Investment Rating - The report maintains a Buy-A rating for Smoore International (06969 HK) with a 6-month target price of HKD 12 12 [4] Core Views - Smoore International's self-owned brand business showed strong growth in H1 2024 with revenue increasing by 71 94% YoY to RMB 1 116 billion while ODM revenue declined by 12 35% YoY to RMB 3 922 billion [2] - The company's gross margin improved to 38 0% in H1 2024 up 1 8 percentage points YoY driven by the higher proportion of high-margin self-owned brand business and cost reduction efforts [3] - Smoore International is expected to achieve revenue of RMB 12 357 billion in 2024 representing a YoY growth of 10 65% with adjusted net profit of RMB 1 694 billion a YoY increase of 0 95% [3] Business Performance - In H1 2024 Smoore's self-owned brand VAPORESSO continued to gain market share in the open-system product category with revenue from Europe and other markets surging 88 0% YoY to RMB 929 million and US revenue growing 20 6% YoY to RMB 187 million [2] - The company's enterprise-facing sales showed signs of recovery with US revenue declining 9 8% YoY to RMB 1 858 billion and European revenue down 16 0% YoY to RMB 1 976 billion However Q2 2024 saw a sequential recovery with US revenue up 6 1% QoQ and European closed-system pod revenue surging 93 2% QoQ [2] Financial Performance - Smoore's H1 2024 revenue decreased by 1 67% YoY to RMB 5 037 billion while net profit attributable to shareholders declined by 4 76% YoY to RMB 683 million [1] - The company's adjusted net profit margin in H1 2024 was 13 6% down 0 4 percentage points YoY due to increased sales and R&D expenses [3] Valuation and Forecast - The report forecasts Smoore's revenue to grow to RMB 14 024 billion in 2025 and RMB 15 702 billion in 2026 with adjusted net profit expected to reach RMB 1 891 billion and RMB 2 164 billion respectively [3] - Smoore's PE ratio is projected to be 31 6x 30 8x and 27 6x for 2024 2025 and 2026 respectively [3]
思摩尔国际：自主品牌表现亮眼，毛利率同比向好