Broker: UOB Kay Hian
Date of Report: Thursday, 17 September 2025

QuantaSing Delivers Strong Earnings Beat and Upbeat Pop Toy Outlook: Analyst Sees Nearly 90% Upside

Introduction: QuantaSing Surprises with Robust Q4 and Bright FY26 Prospects

QuantaSing (QSG US), a leading lifestyle solution provider with a growing presence in pop toys and wellness products, delivered a notable fourth-quarter FY25 performance, beating earnings expectations despite year-on-year revenue declines. The company’s recent venture into the pop toy sector is gaining momentum, driving both revenue and investor optimism. UOB Kay Hian maintains a BUY rating, raising the target price to US\$19.00, signaling an impressive 87.2% potential upside.

Q4 FY25 Financial Performance: Key Highlights and Metrics

Despite a 38% year-over-year drop in total revenue, QuantaSing’s Q4 FY25 results came in well ahead of analyst expectations. Notably, the pop toy business excelled, outperforming internal forecasts and helping to offset weaknesses in other segments.

• Pop toy revenue reached Rmb65.8m, significantly surpassing the Rmb50m estimate.
• Operating expenses continued to trend lower, supporting profitability despite challenging macro conditions.
• Restructuring of the core online learning business led to a 50% YoY decline in that segment.

Pop Toy Business: Outperforming Expectations and Powering Future Growth

The pop toy business, a recent strategic pivot for QuantaSing, delivered standout results in Q4 FY25 and is set to become a major growth engine.

• Q4 FY25 pop toy revenue: Rmb65.8m (vs. Rmb50m estimated).
• FY26 pop toy revenue guidance: Rmb750m–800m, up from a previous Rmb550m estimate.
• Product launches such as the WAKUKU Fox and Bunny series have sold 1 million+ units since May debut.
• SIINONO brand achieved 10,000 units sold in just 10 seconds at partner retail stores.

Global Expansion and Omnichannel Scaling

QuantaSing is aggressively scaling both online and offline, targeting domestic and international markets for pop toys and lifestyle products.

• China: Gross merchandise value exceeded Rmb18m in August, a ninefold increase since April.
• International: Launched an independent e-commerce site in North America, set up flagship stores on TikTok for North America and Southeast Asia, and opened an official Shopee store in Southeast Asia.
• Offline: Built a wholesale network exceeding 10,000 Chinese retail stores, expanded distribution to over 20 countries, and is negotiating flagship store openings in Tier 1 Chinese cities.

Operational Highlights: Innovation, Demand, and Capacity

• Strong product launches, notably SIINONO at MINISO LAND’s Shanghai flagship, sold out quickly and boosted single-day sales by 31.3%.
• Pop toy business operating margin target is 15% in the near term, with ongoing strategic investment to drive scale and brand equity.
• Product delivery rates are around 50%, reflecting robust demand and some capacity constraints—which the company is actively addressing with new product launches and supply chain investments.

Segmental Breakdown: Weakness in Online Learning, Strength in Consumer and Pop Toys

• Individual online learning services revenue fell 50% YoY to Rmb457m in Q4 FY25.
• Skills upgrading courses: -59% YoY; recreation and leisure: -12% YoY; financial literacy: -48% YoY.
• Consumer business revenue surged 51.5% YoY to Rmb50.5m on the back of strong wellness product sales.

Valuation and Recommendation: Substantial Upside, Pop Toys Key to SOTP

UOB Kay Hian reiterates its BUY rating with a raised target price of US\$19.00. The valuation uses a sum-of-the-parts (SOTP) approach, heavily weighting the newly-acquired pop toy segment:

• Letsvan (pop toy) segment is valued at 6x FY26F sales or 30x FY26F PE, reflecting rapid growth and market enthusiasm.
• Other segments (online learning, enterprise, consumer) use lower multiples reflecting more modest growth.
• Total target price per share: US\$19.00, based on 54 million shares and a 7.2 Rmb/US\$ exchange rate.

Key Financials and Forecasts: 2024–2028 Outlook

Risks, Catalysts, and Analyst Outlook

• Risks: Continued pressure on the online learning segment, capacity constraints in pop toy production, and the need to execute on new market launches.
• Catalysts: Success in the pop toy segment and increased exposure to the “silver economy” (senior-focused services and products).
• Forecasts for FY26 have been raised, with a 6% increase in non-GAAP net profit expectations. The pop toy business is now expected to sustain company-wide growth and margin improvement.

Company Overview: QuantaSing at a Glance

QuantaSing is a diversified lifestyle solution provider, delivering accessible, affordable wellness-oriented services and products, primarily targeting the senior demographic. The recent expansion into the high-growth pop toy market marks a strategic transformation from a traffic-driven to a product-driven business model. With a strong cash position, innovative product launches, and expanding international reach, QuantaSing is poised for continued growth and value creation.

Conclusion: BUY Rating with High Conviction

UOB Kay Hian’s latest analysis underscores QuantaSing’s successful pivot to pop toys, robust international expansion, and improving margin trajectory. Despite challenges in legacy online learning operations, the company’s diversified approach and dynamic execution in pop toys and consumer products support the bullish outlook. The raised target price of US\$19.00 offers nearly 90% upside, making QuantaSing a compelling investment for growth-oriented investors in the consumer discretionary sector.