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

QuantaSing Group (QSG): Pop Toy Surge Powers Earnings Beat and Ambitious Growth Outlook

Strong Earnings Beat in 4QFY25: Pop Toy Segment Outshines

QuantaSing Group (QSG), a prominent lifestyle solution provider with a growing footprint in pop toys and wellness products, reported a robust fourth-quarter FY25 performance that beat expectations, despite a year-on-year pullback in overall revenue. The company’s well-timed pivot to the high-growth pop toy market is delivering results, prompting a raised FY26 guidance and a newly increased target price.

Key 4QFY25 Financial Highlights

Revenue for the quarter was Rmb618 million, down 38% year-on-year but 10% above internal estimates.
Pop toy revenue reached Rmb65.8 million, surpassing the Rmb50 million expectation.
Non-GAAP net profit plummeted 41% year-on-year to Rmb113 million but still exceeded consensus by nearly 90%.
Gross margin contracted to 75.7% from 85.9% a year prior, reflecting the evolving business mix.

Pop Toy Business: A New Growth Engine

QSG’s strategic foray into the pop toy segment is proving transformative. The company’s pop toy business not only outperformed expectations in the latest quarter but is positioned for exponential growth in FY26:
1QFY26 pop toy revenue guidance: Rmb100m–110m.
Full-year FY26 pop toy revenue guidance: Rmb750m–800m, a substantial upgrade from the previous Rmb550m estimate.
The WAKUKU Fox and Bunny series sold over 1 million units since its May 17 launch.
SIINONO, a new original IP, achieved 10,000 units sold within 10 seconds during its debut at partner retail stores.

Strategic Expansion: Online and Offline

QuantaSing is aggressively scaling both its online and offline channels for the pop toy business:
Domestic GMV in August 2025 exceeded Rmb18 million, a ninefold increase since April.
Launched a North American e-commerce site and established flagship stores on TikTok, targeting both North American and Southeast Asian markets.
Official online store launched on Shopee for Southeast Asia.
Built a wholesale network covering over 10,000 retail stores in China and expanded to 20+ countries via distributors.
Negotiating with top-tier malls in China’s Tier 1 cities to open 3–5 flagship stores by year-end 2025.

Pop Toy Product Innovations and Demand Trends

QSG is preparing a new WAKUKU series for launch in 2QFY26.
Letsvan, a key subsidiary, launched SIINONO at MINISO LAND’s Global Flagship Store in Shanghai and across 12 cities nationwide.
SIINONO’s online launch on Tmall, Douyin, Xiaohongshu, and its own mini-program saw a 31.3% jump in single-day sales at debut compared to the previous day.
Despite robust demand, capacity constraints limited delivery rates to around 50%, indicating significant untapped potential.

Segment Performance: Online Learning Faces Pressure, Consumer Business Rises

Individual online learning services revenue dropped 50% YoY to Rmb457 million in 4QFY25.
Skills upgrading: -59% YoY
Recreation and leisure: -12% YoY
Financial literacy: -48% YoY
Consumer business revenue soared 51.5% YoY to Rmb50.5 million, powered by wellness product sales.

Margin Outlook and Profitability

QSG targets a 15% pop toy margin in the near term and continues to invest in scaling the business.
Full-year non-GAAP net profit is expected to fall a milder 8% YoY to Rmb340 million in FY26, compared to a 12% drop in FY25, reflecting the ongoing transition from traffic-driven to product-driven growth.

Key Financials and Valuation Metrics

Other highlights:
FY26 NAV/share: Rmb 7.27
FY26 Net cash/share: Rmb 9.68
No dividends anticipated through FY28

Sum-of-the-Parts (SOTP) Valuation & Price Target

UOB Kay Hian maintains a BUY rating, raising the target price to US$19.00, implying an 87.2% upside from current levels. The SOTP valuation applies differentiated multiples to each business segment, reflecting their distinct growth and risk profiles.

Assumptions:
6x PS or 30x FY26F PE for pop toy segment (Letsvan)
4x FY26F PE for online learning
1x FY26F PS for consumer business

Earnings Outlook, Revisions, and Share Price Catalysts

1QFY26 revenue estimate reduced by 4%, but FY26 revenue forecast raised by 8%, reflecting pop toy resilience.
1QFY26 non-GAAP net profit forecast cut by 13%, but FY26 full-year non-GAAP net profit forecast lifted by 6%.
Share price catalysts include continued success in the pop toy segment and growing exposure to the silver economy.

Company Profile: QuantaSing at a Glance

Sector: Consumer Discretionary
Shares issued: 34.5 million
Market cap: US$479.7 million
Major shareholder: Even Par Holding Limited (32.5%)
Business focus: Accessible, affordable wellness-oriented services and products, increasingly targeting the senior demographic and consumer market through pop toys and wellness products.

Summary: Transformation Underway, Pop Toy Momentum Accelerates

QuantaSing Group’s decisive pivot to pop toys and high-growth consumer segments is already paying off, with the pop toy division rapidly scaling and driving upgraded guidance. The company’s strategic investments in omni-channel expansion and IP innovation, coupled with a solid balance sheet, underpin a bullish outlook despite transitional pressures in legacy online education. UOB Kay Hian’s raised target price and BUY rating reflect confidence in QSG’s transformation story and its ability to capture new growth frontiers in China and abroad.