Investment Rating - Buy (Maintained) [5] Core Views - The new generation Glo Hilo product shows significant improvements in performance and user experience compared to both the market-leading IQOS iluma i and its previous generation, with expectations of market expansion and volume growth by 2025-2026 [3] - The company has actively responded to regulatory changes in the European market by launching compliant solutions such as TANKER and QUAD SHOT Pro, which are expected to capture elastic demand post-regulatory tightening [7] - The report forecasts revenue growth of 8%, 11%, and 21% for 2024-2026, with net profit attributable to the parent company expected to grow by 36% in both 2025 and 2026 [24] Product Comparison - Glo Hilo Plus is more compact and lightweight (92g) compared to IQOS iluma i (146g), offering better portability and grip [17] - Glo Hilo charges faster, reaching 80% in 40 minutes, while IQOS iluma takes 90-135 minutes for a full charge [17] - The new Glo Hilo features improved heating technology, shorter preheating time, and extended session duration, supporting 5 minutes 10 seconds in standard mode and 3 minutes 40 seconds in boost mode [21] Market and Regulatory Trends - The HNB market is growing steadily, with IQOS maintaining a 71% market share in 2023, while Glo holds 15.6%, indicating significant room for growth [36] - Regulatory changes in Europe and Australia are tightening restrictions on disposable e-cigarettes, while the FDA in the US is increasing enforcement against illegal e-cigarette products [19] Financial Performance - Revenue is projected to reach RMB 120.67 billion, RMB 134.46 billion, and RMB 162.63 billion in 2024-2026, with year-on-year growth of 8%, 11%, and 21% respectively [24] - Net profit attributable to the parent company is expected to be RMB 13.28 billion, RMB 18.13 billion, and RMB 24.62 billion in 2024-2026, with growth rates of -19%, 36%, and 36% respectively [24] - The company's P/E ratio for 2024-2026 is projected at 47.88X, 35.08X, and 25.83X [24] Product Innovation - The company has introduced new solutions like FEELM PRO, which uses ultra-thin high-performance technology for better vaporization performance [22] - Glo Hilo's new heating technology enhances flavor intensity and consistency, addressing consumer preferences [7]

Investment Rating - The report maintains a "Buy" rating for Smoore International with a target price of HKD 13.35, based on a 2025 PE of 48x [1] Core Investment Thesis - Smoore International has experienced a "double whammy" since 2021 due to regulatory headwinds in China and illegal product competition overseas, leading to declining EPS and profitability [1][5] - The company's core advantages remain strong, including leading R&D capabilities, deep customer relationships, and PMTA-approved products in the US [1][6] - Regulatory headwinds in the US and Europe are expected to ease, benefiting Smoore's pod and open-system vape businesses [1][9] - The launch of HNB products by major customers like BAT could create a second growth curve for Smoore [1][13] - Smoore's platform-based advantages in vaporization technology are expected to open new growth opportunities in medical and beauty vaporization [1][14] Market Opportunities US Market - The US illegal vape market accounts for over 70% of the market share, but regulatory crackdowns and potential relaxation of flavor restrictions could drive growth in the legal pod market [1][11] - The mid-term market size for legal pod systems in the US is expected to grow by 63%-299% compared to 2023 levels [1] - FDA has approved menthol-flavored vapes for the first time, signaling a potential easing of flavor restrictions [126] European Market - European countries are gradually implementing bans on disposable vapes, which could benefit Smoore's pod and open-system products [1][12] - The mid-term market size for pod systems in Europe is expected to grow by 42%-60%, while open-system products could grow by 52%-75% compared to 2023 levels [1] HNB Market - The global HNB market reached $34.1 billion in 