Core Viewpoint - UBS maintains a "Sell" rating on Smoore International (06969) with a target price of HKD 13.11, citing concerns over profitability despite expected revenue growth driven by e-cigarette sales [1] Group 1: Company Insights - UBS recently met with management from Japan Tobacco in Tokyo and held an investor meeting with Smoore's management in Shenzhen [1] - The firm anticipates a 20% year-on-year revenue growth in 2025, primarily driven by e-cigarette sales [1] - However, net profit is expected to decline by 40% year-on-year due to rising R&D and sales expenses, along with pressure on gross margins [1] Group 2: Market and Regulatory Environment - The impact of U.S. enforcement against illegal e-cigarettes may weaken due to inconsistent enforcement, as indicated by on-the-ground feedback [1] - Chinese customs data shows a 39% increase in e-cigarette exports in August, suggesting that Chinese e-cigarette exporters are adapting to U.S. enforcement measures [1] - UBS's net profit forecasts for 2025-2027 are 18-45% lower than market consensus [1]

Core Viewpoint - UBS maintains a "Sell" rating on Smoore International (06969) with a target price of HKD 13.11, citing concerns over rising costs and declining net profits despite expected revenue growth driven by e-cigarette sales [1] Group 1: Company Insights - UBS recently met with management from Japan Tobacco in Tokyo and held an investor meeting with Smoore's management in Shenzhen [1] - The firm notes that while the U.S. has intensified efforts against illegal e-cigarettes since early 2025, inconsistent enforcement may lessen the impact of these measures [1] - Chinese customs data indicates a 39% increase in e-cigarette exports in August, suggesting that Chinese e-cigarette exporters are adapting to U.S. enforcement [1] Group 2: Financial Projections - UBS forecasts a 20% year-on-year revenue growth in 2025, primarily driven by e-cigarette sales [1] - However, net profit is expected to decline by 40% year-on-year due to rising R&D and sales expenses, along with pressure on gross margins [1] - The firm's net profit projections for 2025-2027 are 18-45% lower than market consensus [1]

Core Insights - The report from CICC indicates that the 2025 National Day and Mid-Autumn Festival holiday will span 8 days, coupled with more flexible leave arrangements, which is expected to stimulate a more active consumption window [1] - The Ministry of Culture and Tourism has announced that over 480 million yuan in consumption subsidies will be distributed during the consumption month, which is anticipated to further enhance residents' willingness to spend and boost holiday consumption [1] Group 1: Consumer Trends - The extended holiday peak is expected to improve travel sentiment year-on-year [1] - The report emphasizes a long-term focus on self-consumption, recommending sectors such as trendy toys and e-cigarettes, with specific companies like Pop Mart, Blokus, and Smoore International highlighted [1] Group 2: Domestic Brands and Policy Impact - The report suggests a trend towards the rise of domestic brands, recommending beauty and personal care sectors, including companies like Mao Geping, Juzhibio, Shanghai Jahwa, and Shanghai Jahwa [1] - Attention is drawn to sectors benefiting from policy catalysts, particularly retail, supported by domestic demand policies and seasonal boosts [1]

Core Viewpoint - The recent launch of Glo Hilo and Glo Hilo Plus heating non-combustible devices in Poland marks a significant step in the expansion of HNB (Heated Not Burned) business, with a focus on diverse product offerings and market penetration strategies [1][2]. HNB Business Expansion - Glo Hilo has been launched in Japan since September 1, with positive trial feedback and higher-than-expected shipment volumes [1]. - In Poland, Glo Hilo was officially released on September 18, featuring improved device options and a wider variety of 13 flavored smoke sticks (8 tea-based and 5 tobacco flavors) [1]. - Marketing efforts include a promotional campaign by British American Tobacco, offering four packs of smoke sticks with the purchase of heating devices [1]. - Future expansion plans include entering the Italian market in 2024, which is projected to be the third-largest global HNB market [1]. Vaping Market Dynamics - The U.S. has intensified regulation of the illegal vaping market, with a significant seizure of unauthorized electronic cigarette products valued at approximately $86.5 million [2]. - Exports of electronic cigarettes from China to the U.S. are expected to decline by about 23% year-on-year from May to August 2025, primarily due to tightening regulations and tariffs [2]. - In Europe, the company is responding to a ban on disposable products by quickly launching innovative compliant products, which is anticipated to drive business growth and improve product structure [2]. Growth Potential and Financial Forecast - The vaping segment shows a clear recovery trend, benefiting from regulatory shifts and increased market share among major clients [3]. - The HNB business has significant growth potential, with Glo Hilo expected to capture market share in a sector where global penetration is currently only about 6% [3]. - Long-term growth prospects are bolstered by developments in medical vaping, special-purpose vaping, and beauty vaping, with notable progress in obtaining medical device certifications [3]. - The company forecasts net profits of 1.3 billion, 2.04 billion, and 2.89 billion yuan for 2025-2027, corresponding to P/E ratios of 78, 50, and 35 [3].

