Investment Rating - Buy rating maintained for Smoore International (6969 HK) [4] Core Views - Smoore International reported H1 2024 revenue/net profit/total comprehensive income of RMB 5 037/683/725 million down 2%/5%/1% YoY [2][5] - Self-branded business grew strongly with Q2 pod product sales recovering and showing growth momentum [6] - R&D investments in HNB and atomization products driving long-term growth [7] Revenue Analysis - TOB business revenue declined 12% YoY in H1 2024 accounting for 78% of total revenue [6] - US/China/Europe & other regions revenue changed -10%/+41%/-16% YoY respectively [6] - Disposable/pod & HNB/APV product revenue was RMB 1 217/2 704/1 116 million changing -19%/-9%/+72% YoY [6] - US pod product revenue grew 6 1% QoQ and 6 5% YoY in Q2 [6] - Europe & other regions pod product revenue surged 93 2% QoQ and 22 5% YoY in Q2 [6] - TOC business revenue jumped 72% YoY in H1 2024 with share rising 9pcts to 22% [6] - US/Europe & other regions revenue increased 20 6%/88 0% YoY [6] - New XROS 4 product became a market hit [6] - VAPORESSO brand strengthened its leading position in open system products [6] Profitability Analysis - Gross margin improved 1 8pcts to 38 0% in H1 2024 driven by [6] - Higher-margin self-branded products gaining share [6] - Lower-margin disposable products declining [6] - Net profit declined 5% YoY in H1 2024 due to [6] - Sales expense ratio up 3 3pcts to 7 4% from international market expansion and new product launches [6] - R&D expense ratio up 3 1pcts to 15 1% from increased investments in medical atomization and HNB [6] - Management expense ratio down 2 4pcts to 6 7% from cost control and efficiency improvements [6] R&D and Growth Prospects - HNB R&D spending increased 15% YoY in H1 2024 with differentiated product solutions developed [7] - Atomization product R&D spending accounted for 24 4% of total in H1 2024 up from 18 5% in H1 2023 [7] - Launched MOYAL skincare brand and first-generation atomization beauty product solution in Q1 2024 [7] - Completed development of several drug delivery devices for asthma and COPD and 10+ drug formulations in H1 2024 [7] - Leading compliant brands expected to gain market share amid tightening regulations [7] - Key client VUSE held 51 2% US market share (closed system and disposable products) as of H1 2024 [7] - Forecast 2024-2026 net profit of RMB 1 660/1 910/2 160 million with PE of 29/25/22X [7]
思摩尔国际2024H1点评：自主品牌高增，换弹产品趋势向好，研发驱动长期成长