Investment Rating - Buy (maintained) [1] Core Views - China Tobacco Hong Kong (06055) reported strong H1 2024 results with total revenue of HKD 8.7 billion, up 12.4% YoY, and net profit attributable to shareholders of HKD 640 million, up 40.8% YoY [2] - The company announced an interim dividend of HKD 0.15 per share starting from 2024 [2] - Cigarette export revenue surged 127.9% YoY to HKD 550 million, driven by recovery in duty-free market traffic [3] - Tobacco leaf import revenue increased 5.5% YoY to HKD 6.8 billion, while tobacco leaf export revenue rose 23.0% YoY to HKD 920 million [3] - New tobacco product export revenue grew 28.4% YoY to HKD 44 million, and Brazil operations revenue increased 42.8% YoY to HKD 390 million [3] - Gross margin improved to 11.1%, up 1.5 percentage points YoY, with cigarette export gross margin rising significantly to 22.2%, up 6.5 percentage points YoY [3] Financial Performance Summary - Revenue breakdown: Tobacco leaf import (HKD 6.8 billion, +5.5% YoY), tobacco leaf export (HKD 920 million, +23.0% YoY), cigarette export (HKD 550 million, +127.9% YoY), new tobacco product export (HKD 44 million, +28.4% YoY), Brazil operations (HKD 390 million, +42.8% YoY) [3] - Gross margin improvement driven by higher-margin cigarette exports and optimized product mix [3] - Net profit margin increased to 7.4%, up 1.5 percentage points YoY [3] Market Data - Current price: HKD 16.72 [4] - 52-week price range: HKD 8.61-17.88 [4] - Market capitalization: HKD 11.56 billion [4] - Average daily turnover: HKD 53.35 million [4] Forecast and Valuation - Revenue forecast for 2024E-2026E: HKD 13.4 billion (+13% YoY), HKD 14.7 billion (+10% YoY), HKD 15.9 billion (+8% YoY) [5] - Net profit forecast for 2024E-2026E: HKD 848 million (+42% YoY), HKD 969 million (+14% YoY), HKD 1.07 billion (+10% YoY) [5] - 2024E-2026E P/E ratios: 13.6x, 11.9x, 10.8x [5] - ROE expected to remain strong at around 30% from 2024E to 2026E [6] Key Drivers - Recovery in duty-free market traffic driving cigarette export growth [3] - Optimization of product mix and expansion of self-operated business scale improving margins [3] - Strong demand for tobacco leaf in international markets supporting export growth [3] - Focus on key brand cultivation and marketing efforts boosting new tobacco product sales [3]
中烟香港：2024H1点评报告：归母净利润同比增长41%，卷烟出口收入增速亮眼