Daily Brief Equity Bottom-Up: 2026 High Conviction: Sell Pop Mart Intl (9992 HK) and more

• Peak IP momentum risk: Labubu (~23% of revenue) shows fading hype, with resale prices and ex-China search interest normalizing, raising risk of faster-than-expected growth deceleration in 2026.
• IP concentration and gap: No other IP has demonstrated Labubu-like scaling, increasing risk of an IP digestion period. Overseas expansion matures and supply normalization caps incremental demand.
• Valuation/Expectations mismatch: At 14x 2026E P/E, valuation assumes durable IP growth; TP at HKD 100 to 105 with downgrade risk in 2H26.

• Context: This Insight follows up on previously highlighted relative value opportunities, using a statistical methodology based on mean-reversion to identify opportunities in paired securities.
• Opportunity: Currently eight pair trade opportunities across four markets and five sectors persist.
• Why read: Statistical analysis offers a unique perspective on relative value. Gain insights into actionable statistical pair trade opportunities and monitor performance of previously highlighted pairs.

• Strategic Pivot to Web3 and Metaverse: Gumi is aggressively shifting its focus from a reliance on hit-driven mobile games to becoming a comprehensive Web3 enterprise, underscored by strategic partnerships with Square Enix and SBI Holdings, and significant investments in cryptocurrencies like XRP and Bitcoin.
• Financial Volatility and Restructuring: The company has experienced significant financial turbulence, with a substantial net loss in FY24 driven by underperforming titles, leading to the discontinuation of flagship games, workforce reductions, and a halt in the development of high-risk original titles.
• Leveraging Existing IP for Future Growth: Despite sunsetting major titles, Gumi plans to leverage its well-known ‘Brave Frontier’ IP for a new Web3 game, ‘Brave Frontier Versus’, in partnership with the Sui Foundation, aiming to blend its established brand with new blockchain-based gaming experiences.

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• JSW has shown strong growth in generation capacity, with plans to double it to 30GW by 2030. The company is also venturing into ancillaries like battery assembly and hydrogen production. 
• We conservatively estimate FY26 EBITDA at 10,000cr (11% below consensus) with 20% CAGR from capacity expansion (25% CAGR to 30GW) and improving utilisation (35% CAGR in generation).
• We ascribe EV/EBITDA multiple of 8-12x to the thermal business and 12-16x multiple to renewables business to arrive at SOTP valuation of 550-770 by March 2027 vs CMP of 480.

• Earnings re-based higher: FY2025–27 EPS upgraded ~20%, driven by copper and gold prices; resource earnings dominate while smelting volatility remains largely accounting-driven.
• Valuation near fair value: At ~¥6,000, SMM trades around mid-cycle value; upside depends on sustained copper/gold strength rather than multiple expansion.
• Downside cushioned: Strong balance sheet and ~2× FCF dividend cover limit downside, with pullbacks offering better entry than chasing spot-driven rallies.

• Sales are growing again and the company has turned profitable with capacity utilization up and costs down. Guidance for 2H of FY Mar-26 looks conservative. 
• Sales of power devices is rising after a long period of weakness, supported by auto, industrial and data center related demand.
• Projected valuations are once again reasonable. The share price should continue to trend upwards.

• Wellex Industries (WIN) is a Philippine holding company with primary interests in mining, oil exploration, and real estate leasing through its subsidiary, Plastic City Industrial Corporation.
• The company’s financial performance is characterized by extreme volatility, highlighted by a significant one-off net income gain in 2024 that masks underlying operational weaknesses, such as a return to quarterly losses and persistent negative cash flows.
• Future performance is subject to high uncertainty, contingent on the successful execution of its strategy to revitalize its mining and exploration activities and the performance of the broader Philippine real estate and resources sectors.

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• Philippine Business Bank (PBB) is a thrift bank strategically focused on the underserved Small and Medium Enterprise (SME) sector, which constitutes the vast majority of registered enterprises in the Philippines.
• The bank demonstrates a strong operational growth trajectory, with significant increases in revenue and net income over the past three years. This is complemented by a high dividend yield, making it attractive from a value and income perspective.
• Despite robust fundamental growth, the company’s market capitalization has declined, indicating a significant valuation gap. Key risks include high sensitivity to macroeconomic conditions, intense competition within the Philippine banking sector, and potential asset quality pressures inherent in its SME-focused loan portfolio.

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• Dominant Market Position with Extensive Reach: GMA Network is a leading media company in the Philippines, boasting the largest broadcast footprint with 115 TV stations and 21 radio stations, reaching an estimated 67 million Filipinos. This extensive reach provides a significant competitive advantage in attracting advertisers and maintaining a large viewer base.
• Diversifying Revenue Streams Beyond Traditional Media: Recognizing the global shift in media consumption, GMA is actively diversifying its portfolio. This includes a strong push into digital media, where it ranks number one in Southeast Asia for video views, and strategic investments in technology startups through its venture capital arm, GMA Ventures.
• Challenging Financial Performance Amidst Industry Headwinds: Despite its market leadership, GMA has faced financial challenges, including a significant drop in net income over the past three years. This is attributed to high operating costs, unfavorable economic conditions, and a dip in television ratings, reflecting broader trends of declining viewership for traditional broadcasting.

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• Tenneco Clean Air India Ltd (1880671D IN) is part of the Tenneco Group, a U.S.-headquartered global Tier I automotive component supplier.
• It designs and manufactures clean air, powertrain, and suspension solutions for Indian OEMs and export markets.
• Since its listing, the stock is up 19%, but there is still upside potential.