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]
思摩尔国际：激励充分，目标宏伟，研发成果逐步落地