Investment Rating - The report maintains a "Buy" rating for Smoore International Holdings (6969.HK) with a target price of HKD 10.7, indicating a potential upside of 17% from the current price of HKD 9.12 [3][4]. Core Insights - Smoore's revenue for the first half of 2024 was HKD 50.3 billion, a year-on-year decrease of 1.7%, while net profit was HKD 6.8 billion, down 4.8% year-on-year. The gross margin improved to 38%, up 1.8 percentage points, while the net margin slightly decreased to 13.6%, down 0.4 percentage points [1]. - The company's proprietary brand products saw significant growth, with APV product revenue reaching HKD 11.1 billion, a 72% increase year-on-year. The European market experienced an 88% revenue growth, while the U.S. market grew by 20% [1]. - The report anticipates a recovery in the domestic market, with a 41% year-on-year increase in revenue from 2B products in China, suggesting that the compliant market has likely bottomed out [1]. Financial Performance Summary - Revenue and Profit Forecasts: The expected net profits for 2024, 2025, and 2026 are HKD 16.5 billion, HKD 19.0 billion, and HKD 21.0 billion, respectively, with corresponding EPS of HKD 0.29, HKD 0.34, and HKD 0.38 [1][7]. - Sales and Cost Structure: The sales expenses increased significantly by 70% to HKD 7.6 billion, primarily due to increased marketing investments in proprietary brands and beauty products. Management expenses decreased by 27% to HKD 3.4 billion [1][15]. - R&D Investment: R&D expenses for the first half of 2024 were HKD 7.6 billion, accounting for 15.1% of revenue, reflecting a year-on-year increase of 3.1 percentage points. The company is focusing on medical and beauty product development, with a 63% increase in related R&D spending [1][15]. Market Dynamics - The report highlights a shift in European regulations favoring refillable products, which is expected to boost demand for Smoore's products in the region. The company's 2B business in Europe and other markets saw a revenue decline of 16% due to stricter regulations on disposable products, but the demand for refillable products is anticipated to recover [1]. - In the U.S. market, Smoore has the highest number of PMTA certifications among its clients, which is expected to enhance its market position as regulatory enforcement strengthens [1]. Valuation Analysis - The report employs DCF and PE valuation models, estimating a fair valuation of HKD 66.1 billion, corresponding to a target price of HKD 11.1. The average PE for the electronic cigarette industry is projected at 11.3x for 2025, and considering Smoore's market leadership, a PE of 30x is applied for 2025, leading to a target price of HKD 10.2. The final target price of HKD 10.7 reflects a blend of these valuation methods [7][10].

Investment Rating - The report suggests maintaining attention on the company due to its strategic clarity and solid fundamentals [2]. Core Insights - The company reported a revenue of 5.037 billion RMB for the first half of 2024, a year-on-year decrease of 1.7%. However, gross profit increased by 3.2% to 1.915 billion RMB, while net profit fell by 4.8% to 683 million RMB [1]. - The self-owned brand (APV) business saw significant growth, contributing 1.12 billion RMB in revenue, a year-on-year increase of 71.9%. The European and other markets experienced a rapid rise of 88%, while the US market grew by 20.6% [1]. - The company is focusing on cost management, with distribution and sales, administrative, and R&D expense ratios at 7.4%, 6.7%, and 15.1% respectively, showing changes of +3.3pp, -2.4pp, and +3.1pp year-on-year [1]. - The ODM segment aimed at enterprise clients is in a recovery phase, with reported revenue of 3.92 billion RMB. The European market saw a decline of 16%, while the US market decreased by 9.8%. In contrast, the Chinese market experienced a growth of 41.4% [1]. - The company continues to innovate, launching the MOYAL brand and developing products for asthma and COPD drug delivery systems [2].

