Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company is expected to see a long-term growth trajectory despite short-term fluctuations, with a focus on the recovery of its vaping business [1] - The company has demonstrated strong performance in its mature vaping business, with a notable recovery in overall performance [2] - The HNB (Heat-not-Burn) segment is experiencing significant growth, with a projected revenue increase of 476% year-on-year [3] - The emerging medical and beauty vaping business is in the exploratory phase, with high R&D investments impacting short-term performance but offering substantial long-term profit potential [3] - The company is expected to maintain a high dividend yield, reflecting confidence in future growth [4] Summary by Sections Financial Performance - In 2025, the company achieved a revenue of 14.3 billion HKD, a year-on-year increase of 21%, while the net profit attributable to shareholders was 1.06 billion HKD, a decrease of 19% [1] - The adjusted net profit for 2025 was 1.53 billion HKD, reflecting a year-on-year increase of 1.3% [1] - The company plans to distribute a dividend of 0.2 HKD per share for 2025 [1] Business Segments - The vaping business in the US and Europe showed revenue growth of 19% and 2% respectively, while the Chinese market saw a decline of 11% [2] - The company's own brand generated revenue of 2.9 billion HKD, with significant growth in the US and European markets [2] - The HNB segment generated 1.3 billion HKD in revenue, with plans for expansion into key markets like Japan and Poland [3] - The medical and beauty vaping segment is preparing for FDA approval and aims to build small-scale production capabilities [3] Future Projections - Revenue projections for 2026-2028 are 16.91 billion HKD, 19.98 billion HKD, and 23.66 billion HKD, with year-on-year growth rates of 18.64%, 18.13%, and 18.42% respectively [4] - Net profit projections for the same period are 1.65 billion HKD, 2.57 billion HKD, and 3.49 billion HKD, with growth rates of 55.20%, 55.58%, and 35.69% respectively [4] - The expected EPS for 2025-2027 is 0.27 HKD, 0.41 HKD, and 0.56 HKD, with corresponding P/E ratios of 42, 27, and 20 times [4]

Investment Rating - The investment rating for Smoore International (6969.HK) is not explicitly stated in the provided documents, but the report suggests a positive outlook based on market developments and company performance [1]. Core Viewpoints - The marketing promotion of HILO in Japan is expected to accelerate, while the compliance market in the US is showing signs of recovery [1]. - The competitive landscape in Japan is intensifying, with major players like Philip Morris and British American Tobacco reducing prices, which may enhance HILO's market share [2]. - The US market is anticipated to improve further, with an increase in the compliance product listing rate expected from Q3 2025, benefiting Smoore's core supply chain [2]. - In Europe, Smoore's ODM revenue is projected to grow significantly, with a year-on-year increase of 38% in the first half of 2025, indicating a successful transition from disposable products to compliant alternatives [3]. - The HNB (Heated Not Burned) product line is set to launch in Japan and expand into Europe, with expectations for revenue growth in subsequent quarters [3]. - Profit forecasts indicate a continuous improvement in operational performance, with net profits projected to reach 1.23 billion, 2.02 billion, and 3.06 billion yuan for 2025, 2026, and 2027 respectively [3]. Summary by Sections Market Developments - The US FDA and CBP have conducted significant enforcement actions against unauthorized e-cigarette products, indicating a tightening regulatory environment that may benefit compliant products [1]. - The introduction of new regulations in various US states is expected to enhance the market for compliant products, with a notable increase in the market share of compliant flavors [2]. Financial Projections - Total revenue is projected to grow from 11.8 billion yuan in 2024 to 19.3 billion yuan in 2027, with a compound annual growth rate (CAGR) of approximately 18% [6]. - The net profit is expected to recover from a decline in 2024 to a significant increase by 2027, reflecting a turnaround in profitability [6]. - Earnings per share (EPS) are forecasted to rise from 0.21 yuan in 2024 to 0.49 yuan in 2027, indicating improved shareholder value [6]. Operational Insights - The company is focusing on product innovation and compliance, with a shift from disposable products to more sustainable and compliant offerings, which is expected to drive growth in various markets [3]. - The operational cash flow is projected to improve significantly, reflecting better management of working capital and operational efficiency [9].