Core Viewpoint - The company reported a revenue of 6.013 billion yuan for the first half of 2025, marking an 18.3% year-on-year increase, while net profit decreased by 28.0% to 492 million yuan [1] Financial Performance - Revenue for H1 2025 reached 6.013 billion yuan, up 18.3% year-on-year [1] - Gross profit was 2.244 billion yuan, a 16.6% increase, with a gross margin of 37.3%, down 0.5 percentage points [1] - Net profit fell to 492 million yuan, a decrease of 28.0%, while adjusted net profit was 737 million yuan, down 2.1% [1] - Adjusted net profit margin stood at 12.3%, down 2.5 percentage points year-on-year [1] Segment Performance - Self-owned brand revenue from electronic vapor products and vapor beauty products was 1.274 billion yuan, up 14.1%, accounting for 21.2% of total revenue [1] - Revenue from the European and other regions was 1.069 billion yuan, a 15.1% increase, driven by the strong performance of the VAPORESSO brand [2] - The U.S. market revenue was 174 million yuan, down 6.7%, while the Chinese market saw a significant increase of 2595.2% to 30.618 million yuan, mainly from the "岚至" brand [2] - Revenue from enterprise clients was 4.739 billion yuan, up 19.5%, making up 78.8% of total revenue [2] Regulatory Environment - Increased enforcement against non-compliant products in the U.S. has been noted, with the FDA and CBP seizing over 135 million USD worth of illegal e-cigarettes [2] - In Europe, several countries have imposed restrictions or bans on disposable e-cigarettes, with the UK implementing a sales ban on June 1, 2025 [2] R&D and Future Growth - The company successfully supported the launch of the high-end HNB product Hilo series, set to be released in Japan in September 2025 [3] - The vapor medical subsidiary is developing leading asthma and COPD products for the U.S. and European markets, aiming for greater revenue contributions [3] - The "岚至" home beauty device has surpassed 10,000 users, and the professional equipment has received Class II medical device certification [3] - R&D expenditure for H1 2025 was 723 million yuan, down approximately 4.9%, representing about 12.0% of revenue [3] Profit Forecast and Investment Outlook - The company is expected to benefit from increased market concentration due to stricter regulations, with significant contributions from HNB business anticipated from 2026 [3] - Adjusted net profit forecasts for 2025-2027 are 1.472 billion, 1.979 billion, and 2.663 billion yuan, respectively, with year-on-year growth of 34.40% and 34.60% in 2026 and 2027 [3]

Core Viewpoint - Smoore International, the world's largest electronic vapor product manufacturer, reported a revenue of 6.013 billion RMB for the first half of 2025, an increase of 18.3% year-on-year, while adjusted net profit decreased by 2.1% to 737 million RMB [1] Group 1: Financial Performance - The company proposed an interim dividend of 0.20 HKD per share, with a payout ratio increasing to 225.1%, compared to approximately 38.7% in the same period of 2024 [1] - The self-owned brand business generated approximately 1.274 billion RMB in revenue, a year-on-year increase of about 14.1%, accounting for approximately 21.2% of total revenue [1] Group 2: Brand and Market Performance - The self-owned brand "Lanzhi" in mainland China generated approximately 31 million RMB in revenue, showing a significant year-on-year growth of about 2595.2% [2] - The "Lanzhi" home beauty device has surpassed 10,000 users, and the professional equipment has received Class II medical device certification, being adopted by over 100 private institutions [2] Group 3: Business Segments - The To B (business-to-business) segment recorded revenue of approximately 4.739 billion RMB, a year-on-year increase of about 19.5%, driven mainly by the recovery of the electronic vapor business [2] - The company successfully supported key clients in launching a series of innovative compliant products in response to regulatory changes in the European market, leading to strong order growth [2] Group 4: Research and Development - The company focused on enhancing R&D efficiency, prioritizing investments in heated non-combustible (HNB) products and vapor medical applications, achieving several breakthroughs in R&D [3] - A significant milestone was the successful support of a strategic client in launching a high-end HNB product series in key markets, with plans for a nationwide launch in Japan by September 2025 [3] Group 5: Future Outlook - The company aims to continue leveraging technological innovation as a foundation, focusing on electronic vapor, heated non-combustible, special-purpose vapor products, vapor medical, and vapor beauty sectors to provide comprehensive vapor technology solutions [3]

