Investment Rating - The report maintains a "Buy" rating for the company with a target price of 1.68 HKD, expecting a relative return of over 20% within the next six months [1]. Core Views - The company has experienced a revenue decline of 11.2% year-on-year, totaling 2.064 billion RMB in 2023, while net profit increased by 66.5% to 141 million RMB, primarily due to significant profit improvements from corporate restructuring [1]. - The electronic cigarette segment faced a revenue drop of 22.6%, contributing 9.02 billion RMB, while flavor enhancers and food flavors showed slight declines and growth, respectively [1]. - The company is focusing on expanding its international market presence in flavor and electronic cigarette products, supported by a complete industrial chain layout and strong R&D capabilities [1]. Summary by Sections Revenue and Profitability - The company reported a gross profit of 798 million RMB with a gross margin of 38.7%, an increase of 4.8 percentage points year-on-year [1]. - The restructuring efforts and the sale of two subsidiaries in South Korea contributed to the net profit increase, despite a decline when excluding these gains [1]. Business Segments - Electronic cigarette products accounted for 43.7% of total revenue but reported a net loss of 73 million RMB due to new regulatory policies affecting flavor sales [1]. - Flavor enhancers generated 769 million RMB, with an operating profit margin of 31.4%, while food flavors and daily-use flavors showed positive growth [1]. Future Outlook - The company anticipates revenue growth of 10% annually for its Dongguan subsidiary from 2020 to 2024, with projected revenues of 2.52 billion, 2.76 billion, and 3.07 billion RMB for 2024-2026 [1]. - The report highlights the potential for improved industry dynamics due to regulatory clarity in the electronic cigarette market, which is expected to enhance competitive positioning and market concentration [1].
香精香料、电子烟产品持续开拓国际市场、企业重组大幅提升利润