Investment Rating - The investment rating for China Tobacco Hong Kong (06055) is "Buy" with a target price of HKD 25.8, maintained for the next six months [1]. Core Views - The company is expected to see a significant profit increase in 2024, with an anticipated growth of no less than 30% in net profit attributable to owners compared to the previous year [1]. - The report highlights the continuous improvement in overall profitability across five major business segments, with all segments showing growth in gross profit [1]. - The company benefits from its unique position as the exclusive operator for international business expansion and related trade for China National Tobacco Corporation, which is expected to provide ongoing advantages in overseas expansion and potential mergers and acquisitions [1]. Summary by Sections Business Performance - The import business of tobacco leaves has seen growth due to an increase in the proportion of high-margin Brazilian tobacco leaves and rising sales prices [1]. - The export business of tobacco leaves has significantly improved gross margins due to effective sourcing and pricing strategies [1]. - The export business of cigarettes has also experienced a substantial increase in gross profit levels due to structural optimization and a higher proportion of self-operated business [1]. - The export business of new tobacco products has shown growth in gross profit as the company continues to optimize its operational model [1]. - The Brazilian operations have benefited from a higher sales price of finished tobacco products, leading to a significant increase in gross profit [1]. Strategic Advantages - The company possesses a rare advantage with its exclusive rights to international tobacco business operations, which is expected to continue benefiting from the parent company's overseas expansion efforts [1]. - The business model demonstrates strong cash flow and pricing power, supported by stable revenue growth and a robust risk resistance capability [1]. - Future opportunities for industry chain integration are anticipated, enhancing the company's competitive edge [1]. Profit Forecast and Valuation - The company is projected to achieve net profits of HKD 7.87 billion, HKD 9.10 billion, and HKD 11.00 billion for the years 2024, 2025, and 2026 respectively [1]. - The report maintains a "Buy" rating, emphasizing the company's unique position as the only international business platform under China National Tobacco Corporation, which is expected to benefit from industry development and transformation [1].
中烟香港：预告24年利润大幅增长，盈利能力持续提升！