Investment Rating - The investment rating for the company is "Buy" and is maintained [9] Core Viewpoints - The Glo Hilo new market is steadily advancing, with the vaporization business expected to recover rapidly. The Glo Hilo products have been launched in Poland and Japan, with positive initial feedback and promotional activities in place [10][10] - The company is well-positioned to benefit from regulatory changes in the U.S. market, which may lead to growth opportunities for its vaporization business [10] - The overall growth potential of the company is strong, driven by the recovery of its main business and the expansion of its HNB (Heated Not Burned) products [10] Summary by Relevant Sections HNB Business - Glo Hilo has launched in Japan and Poland, with positive sales feedback and a variety of product offerings including 13 flavors of tobacco and tea-based sticks [6][10] - The marketing strategy includes promotional offers to boost initial sales [10] Vaporization Business - The U.S. market is seeing increased regulation of illegal products, which may provide a favorable environment for compliant products [10] - The company has introduced innovative compliant products to meet market demand, which is expected to drive growth [10] Fundamental Trends - The recovery trend in the vaporization business is clear, with expectations of accelerated growth due to improved market share among major clients [10] - The company anticipates significant growth in the HNB segment, with a current global market penetration of only about 6% [10] - Long-term growth opportunities are also present in medical and specialty vaporization products [10] Profit Forecast - The company is projected to achieve net profits of 1.3 billion, 2.04 billion, and 2.89 billion RMB for the years 2025 to 2027, with corresponding PE ratios of 78, 50, and 35 [10]

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].

Core Viewpoint - The article highlights significant growth in the global lithium battery and related materials market, with various segments showing substantial year-on-year increases in production and sales, driven by rising demand for electric vehicles and energy storage solutions. Group 1: Global Battery Production Statistics - In August 2025, global battery production reached 198.42 GWh, a year-on-year increase of 50.31% [1] - From January to August 2025, global lithium battery production totaled 1373.53 GWh, reflecting a year-on-year growth of 48.86% [1] - Global energy storage battery production in August 2025 was 54.45 GWh, up 64.5% year-on-year, with a cumulative production of 345.73 GWh from January to August, marking an 81.75% increase [1] Group 2: Material Production Statistics - Global lithium iron phosphate production in August 2025 was 33.85 million tons, a year-on-year increase of 61.72%, with a cumulative production of 230.45 million tons from January to August, up 65.69% [2] - Global ternary material production in August 2025 was 9.61 million tons, a year-on-year increase of 16.48%, but cumulative production from January to August decreased by 0.23% to 63.76 million tons [3] - Global anode material production in August 2025 was 26.3 million tons, a year-on-year increase of 45.7%, with a cumulative production of 180.74 million tons from January to August, up 35.76% [4] - Global electrolyte production in August 2025 was 20.4 million tons, a year-on-year increase of 38.77%, with a cumulative production of 139.07 million tons from January to August, reflecting a 43% increase [5] - Global separator production in August 2025 was 2.774 billion square meters, a year-on-year increase of 36.65%, with a cumulative production of 19.734 billion square meters from January to August, up 36.64% [5] Group 3: Automotive Industry Growth Plans - The Ministry of Industry and Information Technology and eight other departments issued a plan aiming for approximately 32.3 million vehicle sales in 2025, a year-on-year growth of about 3%, with new energy vehicle sales projected at around 15.5 million, up 20% [1] Group 4: Market Conditions for Lithium Battery Materials - The domestic lithium carbonate market price fluctuated between 72,000 to 74,000 yuan per ton, with procurement activity increasing due to pre-holiday stockpiling [8] - The ternary material market price remained stable, with recent uncertainties in raw material supply affecting prices [9] - The domestic phosphoric iron lithium market price remained stable, with significant agreements signed for future supply [10] - The anode material market is experiencing strong demand, with potential price increases anticipated [11] - The separator market price is stable, with leading companies maintaining high production levels [13] - The electrolyte market is also stable, with expectations of price increases due to tight supply [15] Group 5: Demand in Lithium Battery Downstream Markets - The lithium battery market is maintaining high operating rates, with production expected to peak around late October [16] - New energy vehicle sales reached 268,000 units last week, with a penetration rate of 59.6% [18] - The energy storage market is projected to reach 140 GW of installed capacity this year, closely approaching the target of 180 GW [19]

