Investment Rating - The report assigns an "Accumulate" rating for the company, marking the first coverage of the stock [1]. Core Views - The company is a global leader in atomization technology, primarily developing a diversified business model focused on B2B operations. In 2023, the company reported revenue of 111.7 billion yuan, a year-on-year decrease of 8%, with B2B and B2C business accounting for 83% and 17% of revenue, respectively [2][20]. - The tightening regulations on electronic cigarettes are expected to benefit compliant leaders in the industry, while the potential for heated non-combustion (HNB) products remains significant [3][43]. - The company is deeply integrated with major clients, and the HNB segment is anticipated to create a second growth curve for the business [8][58]. Summary by Sections Company Overview - The company, originally established in 2009, has evolved from an OEM for electronic cigarettes to a diversified business model, including heated non-combustion and special atomization products. It went public in 2020 and has a market share of 13.7% in the global electronic atomization device market as of 2023 [17][19]. Industry Analysis - The global electronic cigarette market is projected to grow, with a market size of 21.2 billion USD in 2023, reflecting a 7% year-on-year increase. The market is expected to continue expanding, with a compound annual growth rate (CAGR) of 6% from 2023 to 2028 [43][44]. - The HNB market is also on the rise, with a 2023 market size of 34.5 billion USD, showing a 12% increase year-on-year. The CAGR for the HNB market is expected to be 14% from 2023 to 2028 [58][59]. Financial Analysis - The company's revenue forecast for 2024-2026 is projected at 132.1 billion, 166.1 billion, and 223.6 billion yuan, respectively. The corresponding price-to-earnings (P/E) ratios are estimated to be 60, 48, and 36 times [1][8]. Investment Recommendations - The report emphasizes that the company is well-positioned to benefit from the tightening regulations in the electronic cigarette market and the growth potential of the HNB segment, leading to a favorable investment outlook [8][58].

Investment Rating - The report maintains a positive outlook on Simer International (6969 HK) with a focus on its potential in the HNB (Heat-Not-Burn) market and its role as a key supplier to major tobacco companies [1] Core Views - The HNB market is expected to grow significantly with a projected market size of 32 billion USD in 2023 and a growth rate of 12% [2] - HNB products have high consumer stickiness and conversion rates with PMI reporting a conversion rate of over 70% [3] - Major tobacco companies like PMI BAT and JTI are aggressively expanding their HNB product lines with PMI aiming for over 2/3 of its revenue from smoke-free products by 2030 [4] - Simer International is expected to play a crucial role in BAT's HNB supply chain leveraging its technological expertise and patent-sharing agreements [5] - The Hilo product by Simer International shows strong product competitiveness with improvements in weight heating speed and overall smoking experience [7] - The Hilo product is projected to achieve significant sales with potential sales of millions of devices and billions of cartridges [8] - Revenue and profit contributions from Hilo are expected to be more pronounced in 2026 with both devices and cartridges contributing significantly [9] - The vaping market is expected to recover with stricter FDA regulations favoring compliant brands like Vuse and Njoy which are supplied by Simer International [10] - Simer International's valuation is justified by its strong position in the HNB market which has higher long-term potential compared to the vaping market [11] Market and Industry Analysis - The HNB market is characterized by high entry barriers and a competitive landscape dominated by a few major players [3] - The global tobacco industry is shifting towards smoke-free products with significant investments and strategic plans by major companies [4] - The US market is expected to be a key growth driver for HNB products with PMTA approvals and market entry strategies being critical [2][8] - The vaping market is undergoing regulatory changes with a focus on compliance and market consolidation [10] Financial Projections - Simer International's revenue is projected to grow from 11 168 million CNY in 2023 to 16 606 million CNY in 2026 with a CAGR of 14% [15] - Net profit attributable to shareholders is expected to increase from 1 645 million CNY in 2023 to 2 551 million CNY in 2026 [15] - The company's PE ratio is expected to decrease from 54 4X in 2024 to 28 6X in 2026 reflecting improved profitability [13] Key Observations - Key factors to monitor include the entry into the Japanese and Korean markets the pace of European market development and the progress of PMTA approvals in the US [12] - The company's financial health remains strong with a solid balance sheet and improving profitability metrics [15][17]