Investment Rating - The report suggests maintaining attention on the company due to its solid fundamentals and clear strategic planning [2]. Core Insights - The company's revenue for the first half of 2024 was 5.037 billion RMB, a year-on-year decrease of 1.7%, while gross profit increased by 3.2% to 1.915 billion RMB, and net profit decreased by 4.8% to 683 million RMB [1]. - The self-owned brand (APV) business saw significant growth, contributing 1.12 billion RMB in revenue, a year-on-year increase of 71.9%, with notable growth in Europe and other markets at 88% and the US market at 20.6% [1]. - The company is focusing on cost management, with distribution and sales, administrative, and R&D expense ratios at 7.4%, 6.7%, and 15.1% respectively, showing changes of +3.3pp, -2.4pp, and +3.1pp year-on-year [1]. - The ODM segment aimed at enterprise clients reported revenue of 3.92 billion RMB, with a decline in Europe by 16% and in the US by 9.8%, while China saw an increase of 41.4% [1]. - The company is actively innovating, launching the MOYAL brand in the beauty aerosol field and developing devices for asthma and COPD medication delivery [2]. Summary by Sections Revenue Performance - Total revenue for the first half of 2024 was 5.037 billion RMB, down 1.7% year-on-year [1]. - Gross profit reached 1.915 billion RMB, up 3.2% year-on-year [1]. - Net profit was 683 million RMB, a decrease of 4.8% year-on-year [1]. Self-Owned Brand Growth - Revenue from self-owned brands (APV) was 1.12 billion RMB, increasing by 71.9% year-on-year [1]. - Growth in Europe and other markets was 88%, while the US market grew by 20.6% [1]. Cost Management - Distribution and sales expenses increased, with ratios at 7.4%, while administrative expenses were at 6.7% and R&D expenses at 15.1% [1]. - Year-on-year changes in expense ratios were +3.3pp for distribution and sales, -2.4pp for administrative, and +3.1pp for R&D [1]. ODM Segment Performance - Revenue from the ODM segment was 3.92 billion RMB, with a 16% decline in Europe and a 9.8% decline in the US, while China saw a 41.4% increase [1]. Innovation and Product Development - The company launched the MOYAL brand in the beauty aerosol sector and developed devices for asthma and COPD medication delivery [2].

证券研究报告 | 半年报点评 gszqdatemark 2024 08 21 年 月 日 思摩尔国际（06969.HK） APV 表现靓丽，换弹式恢复稳增，多元结构共驱成长 公司发布 2024H1 财务数据：24H1 实现收入 50.37 亿元（同比-1.7%）， 全面收益总额为 7.25 亿元（同比-1.3%）；单 Q2 我们预计收入约实现 28 亿元（同比约+9%），全面收益总额为 4.15 亿元（同比-3%）。APV 延续 靓丽表现，换弹式稳步复苏，收入逐季改善；盈利略承压主要系研发投入 加大。 自主品牌表现靓丽。2024H1 APV 实现收入 11.16 亿元（同比+71.9%）， 其中欧洲及其他地区/美国分别实现收入 9.29 亿元（同比+88.0%）/1.87 亿元（同比+20.6%），表现靓丽主要系全新数字化运营赋能、高速洞察终 端需求，H1 成功推出爆款 XRO 4，目前自有品牌 Vaporesso 已在开放式 产品中成为市场头部品牌。 换弹业务改善，一次性小烟阶段性承压。2024H1 代工业务实现收入 39.22 亿元（同比-12.3%），分地区来看： 美国：H1 代工实现 18.58 亿元 ...

