According to a report by Zhongjin, the management of Smoore International Holdings Limited (06969.HK) was recently invited to participate in the 2024 Mid-Term Strategy Meeting of Zhongjin Group to have in-depth exchanges on the company's current situation, future development strategies, and other market concerns. The bank expects that as regulatory policies in Europe and the United States become stricter, sales of new products increase, and overseas demand continues to grow, the growth prospects for the company's multiple e-cigarette product categories can steadily improve, and its global market share is expected to increase. New businesses such as Heated Not Burn (HNB), vaporized beauty and medical products are also expected to gradually enter the harvesting period, opening up long-term growth potential.
According to the report, the United Kingdom plans to ban the sale of disposable e-cigarettes, non-rechargeable or non-refillable e-cigarette products from April 2025. According to the General Administration of Customs, exports of disposable e-cigarettes from China to the UK have declined significantly since March, while exports of refillable e-cigarette products have recovered more quickly. At present, many states in the United States have passed e-cigarette product registration bills, and each state can refer to the FDA's PMTA review to determine the white list of e-cigarette products in that state, and regulate the product and channel supervision system, which is expected to help compliant e-cigarette brands grow well.
The bank believes that with the promotion and strengthening of overseas regulatory policies, the proportion of illegal products and disposable e-cigarettes is expected to decline, while refillable e-cigarettes, APVs, and other products are expected to take on some consumer demand. As a leader in research and development and manufacturing capabilities, and a compliant operation in various product categories, the company is expected to continue to benefit from regulatory standardization, and to jointly improve its global market share with major clients in the medium and long term.
Zhongjin maintains its earnings forecast and "outperform" rating, and based on the success of new businesses in creating, and the broad prospects for development, the target price is raised by 47% to RMB 11.5, corresponding to 31 and 26 times the price-earnings ratio in 2024 and 2025, respectively.