Zhikong Finance APP learned that GTJA released a research report stating coverage of ctihk (06055) for the first time, giving a "shareholding" rating, and expecting EPS of HKD 1.11, 1.30, and 1.52 for 2024-2026, with a target price of HKD 32.4. The company is supported by china tobacco, its business is mostly conducted in an exclusive operating manner, and high barriers provide performance certainty. The increase in tobacco products exports and potential future mergers and integrations are expected to release flexibility.

The company is the only listed entity within the China Tobacco system with tobacco as its main business. Following a business restructuring in 2018, it went public in Hong Kong in 2019. The company's five main businesses include importing and exporting of tobacco leaf products, downstream exports of cigarettes and new tobacco products, and operations in Brazil. At the time of listing, the company obtained partial regional exclusive operating rights and plays a 'bridge' role within the system. China Tobacco Group, as the world's largest tobacco company, has significant influence. Therefore, China Tobacco Hong Kong mainly engages in external account receivables for import and export business. Its excellent business model with high barriers provides certainty, and performance flexibility comes from increased sales of tobacco products and gross margin improvement.

The company positions itself in the circulation sector, primarily earning fixed proportional income through pricing markups. Some businesses follow agreement pricing. Considering the relatively stable global demand for tobacco products and the strong operational certainty due to the exclusive business model, a moderate increase in markups helps hedge industry fluctuations. In addition, in recent years, the company has actively promoted the export of cigarettes and new tobacco products, striving to increase profits through strategies like distribution expansion, product diversification, and channel structure adjustments. The effects are significant so far, coupled with low operating costs, driving fast profit growth. The group's clear positioning and impending mergers and acquisitions integration.

At the initial public offering, the group's positioning for China Tobacco Hong Kong was in capital market operations and international business expansion. In 2021, the company acquired China Tobacco Brazil, successfully increasing profitability through enhanced management. Based on this case, considering the extensive international operations within the China Tobacco system, there is hope for China Tobacco Hong Kong to continue integrating resources of the China Tobacco system as a listed platform. The main approaches may include: first, incorporating the import and export business of other exclusive operating regions of the China Tobacco system into the listed company; second, acquiring other overseas subsidiaries within the system; third, considering overseas tobacco giants' experience, external mergers and acquisitions are also a viable option. Subsequent successful mergers and acquisitions will bring additional performance flexibility to the company.