2023, with a CAGR of 23.1% from 2018-2023 [1][13] - Smoore's major customer BAT is launching a breakthrough HNB product, Glo Hilo, in 2025, which could drive significant growth [1][13][159] Financial Performance - Revenue declined by 11.71% in 2022 and 8.04% in 2023, but is expected to grow by 7.8% in 2024 and 21.21% in 2026 [3] - Net profit attributable to shareholders dropped by 52.52% in 2022 and 34.47% in 2023, but is projected to grow by 43.02% in 2026 [3] - EPS is forecasted to be RMB 0.22, 0.26, and 0.37 for 2024-2026, respectively [1] R&D and Innovation - Smoore has maintained high R&D investment, with R&D expenses reaching RMB 1.483 billion in 2023, a 435% increase from 2019 [92] - The company has accumulated 7,695 patents globally, including 3,867 invention patents [92] - Smoore has developed new technologies like FEELM Turbo and POWER ALPHA 2.0, maintaining its leadership in core vaporization technologies [92] New Business Opportunities Medical Vaporization - Smoore has developed the Air Smooth medical mesh nebulizer system, which reduces drug waste by 60% [166] - The global pulmonary drug delivery device market is expected to grow from $60.1 billion in 2023 to $99.5 billion by 2031 [166] Beauty Vaporization - Smoore has launched its own beauty vaporization brand, MOYAL, targeting the mid-to-high-end market [165] Special Vaporization - Smoore's CCELL ceramic core technology has gained significant market share in the US special vaporization market [164]

Investment Rating - Buy (Maintained Rating) [2] Core Views - The report highlights the positive signals from British American Tobacco's (BAT) capital market communication day, where BAT reiterated its goal to become a smoke-free company by 2035 and shared updates on its new tobacco-related products [2] - The report emphasizes the growth potential in the compliant vaping market, particularly in the US, where regulatory actions against illegal products are expected to drive market expansion [3] - The report also notes the upcoming launch of BAT's new heated tobacco product, Glo Hilo, which is expected to target the high-end market and contribute to the company's growth [3] Market Analysis Vaping Market - The vaping market is expected to see significant growth, with BAT projecting that the number of vaping users will reach 110 million by 2030 [3] - The trend is shifting from disposable vaping products back to rechargeable closed-system products, which are regaining growth momentum [3] - In the US, illegal flavored products account for 70% of the vaping market, but regulatory actions in states like Louisiana have led to a 28% increase in the legal vaping market and a 91% reduction in illegal disposable product channels [3] Heated Tobacco Products (HNB) - BAT sees significant opportunities to improve its market position in the HNB category and plans to launch a breakthrough product, Glo Hilo, by the end of the year [3] - Glo Hilo is positioned as a high-end product and is expected to be further promoted in key markets by 2025 [3] - BAT has submitted a PMTA application for Glo products in the US, aiming to enter the market at an appropriate time [3] Financial Performance and Projections Revenue and Profit - The company's revenue is projected to grow from RMB 11,957 million in 2024E to RMB 16,659 million in 2026E, with a revenue growth rate of 7.06% in 2024E, 14.26% in 2025E, and 21.93% in 2026E [5] - Net profit attributable to the parent company is expected to increase from RMB 1,348 million in 2024E to RMB 2,289 million in 2026E, with a growth rate of 28.60% in 2025E and 32.09% in 2026E [5] Earnings Per Share (EPS) - EPS is projected to be RMB 0.22 in 2024E, RMB 0.28 in 2025E, and RMB 0.37 in 2026E [5] Valuation Metrics - The current stock price corresponds to a P/E ratio of 46x for 2024E, 36x for 2025E, and 27x for 2026E [5] - ROE (Return on Equity) is expected to improve from 5.92% in 2024E to 8.55% in 2026E [5] Industry Trends - The report highlights the tightening regulatory environment in the US, with the FDA and the Department of Justice forming a joint enforcement team to crack down on illegal products [3] - The FDA is also gradually approving more compliant products, such as menthol products, which could further drive market growth [3] - The European market is increasing regulation on disposable vaping products, which is expected to optimize the product structure and improve the company's profit margins [3]