Investment Rating - The report maintains an "Outperform" rating for the stock, indicating an expected relative outperformance of 5% to 20% compared to the market benchmark over the next 6 months [7] Core Views - The company's equity incentive plan sets aggressive performance targets tied to market capitalization, with full unlocking at a target market cap of HKD 500 billion, representing a 619% premium over the current market cap of HKD 69.6 billion [7] - The global HNB (Heat-Not-Burn) market is expected to expand rapidly following the patent settlement between British American Tobacco (BAT) and Philip Morris International (PMI), with the 2023 global HNB market size reaching USD 33.46 billion, up 12.2% YoY [8] - The company's technological iteration, productization capabilities, and stable large-scale delivery and quality assurance capabilities form its long-term competitive advantages [9] - The company's HNB revenue is expected to grow rapidly as a core partner of BAT's new Glo Hilo series, supporting a second growth curve [15] - The relaxation of flavor regulations for pod-based e-cigarettes in the US and stricter regulations on disposable e-cigarettes in Europe are expected to benefit the company's traditional pod-based OEM business [16] Financial Projections - Revenue is projected to grow from CNY 11.548 billion in 2024E to CNY 18.387 billion in 2026E, with YoY growth rates of 3.3%, 17.3%, and 35.7% respectively [21] - Net profit attributable to shareholders is forecasted to increase from CNY 1.298 billion in 2024E to CNY 2.815 billion in 2026E, with YoY growth rates of -21.1%, 30.2%, and 66.6% respectively [21] - The company's PE ratio is expected to decline from 58.6x in 2024E to 27.0x in 2026E, reflecting improved profitability [21] Market Data - The stock's closing price on December 30, 2024, was HKD 13.10, with a 52-week range of HKD 4.61 to HKD 15.26 [3] - The company's H-share market capitalization stood at HKD 80.954 billion, with 6.17967 billion H-shares outstanding [3] - The stock has underperformed the benchmark index by 24% over the past year [6]

Investment Rating - The report assigns a **Buy** rating to the company, with a target price of **HKD 17.4**, representing a **32.9% upside** from the current price [8] Core Views - The company's **HNB (Heat-Not-Burn) business** has significant growth potential, particularly through its partnership with British American Tobacco (BAT) for the **Glo Hilo** product, which is expected to expand into key markets by 2025 [8] - The company's **revenue growth** is driven by its proprietary brand and enterprise client business, particularly in closed-system products, with **Q3 2024 revenue** increasing by **16.5% YoY** [8] - The company has set **aggressive market cap targets** linked to stock options, with performance milestones tied to achieving market caps of **HKD 300 billion, 400 billion, and 500 billion**, demonstrating confidence in long-term growth [8] Financial Performance - **Revenue** for 2024 is projected at **RMB 12.16 billion**, with a **YoY growth of 8.9%**, and is expected to reach **RMB 16.65 billion by 2026**, representing a **19.6% growth** [8] - **Net profit** for 2024 is forecasted at **RMB 1.35 billion**, with a **YoY decline of 17.7%**, but is expected to rebound to **RMB 2.53 billion by 2026**, reflecting a **36.3% growth** [8] - **EPS** for 2024 is estimated at **RMB 0.22**, with a **YoY decline of 17.7%**, but is projected to increase to **RMB 0.41 by 2026**, representing a **36.3% growth** [8] Operational Metrics - The company's **gross margin** is expected to improve from **37.8% in 2024** to **42.2% by 2026**, driven by operational efficiencies and product mix optimization [2] - **R&D expenses** as a percentage of revenue are projected to remain stable at **13.8%** from 2025 onwards, reflecting continued investment in innovation [2] - **Inventory turnover days** are expected to decrease slightly from **43.20 days in 2024** to **42.69 days by 2026**, indicating improved inventory management [2] Valuation - The company is trading at a **2024E P/E of 56.2x**, which is expected to decline to **30.1x by 2026**, reflecting anticipated earnings growth [8] - The target price of **HKD 17.4** is based on a **40x P/E multiple for 2026**, suggesting significant upside potential [8] Industry Outlook - The **electronic cigarette industry** is poised for growth, with the company's **HNB products** expected to capture market share and drive profitability, particularly in partnership with BAT [8]

