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]
思摩尔国际：股权激励目标彰显长期发展信心，看好HNB新业务增长潜能