Bloks Group Ltd.: Toy manufacturer captivates investors

Bloks Group, the Shanghai-based Chinese manufacturer of popular figurines such as Ultraman and Transformers, had a spectacular stock market debut in Hong Kong. The stock rose by an impressive 82 percent at its debut after the 215 million USD Initial Public Offering (IPO) received an enormous response, especially from retail investors. By the start of trading at 9:20 a.m., the stock was quoted at 109.60 Hong Kong dollars, compared to the IPO price of 60.35 Hong Kong dollars. The rush for Bloks shares is part of the recent upward trend among Chinese toy companies. A prime example of this growth was Pop Mart International, whose revenue quadrupled last year. Benjamin Harburg of Magic Stone Alternative Investment notes that the segment of games and general entertainment is particularly in demand. While interest in high-priced retail goods is declining in China, more affordable mass-market products are gaining popularity. A significant increase in demand also resulted from the provision of interest-free loans for stock purchases. Even private investors used margin financing totaling the equivalent of 113 billion USD, which exceeded the initially provided shares by one hundred times. This resulted in an increase in shares issued, which pushed the IPO price to the upper end of the price range and enabled Bloks to generate 1.67 billion Hong Kong dollars. This helped Zhu Weisong, the chairman and CEO, to rise into the circle of billionaires, as determined by the Bloomberg Billionaires Index. Despite the brilliant demand, Nelson Yan of Fosun Wealth International sees potential constraints in the further growth of the stock, as Bloks is more dependent on superhero licensing than competitors such as Pop Mart. According to Yan, Bloks may offer more short-term opportunities than long-term investment possibilities. Although originally focused on Lego-like building blocks in 2014, the company has shifted most of its revenue sources to figurines since 2022, but has remained unprofitable since at least 2021.