Core Viewpoint - CICC has raised the profit forecast for China Tobacco Hong Kong (06055) for 2025/26 by 5%/8% to HKD 9.8/10.9 billion, reflecting the growth momentum in the tobacco leaf import and export business [1] Group 1: Financial Performance - In 1H25, the company's revenue increased by 18.5% to HKD 10.32 billion, and net profit attributable to shareholders rose by 9.8% to HKD 710 million, both exceeding CICC's expectations due to favorable tobacco leaf import shipment schedules and optimized export product structure [2] - The gross profit margin for 1H25 was 9.2%, a decrease of 1.9 percentage points, with improvements in gross margins for tobacco leaf exports and cigarette exports, while the gross margin for tobacco leaf imports declined due to adverse climate impacts [3] Group 2: Business Segments - Tobacco leaf imports saw a revenue increase of 23.5%, with import volume and average price rising by 2.5% and 20.5%, respectively [3] - Tobacco leaf exports experienced a revenue growth of 25.9%, with export volume and average price increasing by 12.7% and 11.7%, respectively, driven by new customer acquisition and product structure optimization [3] - Cigarette exports had a modest revenue increase of 0.8%, but volume decreased by 7.9%, while average price rose by 9.4% [3] - New tobacco revenue declined by 66.4%, with both volume and average price dropping significantly due to supply chain and regulatory challenges [3] - Brazilian operations faced a revenue decline of 50.3%, with volume and average price also decreasing due to climate constraints and shipment timing [3] Group 3: Growth Potential - The company is expected to strengthen its international allocation capabilities in tobacco leaf imports, ensuring stable growth [4] - The company has signed an exclusive global distribution agreement for Great Wall cigars with Sichuan Tobacco, which is anticipated to open new growth avenues [4] - There is potential for external acquisitions that align with the group's strategic goals to enhance global competitiveness [4]