Guojin Securities: Positive signals continue to emerge in various businesses that maintain the “buy” rating of Smore International (06969)
The Zhitong Finance App learned that Guojin Securities released a research report saying that Smore International (06969), as the core supplier of leading tobacco giants, continues to contribute to increased performance and is expected to fully benefit from the expansion of the European and American compliant atomization market. The long-term trend of increasing the penetration rate of new types of tobacco overseas has been determined, and the company relies on its technical strength and mass production capacity to deeply bind the Big Tobacco Group to enjoy the dominant position of major trends in industrial development. The upward trend of the company's atomization and HNB business has not changed, and positive signals from various businesses are constantly emerging. It is recommended to actively pay attention and maintain the “buy” rating.
Guojin Securities's main views are as follows:
Brief review of the event
On December 11, the company announced that in order to advance the equity incentive plan, the company purchased 8.14 million shares on December 11, with an average price of HK$12.26 per share, at a total cost of HK$99.77 million. The company's large single-day repurchase fully demonstrated confidence in subsequent development.
Hilo's product strength is gradually being verified, and British and American tobacco promotion efforts continue to increase
According to BAT's 2025 performance forecast, BAT is actively promoting online and offline marketing activities in the Japanese market. The product brand and performance have resonated strongly with consumers, and the retention rate from consumers of traditional cigarettes and heated tobacco is about 50%. The high retention rate directly verifies Hilo's excellent product strength and lays a solid foundation for subsequent cigarette production. According to BAT's official website, Hilo has recently greatly increased its discount in the Polish market. Hilo devices plus two packs of cigarettes only sell 1 zloty, while Hilo Plus devices plus two packs of cigarettes only sell 79 zlotys. Relying on BAT's complete sales network and sufficient marketing resources, Hilo cigarette sales are expected to continue to increase in the future, contributing to SMOORE's core profit growth.
The core atomization business continues to be repaired, and it is expected that it will continue to benefit from the expansion of the European and American markets
Since 2024, US regulators have continued to step up their crackdown on illegal e-cigarettes, and the living space for illegal products has been severely squeezed. Furthermore, the FDA officially expressed cautious support for expanding the scope of flavored cigarettes, and the compliance market is expected to continue to expand. Countries such as Britain and France have completely banned disposable cigarettes, and the European market is in the midst of a shift in demand from disposable to exchangeable, combustible, and open products. 2025H2, BAT's revenue picked up in the US market. The global core market share was +0.1 pct at the end of 24, of which the US market was +0.7 pct. BAT does not expect the US market to drag down the overall revenue growth of the new tobacco business in 2026, and the vaping business is undergoing continuous repair. Looking ahead, against the backdrop of continuing efforts by IQOS, Nippon Tobacco, etc. to heat tobacco and industry competition is becoming increasingly fierce, BAT clearly stated that it will accelerate the global promotion pace of HiLO in 2026 in order to continue to seize the market share of heated tobacco from the high-end to the middle and low end.
Profit forecast: The bank expects the company's 2025-2027 EPS to be 0.22/0.37/0.59 yuan, respectively, and the current stock price corresponding to PE is 53/31/20 times, respectively.
Risk warning: Overseas regulations on illegal products are weak; new product development is poor; exchange rates fluctuate greatly.