Orientation: Supply and demand resonance accelerates the penetration of the bean product category, empowering emotions to create a new blue ocean for handmade products.

Orient released a research report stating that the trend of the splicing bead category moving from niche to mass market signifies a period of dividend, providing retail enterprises with brand-wide empowerment, strong IP monetization, and the ability to capture offline traffic, bringing certainty to growth. In the midstream, service providers with mature online marketing and e-commerce operational capabilities will benefit greatly from the scale production of emerging splicing bead brands; in the downstream, general retail channels with extensive physical networks and peripheral development capabilities will be the first to reap the benefits of increased customer flow and high-frequency repeat purchases. Related targets: Qingmu Tec Co., Ltd. (301110.SZ, unrated), MNSO (09896, unrated), Levima Advanced Materials Corporation (003022.SZ, unrated). Orient's main views are as follows: From niche handicrafts to mass market breakthrough, the splicing bead category sees a reassessment of value Splicing beads are a form of handmade creation where colored plastic beads are arranged in patterns, heated and melted to form a "pixel-style" finished product, classified into two categories: home DIY and store experiences. Looking back on its development history, splicing beads have gone from their overseas origins in 1958 (initially used for the rehabilitation of the elderly and educational toys) to entering China in the early 21st century (long been popular in parent-child and subculture circles). By the end of 2024, with a high appeal to young people for "low trial and error cost, instant feedback" and resonating with celebrity effects and social media, they have broken through the niche market. Supply and demand resonance accelerates category penetration, creating vast potential audiences According to the data from Cepyi, the splicing bead industry is undergoing a leap forward in market size, with retail sales at the end terminal increasing from 80 million yuan in 2021 to 380 million yuan in 2024, estimated to reach 1 billion yuan by 2026. On the demand side: consumer profiles show highly concentrated characteristics, with women accounting for approximately 77.8%, and the Z generation and millennials making up over 90%. Based on current monthly consumption frequency and average transaction price of 51-100 yuan, the current core group penetration rate is less than 1%, indicating significant room for growth in both audience penetration and repeat consumption frequency. On the supply and channel side: the industry is experiencing a dual resonance of capacity and channels, leveraging the efficient response of industrial belts such as Jinyi New District, not only reducing the entry-level product prices but also pushing the distribution channels from online specialization towards physical retail/experience expansion. This "cost reduction + expansion" positive feedback loop, combined with the deep penetration of online e-commerce, is pushing splicing beads towards the threshold of mass consumer goods. With the entry of retail giants, the product's consumer reach is expected to greatly expand, further deepening the market influence of the splicing bead category and expanding its market size. Intensified competition in the midstream brand sector, constructing a high-premium moat through "product iteration + scarce IP + comprehensive content" The midstream is currently in the early stages of intense competition, with brands breaking through the conventional manufacturing profit ceiling (referring to the fact that the gross profit margin of trendy card games is often above 50%) through vertical integration of the supply chain to reduce costs and output mature "product + content" combinations. As the industry moves towards standardization, brand core barriers will be restructured into three points: strict quality control bottom lines (such as 3C certification and environmentally friendly materials) and gradient product research and development iteration capabilities; obtaining and operating scarce IP (such as top-tier subcultures and hit movies) to control pricing power; massive graphic and immersive short video comprehensive content supply capabilities to achieve low-cost customer acquisition and conversion. The superior model of the experiential store in the downstream, deepening emotional value delivery to consolidate the potential for high-frequency repeat purchases Offline handmade experience stores have the characteristics of "low investment, high net profit, quick return of investment" for a single store. After deducting core district rent deductions, labor and utilities depreciation costs, the net profit margin of a single store can still be maintained at a relatively high level of about 35%, with an ideal investment payback period of approximately 4 months. The long-term profit core of offline stores in the future lies in breaking the limits of "single check-ins," requiring reliance on quality guidance interaction and atmospheric creation to deepen emotional value delivery, and using community operations and membership systems to transform low-frequency random consumption into high-frequency sticky repeat purchases. Risk warning: Continued weakening of end consumer demand, lower-than-expected new product promotion, intensified industry competition, changes in assumptions affecting calculation results.