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]
思摩尔国际：十问十答！