Financial Data and Key Metrics Changes - Total revenue for fiscal year 2025 declined from $151.9 million to $127.5 million, a decrease of $24.4 million compared to fiscal year 2024 [12] - Gross profit decreased to $22.7 million from $29.8 million year-over-year, with gross margins at 17.8%, down from 19.6% [13][14] - Net loss for fiscal 2025 was $39.2 million, compared to $40.8 million in fiscal 2024 [15] Business Line Data and Key Metrics Changes - The company shifted focus from cannabis to the higher-value nicotine sector, resulting in a decline in cannabis-related revenue [4][11] - The cannabis sector's revenue in Q4 2025 was noted to be at a low point, with expectations of improvement as new customer relationships are established [44] - The company reduced net accounts receivable by over 21% year-over-year, marking the first decline in history [7] Market Data and Key Metrics Changes - European revenue increased by 13.6% to approximately $74.1 million, while North American revenue dropped from $63.1 million to $32.6 million [13] - Revenue from Asia-Pacific decreased from $17.6 million to $12.3 million, while revenue from other countries rose to $8.5 million [13] Company Strategy and Development Direction - The company is investing in manufacturing capabilities in Malaysia, aiming for up to 80 production lines, significantly increasing from the current six [5][6] - A strategic pivot towards the nicotine sector is intended to build a more sustainable and profitable business model [4][11] - The company is focused on regulatory compliance and advancing PMTA activities for its devices, positioning itself as a regulatory leader [9][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future growth opportunities in the nicotine market, particularly through international ODM partnerships [10][18] - The company is committed to maintaining financial discipline and expects continued cost reductions in the coming quarters [8][11] - Management acknowledged the challenges in the cannabis industry due to cash flow issues and indicated a potential return to the sector if federal legalization occurs [30][45] Other Important Information - The company has made significant cost optimization measures, resulting in an estimated annual savings of $10.2 million [8] - The appointment of Jay Yu as CFO reflects the company's commitment to strong financial stewardship during its transformation [10] Q&A Session Summary Question: Key milestones for age gating technology approval - Management indicated that the FDA accepted the component PMTA application within four weeks, which is unprecedented, and the review is expected to be expedited [21][22] Question: Approval timelines in other major markets - Management expressed optimism about potential approvals in two unnamed countries that are moving quickly with the technology [24] Question: Details on the $22 million provision for receivables - Management clarified that the provision was a cumulative effect from various customers rather than a single client [32] Question: Future of cannabis revenue - Management noted that Q4 cannabis revenue is expected to be the lowest point, with new customer relationships and product launches anticipated to drive future growth [44] Question: Feedback on U.K. supply agreement - Initial feedback from the U.K. ODM client has been encouraging, with a backlog of $18 million tied to this customer [37] Question: Tariff landscape and supply chain diversification - Management confirmed an increase in inquiries from brands looking to diversify supply chains, with plans for a third facility in Malaysia to accommodate growth [40][41]

Group 1 - The core viewpoint of the article highlights the recent stock transfer of Smoore International (06969) from Wing Lung Bank to CITIC Securities Brokerage in Hong Kong, with a market value of HKD 51.96 billion, representing 4.51% of the total shares [1] - Smoore International reported its interim results for the six months ending June 30, 2025, achieving revenue of RMB 6.013 billion, an increase of 18.3% year-on-year [1] - The adjusted profit for the period was RMB 737 million, reflecting a decrease of 2.1% year-on-year, while the net profit was RMB 492 million, down 27.96% year-on-year [1] - The basic earnings per share for the company stood at 8.08 cents [1]

Investment Rating - Industry rating is maintained at "Outperform the Market" [5] Core Insights - The report highlights the implementation of new regulations on e-cigarettes across multiple states in the U.S. starting September 1, 2025, aimed at enhancing public health and product safety [1] - China's e-cigarette exports showed a steady recovery in July 2025, with an export value of $889 million, reflecting a month-on-month increase of 32.04% despite a year-on-year decline of 11.10% [2] - The report suggests a significant restructuring of the e-cigarette market in the U.S. due to stricter regulations, which may lead to a reduction in product variety and changes in supply chain and marketing strategies [1] Summary by Sections E-Cigarette Regulations - New regulations in states like Texas, Wisconsin, Arkansas, and California impose strict limits on product packaging, ingredients, origin, and advertising, with severe penalties for non-compliance [1] Export Data - In the first seven months of 2025, China's e-cigarette exports totaled $5.616 billion, with July exports reaching $889 million, showing a notable recovery in the U.S. market [2] - The U.S. remains the largest market for Chinese e-cigarettes, accounting for 29.41% of total exports, despite a year-on-year decline of 14.17% [2] Investment Opportunities - The report recommends focusing on companies within the vaping supply chain, including Smoore International, Jincheng Pharmaceutical, and others, as well as tobacco supply chain companies like China Tobacco Hong Kong and China Baotong [3]