Investment Rating - The report maintains a "Buy" rating for Smoore International (06969) with a target price of 8.54 HKD, indicating a potential upside of over 20% [1]. Core Insights - The company reported a revenue of 5.037 billion HKD for the first half of 2024, a year-on-year decrease of 1.7%, and a net profit of 683 million HKD, down 4.8% year-on-year [1]. - The retail customer sales segment (APV) saw a significant revenue increase of 71.9% year-on-year, driven by strong performance in Europe and other markets, while the enterprise customer sales segment (ODM) experienced a decline of 12.3% [1]. - The company is focusing on expanding its product range and reducing costs, which has positively impacted its gross margin, which increased by 1.8 percentage points to 38.0% [1]. Revenue Breakdown - For 2024H1, the revenue from retail customer sales (APV) was 1.116 billion HKD, accounting for 22.1% of total revenue, while enterprise customer sales (ODM) generated 3.922 billion HKD, making up 77.9% of total revenue [1]. - The sales distribution by region shows that Europe and other markets accounted for 45.4% of total sales, followed by the US at approximately 36.9%, with a year-on-year decline of 3.3 percentage points [1]. Research and Development - The company increased its R&D expenditure to 760 million HKD in 2024H1, representing a year-on-year growth of 23.7%, which constitutes 15.1% of total revenue [1]. - Significant investments were made in the development of new products, including the launch of the MOYAL brand and innovative vaping solutions [1]. Profit Forecast and Investment Advice - The report projects net profits for 2024-2026 to be 1.675 billion HKD, 2.152 billion HKD, and 2.603 billion HKD respectively, reflecting year-on-year growth rates of 1.82%, 28.48%, and 20.94% [1]. - The report emphasizes the company's competitive advantages in the vaping technology sector and suggests that the tightening regulations will benefit leading brands like Smoore [1].

Investment Rating - The report maintains an "Accumulate" rating for Smoore International (6969) [2][4]. Core Insights - The company's performance meets expectations, with significant growth in its proprietary brand segment. The report forecasts net profit for 2024-2026 to be 1.65 billion, 1.92 billion, and 2.23 billion RMB respectively, with corresponding PE ratios of 29, 25, and 22 times [4]. - The market trend is shifting, with proprietary brands showing impressive performance. In H1 2024, revenue from proprietary brands increased by 71.9% year-on-year to 1.11 billion RMB, with notable growth in the US (20.6%) and Europe/other regions (88.0%) [4]. - The company is expected to benefit from changes in the regulatory environment, with a focus on compliant products. The report highlights the ongoing crackdown on non-compliant products in the US and the UK, which may favor leading brands with strong compliance capabilities [4]. Financial Summary - Revenue for 2024 is projected at 12.42 billion RMB, with a growth rate of 11%. The net profit for 2024 is estimated at 1.65 billion RMB, reflecting a slight increase of 1% [6]. - The gross profit margin improved due to a higher proportion of high-margin proprietary brands and cost reduction initiatives. R&D expenses increased by 3.1 percentage points to 12.0% of revenue, reflecting investments in new product development [4]. - The company’s management efficiency has significantly improved, with a reduction in management fees by 2.4 percentage points to 6.7% of revenue, attributed to cost control measures and enhanced budget management [4].

各项业务渐进良性通道，费用拖累业绩释放节奏 2024 年 08 月 20 日 ➢ 事件。思摩尔国际发布 24 半年度业绩公告，2024H1 实现收入/税后利润/ 调期内综合收益总额 50.37/6.83/7.25 亿元(同降 1.67%/4.76%/1.3%)，24Q2 实现调期内综合收益总额 4.15 亿元(同降 5.95%)。 ➢ 一次性产品承压&自主品牌产品放量&换弹式环比显著改善。2024H1 收入 同降 2%至 50 亿元：分客户：上半年面向企业客户/面向零售客户收入同比变动 -12.3%/+71.9%至 39.22/11.16 亿元；分产品：1）换弹产品收入同比个位数下 滑，不过伴随全球监管收紧，换弹产品收入呈现逐季改善势头，单 Q2 收入美国 同增 6.5%，欧洲同增 22.5%；2）自主品牌：加强数字化营销+新产品迭代（上 半年推出 XRO 4），自主品牌业务同比增长 72%至 11.16 亿元，占收入比重达 22%；3）一次性产品：同降 19%至 12.17 亿元，主要受制于欧洲一次性电子烟 监管升级；4）特殊雾化产品料仍有压力，主因上半年公司推动业务组织架构调 整，且渠道建设仍处于布局期， ...

