Summary of Smoore International's Conference Call Company Overview - **Company**: Smoore International - **Industry**: Electronic smoking devices and related products Key Points and Arguments Financial Performance - **Q3 Revenue Growth**: Smoore International reported a 27.5% increase in revenue for Q3 2025, exceeding market expectations, with adjusted profit rising by 4.8% quarter-over-quarter [2][3] - **HNB Product Sales**: The strong performance was driven by robust sales of Heat-Not-Burn (HNB) products, with expectations of at least 1.2 billion RMB in annual revenue from HNB [3][4] - **Traditional Vaping Products**: The traditional vaping segment also saw significant growth, particularly in Europe, due to the introduction of new products following a ban on disposable e-cigarettes [2][3] Market Dynamics - **European Market**: The European market outperformed overall company growth, driven by regulatory changes and the introduction of new products [2][5] - **U.S. Market Recovery**: The U.S. market is recovering more slowly, but stricter regulations on compliant products are creating opportunities for Smoore's partners, such as British American Tobacco's VUSE brand [5] Strategic Initiatives - **Expansion of HNB Markets**: Smoore is entering more core markets for HNB products, including Poland and Italy, aiming to transition from the initial development phase to a more expansive growth phase [7] - **Collaboration with British American Tobacco**: The partnership with British American Tobacco is seen as a significant growth opportunity, enhancing Smoore's product offerings and market reach [4][10] Product Development - **Medical Nebulization**: Smoore is investing heavily in the medical nebulization sector, with expectations to generate revenue starting in 2026. The company has submitted multiple products for FDA approval [4][11] - **Free Brand WAPER**: The company is increasing market share for its free brand WAPER through enhanced channel coverage and localized operations, despite limited elasticity in this segment [6] Future Outlook - **Profitability Expectations**: While current profits are not exceptionally high, Smoore anticipates improved profitability from 2026 onwards, driven by regulatory changes and market share expansion [9] - **Valuation and Market Potential**: Following recent stock price adjustments, Smoore's valuation is seen as attractive, with a static P/E ratio of 58x for 2025, expected to drop to 39x in 2026 and 29x in 2027, indicating significant future earnings potential [12] Long-term Growth Areas - **Beauty Nebulization**: The beauty nebulization segment is part of Smoore's long-term strategy, expected to follow the medical nebulization developments, with promising growth potential [13] New Business Contributions - **Initial Profit Contributions**: New business segments are expected to have limited profit contributions initially, which is typical for early-stage promotions. The focus is on market share, with profitability expected to improve as sales volumes increase in subsequent years [14] Additional Important Insights - **Production Capacity**: Smoore has automated production capabilities for 2 million devices and plans to increase this to over 5 million, with monthly production of 2 million cartridges [10] - **Market Positioning**: Smoore positions itself as a technology platform, providing differentiated solutions to various tobacco companies, not just British American Tobacco [7][8]

Core Insights - The new tobacco market is experiencing breakthroughs in technology and products, with "Heat-Not-Burn" (HTP) technology emerging as a primary focus for harm reduction in smoking cessation efforts [1][3] - PTH, a high-end technology brand under He Yuan Group, launched its flagship product "PTH MASTER" in Jakarta, Indonesia, marking the entry of heat-not-burn products into a "zero-waiting era" [1][3] Group 1: Technological Breakthroughs - PTH MASTER addresses traditional device pain points by reconstructing the underlying technology, overcoming issues related to heat conduction efficiency and preheating delays [4][6] - The product features a distributed six-core temperature control system, a unique honeycomb matrix tobacco product (HOP), and an innovative airflow sensor, enabling precise temperature adjustments and immediate user response [4][6] - These innovations allow users to interrupt heating at any time and ensure consistent flavor release, fundamentally changing the energy transfer method in heat-not-burn products [6][7] Group 2: Product Innovation - PTH MASTER integrates dynamic power adjustment, multi-modal interaction, and precise flavor control, transforming the device into an intelligent terminal that adapts to user needs [7][9] - The product offers dual control modes (Ultra and Eco) to cater to different user scenarios, along with a compact tobacco chamber designed for ease of use [7][9] - The design incorporates sustainable materials and a variety of flavor options, showcasing the company's commitment to quality and environmental responsibility [9][10] Group 3: Market Dynamics - The global market for new tobacco products is projected to reach $86.96 billion in 2024, with a 13.1% year-on-year growth, indicating a significant shift towards heat-not-burn products [10][11] - Indonesia, as the fourth-largest tobacco consumer country, presents a substantial opportunity for PTH MASTER, targeting users seeking less harmful alternatives [10][11] - The product's introduction may trigger a trend in Europe and Indonesia towards technology-driven innovations in the tobacco market [10][11] Group 4: Intellectual Property and Industry Positioning - He Yuan Group has applied for over 50 patents related to PTH MASTER, establishing a comprehensive patent portfolio across multiple countries [11] - The company's investment in technology innovation aims not only to launch a product but also to redefine China's capabilities in the new tobacco supply chain [11]