Investment Rating - The report maintains a "Buy" rating for Simer International (06969) with a target price of 13.1 HKD [1] Core Views - The company's revised equity incentive plan demonstrates confidence in long-term business development, with performance targets tied to market capitalization [1] - Simer International is expected to benefit from the growth potential of its HNB (Heat-Not-Burn) new business segment [1] - The company's partnership with British American Tobacco (BAT) since 2018 positions it to capitalize on the market share growth of BAT's new Glo Hilo device [1] - Simer's proprietary brand business is experiencing rapid growth, while its closed-system product business is gradually recovering [1] - The company's first menthol-flavored e-cigarette has passed FDA review, and stricter FDA enforcement is expected to benefit leading brands like Simer [1] Business Performance - In Q3 2024, Simer International reported revenue of 3.286 billion CNY, a 14.1% YoY increase and 16.5% QoQ growth, driven by proprietary brand products and closed-system product revenue [1] - In H1 2024, the company's disposable product revenue decreased by 18.9% to 1.217 billion CNY, while proprietary brand revenue surged 71.9% to 1.116 billion CNY [1] - In Q2 2024, the company's US market pod system revenue grew 6.5% YoY and 6.1% QoQ [1] Product Development - BAT launched the new Glo Hilo device, weighing only 76g (16g lighter than the previous generation), with improved heating technology and extended session times [1] - The Glo Hilo Plus model features a two-part design weighing 92g, significantly lighter than the main competitor IQOS Iluma Prime (171g) [1] - The Glo Hilo series represents BAT's innovation in the Next Generation Product (NGP) field, aiming to close the gap with industry leader Philip Morris' IQOS [1] Regulatory Environment - As of July 18, 2024, the FDA has received nearly 27 million product applications, completing reviews for over 99% and approving 34 e-vapor products and devices, including 17 from Simer's clients [1] - The trend towards "tobacco-like management" in the US e-cigarette market is expected to benefit large brands with resources and technical capabilities to meet increasing regulatory requirements [1] Financial Projections - The report forecasts Simer International's net profit for 2024-2026 to be 1.609/1.966/2.494 billion CNY, representing YoY changes of -2.19%/+22.19%/+26.85% respectively [1] - The company's technological and leadership advantages are expected to drive industry consolidation as regulations tighten [1]

Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 12.03 per share, based on a 35x PE valuation for 2025 [2][177] Core Views - The company's business is recovering from the bottom, with significant future growth potential. The issuance of stock options and high market capitalization targets demonstrate management's confidence [2] - The company has no direct comparable listed companies in Hong Kong. Historical valuations during high-growth periods (2020-2021) reached over 30x PE [2] - The company's reasonable value is estimated at HKD 12.03 per share based on a 35x PE valuation for 2025 [2] Market Overview - The global and US e-cigarette markets remain stable, with e-cigarettes accounting for approximately 7.8% of the US tobacco market. The US e-cigarette market is expected to grow at a CAGR of 16% from 2022 to 2031 [193] - The US disposable e-cigarette market share increased from 25% in 2020 to 52% in 2022, with non-tobacco and non-menthol flavors accounting for 80% of disposable e-cigarettes [194] - As of March 2024, only 34 FDA-authorized products accounted for 13.7% of total US retail store sales [195] Company Performance - The company's total share capital and market capitalization are 6,179.67 million shares and HKD 69,583 million, respectively [3] - The stock price has fluctuated between HKD 4.73 and HKD 15.18 over the past year, with a 30-day average trading volume of 11.66 million shares and turnover of HKD 128.81 million [3] - The stock price has declined by 12.71% over the past three months but increased by 27.51% over the past six months [3] Future Outlook - The company plans to grant 61 million stock options to the chairman at an exercise price of HKD 11.26, with market capitalization targets of HKD 300 billion, HKD 400 billion, and HKD 500 billion by 2025-2030 [2] - The company also plans to grant stock options or awards to core employees [2] - The company's revenue is expected to grow by 9.0%, 31.7%, and 28.9% in 2024-2026, with net profit growth of -18.0%, 44.9%, and 44.0% respectively [73] Industry Trends - The global HNB market continues to grow at a double-digit rate, with PMI, BAT, and Japan Tobacco accounting for 71.4%, 15.5%, and 4.3% of the global heated tobacco market share in 2022 [211] - PMI's heated tobacco unit sales increased by 13% YoY in Q1-Q3 2024, with strong growth in Europe and Japan [55] - BAT's new HNB product, glo Hilo, is expected to have significant growth potential with improved heating technology and taste experience [61]

