Investment Rating - The report assigns a Buy rating to the company, with a target price of HKD 17.4, representing a 32.9% upside from the current price [8] Core Views - The company's HNB (Heat-Not-Burn) business has significant growth potential, particularly through its partnership with British American Tobacco (BAT) for the Glo Hilo product, which is expected to expand into key markets by 2025 [8] - The company's revenue growth is driven by its proprietary brand and enterprise client business, particularly in closed-system products, with Q3 2024 revenue increasing by 16.5% YoY [8] - The company has set aggressive market cap targets linked to stock options, with performance milestones tied to achieving market caps of HKD 300 billion, 400 billion, and 500 billion, demonstrating confidence in long-term growth [8] Financial Performance - Revenue for 2024 is projected at RMB 12.16 billion, with a YoY growth of 8.9%, and is expected to reach RMB 16.65 billion by 2026, representing a 19.6% growth [8] - Net profit for 2024 is forecasted at RMB 1.35 billion, with a YoY decline of 17.7%, but is expected to rebound to RMB 2.53 billion by 2026, reflecting a 36.3% growth [8] - EPS for 2024 is estimated at RMB 0.22, with a YoY decline of 17.7%, but is projected to increase to RMB 0.41 by 2026, representing a 36.3% growth [8] Operational Metrics - The company's gross margin is expected to improve from 37.8% in 2024 to 42.2% by 2026, driven by operational efficiencies and product mix optimization [2] - R&D expenses as a percentage of revenue are projected to remain stable at 13.8% from 2025 onwards, reflecting continued investment in innovation [2] - Inventory turnover days are expected to decrease slightly from 43.20 days in 2024 to 42.69 days by 2026, indicating improved inventory management [2] Valuation - The company is trading at a 2024E P/E of 56.2x, which is expected to decline to 30.1x by 2026, reflecting anticipated earnings growth [8] - The target price of HKD 17.4 is based on a 40x P/E multiple for 2026, suggesting significant upside potential [8] Industry Outlook - The electronic cigarette industry is poised for growth, with the company's HNB products expected to capture market share and drive profitability, particularly in partnership with BAT [8]
思摩尔国际：购股权设置积极市值目标，HNB业务发展潜力巨大