Investment Rating - The report maintains a "Buy" rating for Smoore International (06969) with a target price of 12.54 HKD [1] Core Views - The company reported steady revenue growth in Q3 2024, achieving a revenue of 32.86 billion HKD, a year-on-year increase of 14.1% and a quarter-on-quarter increase of 16.5% [1] - The company's proprietary brand business is experiencing rapid growth, while the closed-system product business is gradually recovering [1] - The decline in net profit is attributed to increased R&D and management expenses, with net profit for Q3 2024 at 3.79 billion HKD, down 22.5% year-on-year but up 10.2% quarter-on-quarter [1] Summary by Relevant Sections Financial Performance - For the first three quarters of 2024, the company achieved a total revenue of 83.23 billion HKD, a 4.0% increase year-on-year, with a net profit of 10.62 billion HKD, down 11.9% year-on-year [1] - In Q3 2024, the revenue was 32.86 billion HKD, with a year-on-year increase of 14.1% and a quarter-on-quarter increase of 16.5% [1] Business Segments - The revenue from proprietary brand business reached 11.16 billion HKD, showing a significant year-on-year growth of 71.9% [1] - The company is expected to continue benefiting from the growth of both proprietary open and closed-system products due to increasing regulatory pressures in the European electronic vaporization market [1] R&D and Future Outlook - The company is increasing its R&D investments, focusing on non-combustible products and medical vaporization products, which are anticipated to become new revenue and profit growth points [1] - The company has completed the development and production of several devices for asthma and COPD medications, with research results gaining industry recognition [1]

Investment Rating - The report maintains a "Buy" rating for the company [2] Core Views - The company's Q1-Q3 revenue reached RMB 8.323 billion, a year-on-year increase of 4.0%, with total comprehensive income of RMB 1.055 billion, a year-on-year decrease of 11.7% [1] - Q3 revenue was RMB 3.286 billion, a year-on-year increase of 14.1% and a quarter-on-quarter increase of 16.5%, while comprehensive income was RMB 330 million, a year-on-year decrease of 28.3% and a quarter-on-quarter decrease of 20.4% [1] - Revenue growth was driven by strong performance in APV and the recovery of refillable products, while profitability was pressured by increased income tax expenses and rising R&D and management costs [1] - The company's self-owned brand Vaporesso saw a 71.9% year-on-year increase in H1 2024, with expectations of continued improvement in Q3 [1] - The refillable market in the US is recovering due to FDA enforcement actions, with core client VUSE's Alto tobacco flavor and Njoy menthol passing PMTA reviews [1] - The disposable e-cigarette market in Europe faced challenges due to stricter regulations, with H1 2024 revenue down 18.9% year-on-year, but a recovery is expected in Q3 [1] - The company is diversifying its product portfolio with investments in HNB, medical atomization, and beauty products, including the launch of the beauty brand Moyal and the first high-viscosity essence atomization beauty device [1] Financial Projections - The report forecasts net profit attributable to the parent company for 2024-2026 to be RMB 1.35 billion, RMB 1.79 billion, and RMB 2.28 billion, respectively, with corresponding P/E ratios of 52.4X, 39.3X, and 30.9X [2] Industry and Market Performance - The company operates in the consumer electronics industry [4] - As of October 10, 2024, the stock price was HKD 12.54, with a total market capitalization of HKD 77.452 billion and a free float of 100% [4] - The 30-day average trading volume