Broker: UOB Kay Hian
Date of Report: Tuesday, 15 July 2025

QuantaSing Group: Strategic Leap Into the Pop Toy Boom and Silver Economy

Introduction: QuantaSing Group’s Bold Transformation

QuantaSing Group (QSG US), a leading lifestyle solution provider, has entered a new phase of growth and innovation. Recognized for its accessible and affordable wellness-oriented services, especially for the senior demographic, QuantaSing has now strategically diversified into the high-growth pop toy market. This move is designed to capitalize on the booming “happiness economy” and sets the stage for multiple growth drivers ahead.

Stock Snapshot and Key Metrics

• Sector: Consumer Discretionary
• Ticker: QSG US
• Shares Issued: 34.5 million
• Market Cap: US\$455.4 million
• 3-Month Avg Daily Turnover: US\$11.2 million
• 52-Week Range: US\$1.50 – US\$15.64
• Current Share Price: US\$8.91
• Target Price: US\$16.00 (Upside: 79.6%)
• Major Shareholders: Even Par Holding (32.5%), DCM Entities (18.7%), K2 Entities (15.2%)

Strategic Expansion: Diversification Into Pop Toy Market

In March 2025, QuantaSing completed the acquisition of a 61.05% stake in Shenzhen Yiqi Culture Co (Letsvan), marking its official entry into the IP consumer and pop toy markets. Letsvan brings an impressive product portfolio centered around IPs like WAKUKU and ZIYULI. Leveraging QuantaSing’s online marketing expertise and extensive channel resources, the company is poised to rapidly scale its presence and reach new consumer segments.

This acquisition represents a pivotal transformation, positioning QuantaSing as a diversified consumer company with expansive growth avenues beyond its original wellness focus.

Financial Highlights and Growth Outlook

QuantaSing expects to consolidate Letsvan’s results starting the March quarter, with an estimated Rmb550 million in revenue from Letsvan in FY26. Management targets over Rmb1 billion in collectibles revenue by FY27, aiming to become one of China’s top pop toy IP-driven companies. The acquisition price for Letsvan was notably attractive, at less than 1x FY26F price-to-sales, compared to Pop Mart’s 13x 2025F price-to-sales.

Pop Toy Market: Robust Growth Trajectory

• China’s pop toy market is projected to grow at a 17.7% CAGR from Rmb40.3 billion (2023) to Rmb91.1 billion (2028), outpacing the global pop toy market’s CAGR of 9.3% over the same period.
• Letsvan, founded in 2020, has rapidly built an IP matrix and expanded distribution via partnerships with major retailers (Miniso, Top Toy), e-commerce giants (Tmall, Douyin), and offline stores across China and Southeast Asia.
• Letsvan’s WAKUKU brand, launched in 2024, quickly gained popularity through innovative designs and celebrity endorsements.

IP Portfolio and Innovation Strategy

For 2025, QuantaSing plans to develop and commercialize 2-3 standardized, IP-based pop toy product lines to secure market share. The company aims to expand its IP portfolio to 20 by FY26, with new character launches, including an elf-themed IP, scheduled for mid-2025. Strategic partnerships and co-branded launches are expected to drive brand visibility and sales.

Leveraging the Silver Economy

• QuantaSing has a strong base of 127.6 million registered users as of FY24, largely from its adult online learning services.
• The company is broadening its service offerings for the aging population, developing new wellness and recreation-related courses, products, and study tourism experiences.

Financial Resilience and Earnings Outlook

QuantaSing is developing its own private label products, especially in wellness, which are expected to boost profits and margins. While gross margins are forecasted to drop due to lower margins in the pop toy segment and increased customer acquisition costs, net profit margins are expected to remain robust, improving from 11.0% in FY25 to 13.4% in FY27 as pop toy revenues scale up.

Non-GAAP net profit is forecasted to decline 23% YoY in FY25, then grow by 1% in FY26 and 32% in FY27 as the pop toy business ramps up.

Valuation and Investment Thesis

• Target price: US\$16.00, based on sum-of-the-parts (SOTP) valuation.
• Letsvan valued at 6x price-to-sales or 20x FY26F PE; online learning at 5x FY26F PE.
• QuantaSing holds Rmb1.1 billion in net cash, providing a solid financial cushion.
• Current market cap: US\$455 million, highlighting significant valuation upside.

Key Risks and Catalysts

• Risks: Limited track record in new service offerings; uncertainties around top-line growth due to a weakening traditional course segment; competitive risks in live-streaming e-commerce.
• Share Price Catalysts: Success in the pop toy segment and increasing penetration in the silver economy market.

Segment Valuation Breakdown (SOTP)

Exchange Rate: Rmb/US\$ 7.2 | No. of shares: 54 million | Target Price: US\$16/share

Conclusion: A Compelling Investment Opportunity

QuantaSing Group stands at the forefront of two high-growth sectors: the happiness-driven pop toy market and the expanding silver economy. With a proven track record in online learning, a rapidly diversifying revenue base, and strong financial reserves, QuantaSing is well-positioned for substantial upside. Investors should closely watch the execution of its pop toy strategy and continued penetration into wellness and recreational offerings for adults and seniors.

Backed by robust financials, innovative IP development, and strategic market positioning, QuantaSing Group represents a unique opportunity to tap into China’s evolving consumer landscape.