MINISO has recently announced plans to spin off its trendy toy brand, Top Toy, and list it on the Hong Kong Stock Exchange, with expected funding of approximately $300 million. This decision has attracted significant market attention, especially in the context of the rapidly growing trendy toy market.

Since opening its first store in Guangzhou's Zhengjia Plaza in December 2020, Top Toy has quickly expanded to over 80 cities across the country, currently boasting 234 stores nationwide. According to data from Frost & Sullivan, the Chinese trendy toy market has experienced rapid growth over the past five years, with market size increasing from 10.8 billion yuan in 2017 to 34.5 billion yuan in 2021, achieving a compound annual growth rate (CAGR) of 33.7%. It is projected that this market will continue to grow at a CAGR of 24% from 2022 to 2026. MINISO has keenly capitalized on this trend by launching the TOP TOY brand.

As of the end of the third quarter of 2024, Top Toy has 234 stores, including 29 directly-operated and 205 partner stores. In the first three quarters of 2024, its total revenue reached 700 million yuan, a year-on-year increase of 42.5%. Notably, Top Toy's total revenue for the third quarter of 2024 reached 272 million yuan, growing 50.4% year-on-year, and it has achieved profitability for four consecutive quarters. This performance lays a solid foundation for its spin-off listing.

Top Toy's business primarily relies on sales of third-party brand products, as well as co-developed and internally incubated IP products. According to MINISO's 2022 IPO prospectus for Hong Kong, Top Toy's GMV in 2021 reached 374 million yuan, ranking seventh in the Chinese trendy toy market. Founder Ye Guofu has expressed optimism about the trendy toy sector and hopes to achieve Top Toy's independent listing within three years.

In addition, Top Toy is actively expanding into overseas markets. In October 2024, it will open its first store in Bangkok, with its first store in Malaysia also in preparation. This international expansion not only enhances the brand's global influence but also broadens its market share.

Leung Siu, executive director of the Hong Kong Small and Medium-sized Enterprises Association and chairman of Zhongshan Capital, stated in an interview that MINISO's choice to spin off Top Toy for an IPO serves two purposes: it can accelerate the development of its trendy toy business through capital market financing, and it can enhance the overall brand value of the group. He noted that for investors, the growth potential of the trendy toy market, the consumption trends of Generation Z, and brand competitiveness will be key factors for evaluation.

However, Leung also pointed out that competition in the trendy toy industry is becoming increasingly fierce. Domestic brands like Pop Mart, 52TOYS, and Coolplay are rapidly expanding, while foreign IP licensing and cross-industry collaborations are becoming mainstream. In this environment, Top Toy needs to enhance its brand uniqueness, diversify its product line, and increase customer loyalty to address the core challenges of future development.

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（Source: uSMART HK）