was 18.24 million shares [4]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 15.42 [7][8] Core Insights - The company reported a strong Q3 revenue growth of 14.1% year-on-year, reaching RMB 3.286 billion, while the net profit decreased by 22.5% to RMB 379 million [2][3] - The company is expected to continue its revenue growth trajectory, driven by the expansion of its proprietary brand business and the recovery of traditional business segments [3][5] - The report forecasts the company's net profit for 2024-2026 to be RMB 1.698 billion, RMB 2.010 billion, and RMB 2.393 billion respectively, with corresponding EPS of RMB 0.28, RMB 0.33, and RMB 0.39 [2][12] Revenue Performance - For the first three quarters of 2024, the company achieved a revenue of RMB 8.323 billion, a 4.0% increase year-on-year [2] - Q3 revenue alone was RMB 3.286 billion, marking a 14.1% increase compared to the same quarter last year [2][3] Profitability Analysis - The company's pre-tax profit for Q3 was RMB 513 million, down 2.6% year-on-year, while net profit saw a more significant decline of 22.5% [2][4] - The report attributes the profit pressure to increased R&D investments and a significant rise in tax expenses compared to the previous year [4][5] Business Segments - The ToB segment is benefiting from stricter regulations in the U.S. and Europe, leading to a shift from traditional disposable products to new closed and open products [3] - The ToC segment has shown remarkable growth, with proprietary brand revenue increasing by 71.9% year-on-year in H1 2024 [3] R&D and Innovation - The company is increasing its R&D investments, particularly in the heated non-combustible products and medical nebulization sectors, which are seen as long-term growth strategies [5] - New product developments in the medical nebulization field have received recognition from regulatory bodies in Europe and the U.S. [5] Financial Projections - The report projects a revenue increase for 2024 to RMB 12.066 billion, with a growth rate of 8.03% [12] - The expected net profit for 2024 is RMB 1.698 billion, reflecting a slight recovery from the previous year's decline [12]

Investment Rating - The investment rating for the company is "Buy" [2][4]. Core Insights - The company's performance is under pressure year-on-year due to cost input strategies, but there is a positive trend on a quarter-on-quarter basis. Future revenue growth from new business segments and an improved market landscape is anticipated [4]. - The company has slightly underperformed expectations, leading to a downward revision of profit forecasts. The projected net profits for 2024-2026 are 1.35 billion, 1.89 billion, and 2.48 billion RMB, respectively, with corresponding PE ratios of 51, 37, and 28 times [4]. - Revenue growth is driven by proprietary brands and closed products, with a year-on-year increase of 14.1% and a quarter-on-quarter increase of 16.5% in Q3 2024. The decline in net profit year-on-year is attributed to tax expenses and increased operational costs [4]. - The market for nebulization products is expected to improve, with recent policy signals indicating a more favorable regulatory environment for flavored electronic cigarettes [4]. - The HNB (Heated Not Burned) business is projected to contribute to revenue growth, supported by increased R&D investment and collaboration with BAT to provide comprehensive product and technology solutions [4]. Financial Summary - The company's revenue for 2024 is estimated at 12.42 billion RMB, with a year-on-year growth of 11%. The projected revenues for 2025 and 2026 are 14.29 billion and 16.43 billion RMB, respectively, both reflecting a 15% growth rate [7]. - The net profit for 2024 is forecasted to be 1.35 billion RMB, with a year-on-year decline of 18%. The net profits for 2025 and 2026 are expected to recover to 1.89 billion and 2.48 billion RMB, showing growth rates of 40% and 31% respectively [7]. - The PE ratio for 2024 is projected at 51.4, decreasing to 36.7 in 2025 and 28.0 in 2026, indicating an improving valuation over time [7].