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected price increase of over 15% in the next 6-12 months [2][5]. Core Insights - The company's H1 2024 revenue and net profit decreased by 1.7% and 4.8% year-on-year, reaching 5.04 billion and 680 million RMB, respectively, which is in line with expectations [2]. - The self-owned brand business is experiencing rapid growth, with Q2 2024 sales of pod-based products showing positive signals. ODM revenue decreased by 12.4% to 3.92 billion RMB, while OBM revenue increased by 71.9% to 1.12 billion RMB [2]. - The gross margin for H1 2024 improved by 1.8 percentage points to 38.0%, driven by an increase in OBM revenue proportion and ongoing cost reduction efforts [2]. - The company is increasing R&D investment in medical and heated non-combustible products, with R&D expense ratio rising by 3.1 percentage points to 15.1% [2]. Financial Performance Summary - Revenue for 2024 is projected to be 12.113 billion RMB, with a growth rate of 8.46% [3]. - Net profit for 2024 is expected to be 1.667 billion RMB, reflecting a growth rate of 1.33% [3]. - The diluted EPS for 2024 is estimated at 0.27 RMB, with corresponding P/E ratios of 30, 26, and 23 for 2024, 2025, and 2026, respectively [2][3].

Financial Performance - For the six months ended June 30, 2024, the company reported revenue of RMB 5,037,242 thousand, a decrease of approximately 1.7% compared to RMB 5,122,862 thousand in the same period last year[5]. - Gross profit for the same period was RMB 1,914,597 thousand, reflecting a growth of 3.2% year-on-year, with a gross margin of 38.0%, up 1.8 percentage points from 36.2%[5]. - The company achieved a profit before tax of RMB 811,555 thousand, an increase of 1.9% compared to RMB 796,170 thousand in the previous year[5]. - Net profit for the period was RMB 683,198 thousand, down 4.8% from RMB 717,342 thousand year-on-year, resulting in a net profit margin of 13.6%[5]. - The total revenue for the group during the review period was approximately RMB 5,037,242 thousand, a decrease of about 1.7% compared to RMB 5,122,862 thousand in the same period last year[39]. - The comprehensive income for the period was approximately RMB 724,597 thousand, a decrease of about 1.3% compared to RMB 734,356 thousand in the same period last year[39]. - The group reported a segment profit of RMB 820,065 thousand, a slight increase of 2.47% from RMB 802,075 thousand in the previous year[100]. - The company reported a net profit of RMB 683,198 thousand for the period, down 4.8% from RMB 717,342 thousand in the same period last year[84]. Assets and Liabilities - The total assets increased by 4.0% to RMB 26,540,994 thousand as of June 30, 2024, compared to RMB 25,508,284 thousand at the end of 2023[5]. - As of June 30, 2024, the group's current assets net value was approximately RMB 13,861,870 thousand, down from RMB 16,004,419 thousand as of December 31, 2023[65]. - The group's asset-liability ratio was approximately 24.5% as of June 30, 2024, compared to 19.1% as of December 31, 2023[68]. - The group had no bank or other financial institution borrowings as of June 30, 2024, consistent with the previous year[67]. Cash Flow and Expenditures - Cash and cash equivalents rose by 22.6% to RMB 6,534,871 thousand, up from RMB 5,332,076 thousand[5]. - Operating cash flow for the six months ended June 30, 2024, was RMB 602,829 thousand, a decline of 43.7% from RMB 1,072,440 thousand in 2023[89]. - Capital expenditures for the six months ended June 30, 2024, totaled approximately RMB 282,315 thousand, significantly lower than RMB 560,670 thousand in the same period of 2023[15]. - The group had capital commitments of approximately RMB 395,328 thousand, down from RMB 494,304 thousand as of December 31, 2023[78]. Revenue Breakdown - Revenue from the self-owned brand business was approximately RMB 1,115,607 thousand, representing a growth of about 71.9% compared to RMB 648,852 thousand in the same period last year[41]. - Revenue from enterprise customer sales was approximately RMB 3,921,635 thousand, a decrease of about 12.3% from RMB 4,474,010 thousand in the same period last year[43]. - Revenue from the European and other markets reached approximately RMB 928,687 thousand, with a year-on-year growth of about 88.0%[13]. - In the U.S. market, revenue was approximately RMB 1,858,160 thousand, a decrease of about 9.8% year-on-year, accounting for approximately 36.9% of total revenue[15]. - Revenue from the company's disposable electronic vapor products decreased by approximately 18.9% year-on-year to about RMB 1,217,423 thousand[16]. - Revenue from electronic vapor products and components (excluding APV) was RMB 3,921,635 thousand, down 12.34% from