Investment Rating - The investment rating for the company is "Buy" with a target price of HKD 46.80 [1]. Core Views - The company achieved a revenue of HKD 14.58 billion in 2025, representing a year-on-year growth of 11.5%, and a net profit of HKD 980 million, up 14.8% year-on-year, slightly exceeding previous expectations [1]. - The company's robust revenue growth amidst external disruptions is attributed to improved gross margins in leaf and cigarette exports, indicating a strong operational performance [1]. - As the only listed platform under China Tobacco, the company has a strong competitive moat and is expected to continue its growth trajectory in core business areas, supported by ongoing breakthroughs in leaf and cigarette export operations [1]. Revenue and Profitability - The combined revenue from leaf import and export business reached HKD 12.02 billion in 2025, a year-on-year increase of 16.5%, accounting for 82.4% of total revenue [2]. - The leaf import business generated HKD 9.54 billion in revenue, up 15.6% year-on-year, driven by an increase in average selling prices despite a slight decline in import volume [2]. - The leaf export business saw revenue of HKD 2.48 billion, a 20.4% increase year-on-year, with both export volume and average price rising, benefiting from enhanced customized services and pricing strategies [2]. Sales Performance - The cigarette export business generated HKD 1.67 billion in revenue, reflecting a 5.9% year-on-year increase, although export volume decreased by 3.3% due to shipping rhythm impacts [3]. - New tobacco product exports faced significant declines, with volumes down 51.2% year-on-year, resulting in a revenue drop of 52.5% [3]. - The company's operations in Brazil reported a revenue of HKD 830 million, down 21.0% year-on-year, primarily due to shipping rhythm and market changes [3]. Profitability Metrics - The overall gross margin for the company was 10.1% in 2025, a decrease of 0.4 percentage points year-on-year, mainly due to the higher proportion of lower-margin leaf import and export business [4]. - The net profit margin for the company was 6.7%, an increase of 0.2 percentage points year-on-year, supported by reduced management and financial expense ratios [4]. - The company has announced several important updates indicating ongoing progress in its export business, suggesting continued growth potential [4]. Earnings Forecast and Valuation - The earnings forecast for 2026-2028 has been slightly adjusted downwards, with expected net profits of HKD 1.08 billion, HKD 1.20 billion, and HKD 1.32 billion respectively [5]. - The company is assigned a target PE of 30 times for 2026, reflecting its unique market position and long-term growth potential, with a revised target price of HKD 46.80 [5].

Investment Rating - The investment rating for the company is "Outperform the Market" [5] Core Views - The company reported a strong revenue growth of 18.5% year-on-year, reaching HKD 10.32 billion in the first half of 2025, with a net profit increase of 9.8% to HKD 706 million [1][2] - The revenue growth was primarily driven by the import and export of tobacco leaf products and cigarette exports, while the net profit increase was attributed to improved profitability in cigarette and tobacco leaf exports, alongside a significant reduction in financing costs by 28% [1] - The company plans to distribute an interim dividend of HKD 0.19 per share, representing a 27% increase [1] Revenue Breakdown - Tobacco Leaf Imports: Revenue increased by 23.5% to HKD 8.4 billion, with an import volume of 97,900 tons (+2.5%) and an average import price of HKD 85,800 per ton (+20.5%). The gross margin decreased to 8.2% due to cost increases outpacing sales price increases [1] - Tobacco Leaf Exports: Revenue rose by 25.9% to HKD 1.16 billion, with an export volume of 38,500 tons (+12.7%) and an average export price of HKD 30,000 per ton (+11.7%). The gross margin improved to 5.5% [2] - Cigarette Exports: Revenue increased by 0.8% to HKD 550 million, with an export volume of 1.019 billion sticks (-7.9%) and an average export price of HKD 0.54 per stick (+9.4%). The gross margin improved to 25.7% [2] - New Tobacco Exports: Revenue fell by 66.5% to HKD 15 million, with an export volume of 81 million sticks (-65.4%) and an average export price of HKD 0.18 per stick (-3.0%). The gross margin remained at 5.5% [3] - Brazilian Operations: Revenue decreased by 50.3% to HKD 195 million, with an export volume of 7,900 tons (-34.8%) and an average export price of HKD 24,600 per ton (-23.8%). The gross margin improved to 27.4% [3] Financial Forecasts - The company has raised its profit forecasts, expecting net profits of HKD 940 million, HKD 1.04 billion, and HKD 1.18 billion for 2025, 2026, and 2027 respectively, reflecting year-on-year growth of 9.6%, 11.4%, and 12.9% [1][4] - The diluted EPS is projected to be HKD 1.35, HKD 1.51, and HKD 1.70 for the same years, with corresponding PE ratios of 27, 25, and 22 times [1][4]

Investment Rating - The investment rating for the company is "Outperform the Market" [1] Core Views - The company operates under exclusive licenses and is positioned as a resource integrator under a franchise framework, with a focus on global expansion [2][6] - The company is the only publicly listed tobacco company within the China Tobacco system, benefiting from strong exclusive operating barriers and actively pursuing both organic and external growth [4][8] Summary by Relevant Sections Business Overview - The company is designated as the overseas platform for China Tobacco International, responsible for capital market operations and international business expansion [4][8] - The business model is characterized by light assets, monopoly, and planned operations, leading to stable profitability [4][8] Revenue and Growth - Revenue from 2018 to 2024 is projected to grow from HKD 70.3 billion to HKD 130.7 billion, with a compound annual growth rate (CAGR) of 10.9% [19] - The company’s revenue is primarily driven by the import and export of tobacco leaves, with significant contributions from cigarette exports and new tobacco products [19][22] Profitability - Net profit is expected to increase from HKD 2.6 billion in 2018 to HKD 8.5 billion in 2024, with a CAGR of 21.8% [22] - The company’s profitability is enhanced by a high-margin business structure, particularly in the Brazilian operations and cigarette exports [22] Market Position - The company holds a unique position in the global tobacco market, with over 40% of the world's tobacco production and consumption occurring in China, yet the internationalization of China Tobacco remains relatively low, indicating significant growth potential [4][8] Future Outlook - The company anticipates net profits of HKD 9.0 billion, HKD 9.8 billion, and HKD 10.6 billion for the years 2025 to 2027, respectively, with corresponding earnings per share (EPS) of HKD 1.30, HKD 1.41, and HKD 1.53 [4][22] - The expected reasonable valuation range for the company is between HKD 29.83 and HKD 36.24, corresponding to a market capitalization of HKD 206 billion to HKD 251 billion [4]