Investment Rating - The report assigns a **Buy** rating to Simer International (6969 HK), indicating that the stock is expected to outperform the benchmark by more than 15% over the next 6 months [2] Core Views - Simer International has implemented a comprehensive incentive plan, including granting 61 million share options to the chairman with performance targets tied to market capitalization milestones of HKD 300 billion, 400 billion, and 500 billion by 2025-2030 [5] - The company is expected to benefit from the recovery of the compliant e-cigarette market in the US, with core client VUSE's Alto tobacco flavor PMTA approval and NJOY's menthol approval driving market share gains [5] - Simer International is well-positioned in the HNB (heat-not-burn) market, with a deep partnership with British American Tobacco and the potential to provide integrated product solutions for the Glo Hilo product [5] - The company's R&D efforts in areas such as HNB, medical, and beauty are starting to bear fruit, with several products in the pipeline and commercialization underway [5] Financial Performance - Revenue is expected to grow from HKD 11 168 million in 2023 to HKD 16 606 million in 2026, representing a CAGR of 14% [14] - Net profit attributable to shareholders is forecasted to increase from HKD 1 645 million in 2023 to HKD 2 551 million in 2026, with a significant acceleration in growth from 2025 onwards [14] - The company's gross margin is expected to recover from 38 81% in 2023 to 43 73% in 2026, driven by product mix optimization and scale effects [16] - R&D expenses as a percentage of revenue remain high at 15% in 2024H1, reflecting the company's continued investment in innovation [5] Industry Outlook - The global HNB device market reached USD 2 13 billion in 2023, with sales volume of 41 million units, representing year-on-year growth of 13 7% and 18 4% respectively [5] - The HNB market is expected to maintain a CAGR of 13% in sales and 10% in volume from 2023 to 2028, indicating a long growth runway for the industry [5] - Regulatory tightening in Europe has impacted the disposable e-cigarette segment, with H1 2024 revenue declining by 18 9% year-on-year [5] Valuation - The stock is trading at 48 8x, 41 9x, and 25 6x P/E for 2024, 2025, and 2026 respectively, based on the report's earnings forecasts [5] - The P/B ratio is expected to decline from 2 87x in 2024 to 2 43x in 2026, reflecting improving profitability and return on equity [14]

Investment Rating - The report maintains a "Buy" rating for Smoore International (6969 HK) [27] Core Views - Smoore International revised its equity incentive plan, granting 61 million shares (1% of total shares) to Chairman Chen Zhiping at HKD 11 26 per share (current price) The unlocking conditions are tied to the company's market capitalization milestones of HKD 300 billion, HKD 400 billion, and HKD 500 billion over six years (2025-2030) [17] - The company has differentiated product solutions in the HNB (Heat-Not-Burn) business, with its partner British American Tobacco launching advanced GLO HILO series products featuring improved heating technology, enhanced user experience, and longer battery life [18] - As the world's largest e-vapor device manufacturer, Smoore is well-positioned to benefit from stricter e-cigarette regulations in the US, with its closed-system products deeply tied to major compliant brands like VUSE (51 2% market share in the US in 2024H1) The company is also rapidly growing its open-system products (self-branded) [19] - Smoore is investing in long-term growth areas including HNB, medical vaporization, self-branded products, and beauty businesses It has completed development and production layout for several drug delivery devices targeting asthma and COPD, along with 10+ drug formulations, which are expected to contribute to revenue and profit growth in the medium to long term [19] Business Performance and Strategy - The equity incentive plan demonstrates management's confidence in the company's long-term growth potential in the fast-evolving and competitive e-vapor industry [17] - Smoore's technological and product advantages, reliable customer base, and strong marketing network are expected to enhance its competitive edge [17] - The company's partnership with British American Tobacco positions it to benefit from the latter's market share gains through its premium GLO HILO products [18] - Smoore's focus on compliance and its status as a leading OEM manufacturer are likely to drive further market share gains amid tightening regulations [19]

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]