Summary of Smoore International's Conference Call Company Overview - **Company**: Smoore International - **Industry**: Vapor Technology and Tobacco Industry Key Financial Performance - **Revenue**: In the first half of 2025, Smoore International reported revenue of 9 billion yuan, a year-on-year increase of 19.5% [2][4] - **Regional Performance**: - European market revenue growth reached 38% due to compliance product sales following a one-time ban [2][4] - Revenue growth in the US and China was 1.5% and -6.1%, respectively [2][4] - **Profit**: The company achieved a profit of 4.92 billion yuan, a decline of 28% year-on-year, primarily due to increased stock incentive amortization, administrative expenses, and marketing costs [2][5] - **Adjusted Net Profit**: Adjusted net profit was 7.37 billion yuan, down 2.1% year-on-year, but actual growth was noted after excluding a 70 million yuan tax impact from OECD's dual pillar international tax [2][5] Future Outlook - **Second Half Expectations**: Smoore International anticipates maintaining double-digit revenue growth in the second half of 2025, with profits expected to remain flat [2][6] - **Key Focus Areas**: - Sales performance of HNB products in Japan in September [2][6] - Progress of British American Tobacco's Halo product launch in Europe, which has the largest marketing budget in its history [2][6] Emerging Business Developments - **Medical Vaporization**: The company is successfully collaborating with major pharmaceutical companies, aiming for FDA approval within the next two to three years [2][7] - **Beauty Vaporization**: The Lancome brand achieved revenue of 31 million yuan in the first half of the year, with expectations of significant profit contributions in the next two years [2][7] Industry Perspective - **Market Position**: Smoore International is viewed as a leader in vapor technology, with a positive outlook on the transformation of the tobacco industry, particularly in the HNB segment [3][8] - **Traditional Business Recovery**: The traditional business is showing signs of recovery, especially in the European market, which has exceeded expectations [2][8] - **Future Profit Contribution**: HNB business is projected to contribute over 1 billion yuan in profit increment next year, while other emerging businesses will take two to three years to reflect in financial statements [2][8]

Group 1 - SMOORE International (06969.HK) closed at HKD 18.120 on May 23, marking a 2.49% increase from the previous trading day, with an intraday high of HKD 18.820, the highest in nearly a year [1] - The net capital inflow for the day was HKD 87.0088 million, with a total of HKD 39,232.538 million flowing in and HKD 30,531.660 million flowing out [1] Group 2 - SMOORE International Holdings Limited was established in 2009 and is a global leader in providing atomization technology solutions, owning one proprietary brand (VAPORESSO) and three technology brands (FEELM, CCELL, METEX) [2] - The company is headquartered in Bao'an District, Shenzhen, with nearly 20,000 employees [2] - SMOORE was officially listed on the Hong Kong Stock Exchange on July 10, 2020, under the stock code HK6969 [2] - The company places a strong emphasis on technological innovation and research and development, with a total of 9 research institutes globally and a research team of over 1,000, accounting for nearly half of its non-production staff [2] - As of June 30, 2021, SMOORE had applied for a total of 2,612 patents and 566 trademarks, with 1,272 patents and 360 trademarks granted [2] - The company has received various certifications and honors, including "National CNAS Laboratory Certification," "International UL Safety Laboratory Certification," "National High-tech Enterprise Certification," and "ISO9001 Quality System Certification" [2]

Investment Rating - Industry rating is maintained at "Outperform the Market" [5] Core Viewpoints - The report highlights the impact of the U.S. imposing tariffs on Chinese e-cigarette products, with a total tariff rate reaching 150% [2]. - The report emphasizes that Smoore's Indonesian production capacity is maturing, which is expected to mitigate the impact of these tariffs [3]. - In the first two months of 2025, China's e-cigarette exports decreased by 9.4% year-on-year, with the U.S. remaining the largest market, accounting for 39.64% of total exports [1]. Summary by Sections E-Cigarette Market Overview - In January 2025, e-cigarette exports amounted to $1.02 billion, a year-on-year decrease of 1.47%, while February saw exports drop to $498 million, down 22.07% [1]. - The average export price for e-cigarettes and similar devices was $71.1 per kilogram, with an average price of $3.93 per unit [1]. Company Focus: Smoore International - Smoore reported a pre-tax profit of 255 million yuan in Q1 2025, a decline of 36.3% year-on-year, with a post-tax profit of 192 million yuan, down 43.4% [3]. - The company invested approximately $500 million in building its first overseas factory in Indonesia, which is expected to have an annual output value of $860 million [3]. Industry Recommendations - The report suggests monitoring companies within the vaping supply chain, including Winbond Technology, Jinlong Electromechanical, and others [4]. - It also highlights companies in the tobacco supply chain such as China Tobacco Hong Kong and Jinjia Shares [4].