RMB 4,474,010 thousand in 2023[98]. - APV revenue increased significantly to RMB 1,115,607 thousand, up 71.93% from RMB 648,852 thousand in 2023[98]. Research and Development - The company has over 1,400 R&D personnel and significantly higher R&D investment compared to peers, ensuring long-term healthy growth[19]. - Research and development expenditure for the first half of 2024 totaled approximately RMB 760.1 million, representing a year-on-year increase of 23.7%, and accounting for about 15.1% of revenue, up from 12.0% in the same period last year[25]. - Research and development expenses grew by approximately 23.7% to RMB 760,112 thousand, increasing from 12.0% to 15.1% of total revenue, reflecting increased investment in nebulization medical and heat-not-burn product areas[56]. - The company’s employee compensation and benefits in R&D rose by approximately 23.6% to RMB 477,901 thousand, accounting for 9.5% of total revenue, due to increased salaries for R&D personnel in the nebulization medical field[56]. Market Expansion and Product Development - The company launched several new products during the review period, including the world's first 20,000 puff high-explosion dual-core disposable solution, enhancing user experience and nicotine delivery efficiency[8]. - The company is expanding its international market presence, operating six distribution centers in Europe and the United States as of June 30, 2024, to enhance global operational capabilities[10]. - The company is actively expanding its international market presence and localizing its product and sales systems to meet diverse consumer needs[13]. - The company plans to launch the MOYAL brand and its first generation of aerosol beauty products in Q1 2024, which will be the industry's first to achieve high-viscosity skincare essence aerosolization[22]. - In the medical field, the company has developed several drug delivery devices for asthma and COPD, with products receiving recognition from European and American regulatory authorities[23]. Compliance and Regulatory - The company is focusing on compliance and safety in the U.S. market, with a gradual recovery expected in its performance due to strengthened regulatory enforcement[15]. - The company aims to enhance its compliance operations to support customer market expansion amid increasing regulatory scrutiny in the electronic vapor market[29]. - The company has implemented cost reduction and efficiency improvement measures, resulting in a significant decrease in administrative expenses during the review period[10]. Other Financial Metrics - The group's financing costs were approximately RMB 18,512 thousand, representing an increase of about 68.6% from RMB 10,980 thousand in the same period last year[61]. - Income tax expenses for the group were approximately RMB 128,357 thousand, an increase of about 62.8% from RMB 78,828 thousand in the same period last year[62]. - The group recognized government grants amounting to RMB 57,955 thousand, an increase from RMB 35,096 thousand in 2023[107]. - The interim dividend declared for the six months ended June 30, 2024, is HKD 0.05 per share, totaling approximately HKD 308,888,000[122].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The FDA recently approved seven electronic cigarette products for sale in the U.S. market, all under the Vuse Alto brand, including six tobacco-flavored products and one electronic cigarette device [2] - The approval of Vuse tobacco-flavored products is significant as it indicates the FDA's recognition of their reduced harm potential compared to traditional cigarettes, suggesting that the benefits of switching to these products may outweigh the risks to youth [2] - The company is expected to benefit from its strong partnership with BAT, which has already seen multiple products approved under the PMTA process, positioning the company to capture a larger market share as regulatory scrutiny increases [2] - The company is diversifying its business across various sectors, including electronic vaporization, heated non-combustion, and medical vaporization, and has returned to positive profit growth with a net profit of 310 million yuan in Q1 2024, a year-on-year increase of 5.6% [2] Financial Projections - The company is projected to achieve a net profit of 1.8 billion, 2.08 billion, and 2.47 billion yuan for the years 2024, 2025, and 2026, respectively, with corresponding PE ratios of 27, 23, and 20 times [3] - Revenue is expected to grow from 12.19 billion yuan in 2024 to 15.33 billion yuan in 2026, reflecting a compound annual growth rate [4] - The company's net profit margin is projected to improve from 14.73% in 2023 to 16.08% in 2026, indicating enhanced profitability [6]