image credit: Bamboo Works
Key Takeaways:
Bloks Group swung to the black last year with a profit of nearly $100 million, buoyed by overseas sales and introduction of rock-bottom-priced toys
Low-priced toys accounted for nearly 20% of the company's revenue just one year after the introduction of its blind box products priced at just 9.9 yuan
An impressive swing from loss to profit in the latest annual results of toymaker Bloks Group Ltd. (0325.HK) has captured investor attention, though skeptics remain. Bloks is among the world's top five character assembly and action figure toymakers, and the largest in China. But unlike Western rivals Hasbro (NASDAQ:HAS), Mattel (NASDAQ:MAT) and Lego, and domestic archrival Pop Mart (9992.HK), Blocks has no self-developed signature toy characters.
That may be a problem, as Bloks struggles with a strategy driven by copious product launches, low price points and overseas expansion, as it struggles to stay at the top of the crowded and constantly evolving global toy box. While it may be achieving scale, it lacks the brand recognition of its domestic and global peers in the $136 billion global toy market.
For now, at least, the headline numbers look good. Bloks reported its revenue rose 30% last year to 2.91 billion yuan ($423 million). It recorded a profit for the year of 634 million yuan after losing money in the previous four years, including a 398 million yuan loss in 2024. Its annual profit wasn't completely unexpected, since it previously reported a profit of 297 million yuan in the first half of the year.
Perhaps that explains why investors were underwhelmed with the full-year profit news. Bloks' shares rose as much as 12% the day after the announcement, but have given back most of that since then and were up just 4% above pre-announcement levels at Wednesday's close of HK$63.55. That's still well below the HK$85 where Bloks shares closed on their first trading in January 2025 following an IPO that raised HK$1.6 billion ($204 million).
Despite last year's strong bottom line showing, one of the biggest contributors to Bloks' move into the black wasn't related to its toy sales at all, but rather to a 78.9% decrease in administrative expenses. That item fell from 465 million yuan ...