Investment Rating - Buy (Maintained) [1] Core Views - The company's Q3 revenue showed steady growth, driven by its own-brand business and closed-system product revenue from enterprise clients [3] - The company continues to invest heavily in R&D, particularly in heated tobacco (HNB) and medical vaporization products, positioning itself for future growth [4] - The global HNB market is expected to grow at a CAGR of 15.5% from 2023 to 2028, reaching USD 75.51 billion by 2028 [4] - The company is expected to benefit from increasing overseas demand for new tobacco products and potential market share gains from major clients [4] Financial Performance - Q3 2024 revenue reached RMB 3.286 billion, up 14.1% YoY, while net profit declined by 22.5% YoY to RMB 379 million [3] - For the first three quarters of 2024, the company achieved revenue of RMB 8.323 billion, up 4.0% YoY, and net profit of RMB 1.062 billion, down 11.9% YoY [3] - The company's own-brand revenue grew by 71.9% YoY in the first half of 2024, reaching RMB 1.116 billion, with continued strong growth expected in Q3 [3] - R&D expenses increased by 23.7% YoY in the first half of 2024, reaching RMB 760 million [4] Future Projections - The company is expected to achieve net profits of RMB 1.7 billion, RMB 2.05 billion, and RMB 2.48 billion for 2024, 2025, and 2026, respectively [4] - Revenue is projected to grow at a CAGR of 19.87% and 16.65% in 2025 and 2026, respectively [5] - Net profit growth is expected to accelerate to 20.45% and 20.98% in 2025 and 2026, respectively [5] - The company's PE ratio is forecasted to be 43x, 35x, and 29x for 2024, 2025, and 2026, respectively [4] Business Strategy - The company is focusing on digital marketing and rapid response to consumer demand for its own-brand products [3] - It is expanding its international market presence and localizing operations to enhance its competitive edge [3] - The company's HNB product portfolio is gaining recognition, and potential orders from major clients like British American Tobacco could drive future growth [4] Financial Ratios - The company's gross margin is expected to improve from 38.81% in 2023 to 40.88% by 2026 [7] - ROE is projected to increase from 7.68% in 2023 to 9.05% by 2026 [7] - The company's net debt ratio is expected to remain negative, indicating a strong financial position [7]

Investment Rating - Buy rating maintained for Smoore International (6969 HK) [1] Core Views - Smoore International's 2024H1 results were largely in line with expectations, with revenue of RMB 5 037 million (-1 7% YoY) and net profit of RMB 683 million (-4 8% YoY) [1] - The company's self-branded business showed strong growth, with revenue increasing by 71 9% YoY to RMB 1 116 million, driven by new product launches and market share gains [1] - Smoore's gross margin improved by 1 8 percentage points to 38 0% in 2024H1, mainly due to the expansion of higher-margin self-branded business and cost optimization efforts [1] - The company is expected to benefit from industry consolidation amid tightening global regulations, leveraging its compliance capabilities, technological advantages, and flexible business model [1] Business Performance - Self-branded business revenue grew significantly in Europe (88% YoY) and the US (20 6% YoY) in 2024H1 [1] - Enterprise client business revenue declined by 12 3% YoY, with mixed performance across regions: US (-9 8%), Mainland China (+41 4%), Europe (-16 0%) [1] - Smoore increased its R&D investment, particularly in medical vaporization and heat-not-burn products, with R&D expense ratio rising by 3 08 percentage points to 15 09% [1] Financial Projections - Revenue is forecasted to grow 6% in 2024, 15% in 2025, and 11% in 2026, reaching RMB 11 811 million, RMB 13 583 million, and RMB 15 033 million respectively [1][2] - Net profit is expected to be RMB 1 632 million (-1% YoY) in 2024, RMB 1 915 million (+17% YoY) in 2025, and RMB 2 134 million (+11% YoY) in 2026 [1][2] - EPS projections are RMB 0 27 (2024), RMB 0 31 (2025), and RMB 0 35 (2026), with corresponding P/E ratios of 31 38x, 26 75x, and 23 99x [1][2] Financial Ratios - ROE is expected to remain stable at around 7 08%-7 88% from 2024 to 2026 [2] - Gross margin is projected to maintain at approximately 38 0%-38 4% over the next three years [5] - The company's net debt ratio is expected to stay negative, indicating a strong financial position [5]

