authorised to speak to media.
The company priced its IPO shares at HK$38.50 in a deal that was hotly contested by institutional and retail investors.
Pop Mart’s shares opened at HK$77.10, outpacing the broader Hang Seng Index which is trading up 0.37% in the final session of the week. It is Friday’s most actively traded stock by turnover on the Hang Seng.
The share-price surge puts the stock among the best-performing debutants for the city on record for deals over $500 million, Refinitiv data showed.
Just this year, Smoore International Holdings Ltd stock shot up 150% on debut in July, Nongfu Spring Co Ltd gained as much as 85% in September while JD Health International Inc gained 56% when it debuted on Tuesday.
GEO Securities Chief Executive Francis Lun said the first day ‘pop’ of IPOs in Hong Kong was driven by investors taking on leverage to buy into deals.
“There is so much money chasing these deals, sooner rather than later these punters are going to hit a rough spot and they will realise that they can lose money on some deals,” he told Reuters.
“The problem is people are too optimistic, they take on a lot of leverage, interest rates are low and they think every deal will make money.”
There have been deals in Hong Kong this year that have failed to rise on the first day, especially in the property services sector.
KWG Living Living Group Holdings Ltd lost 23% while Shimao Services Holdings Ltd and First Service Holding Ltd dropped 23% and 27% respectively on their recent debuts.
Pop Mart’s main product is “mystery” toy boxes that each hold a single figurine from different collections. Its best-selling character is the round-faced Molly doll.