1H26 growth gained momentum – Bloks Group, a manufacturer of assembly character toys, delivered robust 1H26 results, with revenue growing 32.7% YoY to RMB1.78bn, sustaining the strong momentum from FY25 (30% YoY growth). Topline expansion was driven by its continuously expanding product portfolio. A total of 426 new SKUs were launched during the period, representing nearly a quarter of the 1,851 SKUs currently available for sale. Best‑selling IPs, including TRANSFORMERS, ULTRAMAN, and KAMEN RIDER, remained key revenue drivers.

On an adjusted basis, profit for the period stood at RMB401mn (+25.1% YoY). However, GPM came in at 44.3% (down 410 bps YoY) and net margin at 22.6% (down 130 bps YoY). This margin pressure primarily stemmed from a higher sales mix of lower‑margin products. The value‑price segment (RMB9.90/item) now accounts for 19.5% of total revenue, up from 18.6% at end‑FY25. An interim dividend of HK$0.3247 per share was declared for the period.

Overseas channel contributed higher mix – Overseas sales emerged as a powerful new growth driver, surging nearly 2.3x YoY to RMB364mn, already exceeding the full‑year contribution in FY25 and now representing 20.6% of total revenue (vs. 11.0% at end‑FY25 and 2.9% at end‑FY24). The United States and Indonesia were the top two contributing markets. It is expected that overseas contribution will continue rising as the company deepens its presence in North America, Southeast Asia, and Europe.

IP portfolio diversification deepens – The top six best‑selling product series together generated RMB1.38bn, accounting for 77.6% of total revenue. This represents a significant decline in concentration from 88.8% for the top six series in the same period last year, indicating a more diversified IP portfolio. Among them, TRANSFORMERS remained the largest contributor (approximately 35% of total revenue) and still achieved 59.2% revenue growth even on a relatively high base, demonstrating strong brand sustainability.

Our view – Bloks Group delivered solid overall growth, with overseas expansion standing out as a key positive. Although margins are under pressure due to the product mix shift towards value‑price items, we view this as an effective customer acquisition strategy that should broaden the user base. A few key catalysts include sustained momentum in overseas markets, successful renewal of key IP licenses, and margin stabilization as new products mature. In addition, the premiere of iconic Marvel movies in 2H26 could provide additional exposure for Bloks' products. The counter is currently trading at 18.6x FY26E P/E. (Amelia Deng)