Financial Performance - The group's revenue for the six months ended June 30, 2024, was RMB 5,037,242 thousand, a decrease of 1.7% compared to RMB 5,122,862 thousand in the same period of 2023 [20]. - Gross profit increased by 3.2% to RMB 1,914,597 thousand, with a gross margin of 38.0%, up 1.8 percentage points from 36.2% in 2023 [20]. - The net profit margin decreased to 13.6% from 14.0% in the previous year, with net profit for the period at RMB 683,198 thousand, down 4.8% from RMB 717,342 thousand [20]. - The comprehensive income for the period was approximately RMB 724.60 million, a decrease of about 1.3% compared to the same period last year [70]. - Basic earnings per share decreased to RMB 11.20 from RMB 11.81, reflecting a decline of 5.2% year-over-year [197]. - The total revenue for the group during the review period was approximately RMB 5,037.24 million, a decrease of about 1.7% compared to the same period last year [70]. Research and Development - The company continued to increase R&D investment in the first half of 2024, focusing on aerosol medical and heated non-combustible products, with expectations for new revenue and profit growth points [13]. - Research and development expenditure totaled approximately RMB 760,112 thousand, an increase of about 23.7% compared to the previous year, with R&D spending as a percentage of revenue rising from approximately 12.0% to about 15.1% [57]. - The R&D team consists of over 1,400 personnel, with significant investment in innovation to support long-term growth and maintain competitive advantages [49]. - The company filed a total of 699 new patent applications globally during the review period, including 401 invention patents, bringing the total to 8,394 patents as of June 30, 2024 [54]. Product Development and Launches - The company launched multiple new products, including the FEELM Pro and the XROS 4, which received positive feedback and contributed to rapid revenue growth in its proprietary brand business [10]. - The atomization beauty product "MOYAL" was successfully launched, being the first in the industry to atomize high-viscosity serums, and is currently in the channel development phase [12]. - The company successfully launched several new product solutions in the first half of 2024, including the world's first 20,000 puff high-explosion dual-core disposable solution [25]. - The company plans to launch more innovative products in the second half of 2024 to enhance its product matrix and market share [15]. Market Expansion and Strategy - The company is actively advancing its atomization technology into new business areas, with steady progress in atomization medical and beauty sectors [12]. - The company is focusing on localizing its sales teams and enhancing delivery capabilities to better meet consumer preferences [12]. - The company plans to diversify its revenue across different countries and regions and enhance its product portfolio, focusing on the application of aerosol technology in healthcare and other industries [39]. - The company is committed to building a global leading aerosol technology platform, with confidence in the long-term growth of the global aerosol market [60]. Financial Position and Assets - The total assets of the group as of June 30, 2024, reached RMB 26,540,994 thousand, representing a 4.0% increase from RMB 25,508,284 thousand at the end of 2023 [20]. - Cash and cash equivalents increased by 22.6% to RMB 6,534,871 thousand from RMB 5,332,076 thousand at the end of 2023 [20]. - As of June 30, 2024, net current assets were approximately RMB 13,861,870 thousand, down from RMB 16,004,419 thousand as of December 31, 2023 [102]. - The current ratio as of June 30, 2024, was approximately 396.2%, down from 548.8% as of December 31, 2023 [102]. Regulatory Environment - The regulatory environment for electronic atomization products is strengthening, which is expected to benefit the long-term development of the industry [10]. - The EU's new regulations require all tobacco products to have unique identification codes, enhancing traceability and compliance [34]. - Belgium has received EU approval to implement a ban on disposable e-cigarettes, set to take effect on January 1, 2025 [35]. Shareholder and Governance - The board declared an interim dividend of HKD 0.05 per share for the six months ended June 30, 2024, consistent with the previous year [145]. - The company has established an ESG committee to enhance its ESG management capabilities [131]. - The company has established various communication channels with shareholders and investors to provide updates and gather feedback [141]. - The board of directors believes that the current governance structure is appropriate for shareholder interests and will continue to review its effectiveness [123]. Employee and Operational Efficiency - The company emphasizes employee training and development, with structured programs for various talent levels and a focus on online learning [110]. - The company is focusing on cost reduction and efficiency improvements, successfully achieving a significant decrease in administrative expenses during the review period [27]. - Employee compensation and benefits increased by 37.1% to RMB 148,642 thousand, accounting for 3.0% of total revenue [88]. Future Outlook - The company has outlined a future outlook with a focus on market expansion and new product development [1]. - The company projects a revenue growth of 2.99% to 3.51% for the periods ending in 2025 and 2026, respectively [1]. - The company plans to continue its strategy of incentivizing key personnel through the share incentive plan to drive further growth [169].