In the consumer market, certain specific categories of products are known as the "golden track," as they can trigger sustained interest and dependence among consumers.

These products include cigarettes, games, alcoholic beverages, etc. They are favored by the market in the long term because they can provide a lasting sense of pleasure, prompting consumers to make repeated purchases.

The common characteristics of these consumer goods are high frequency of consumption, high user stickiness, strong resistance to economic cycles, and good cash flow, making them highly sought after by investors. Many historically successful stocks like British American Tobacco, Philip Morris, Starbucks, Coca-Cola, etc., originate from this sector.

However, over time, the growth rate of traditional addictive consumer industries has begun to slow down, and the investment returns of some traditional giants have gradually become mediocre. In this context, emerging addictive consumer sectors are beginning to shine. For example, the rapidly growing e-cigarette market and CBD products in recent years. These emerging tracks often harbor new growth points and greater investment opportunities.

For investors, they are more concerned about companies that can provide disruptive products and continue to make breakthroughs. These companies often have strong R&D capabilities and market insights, enabling them to seize opportunities in intense market competition, achieving continuous growth and development.

Following this investment logic, Cloudy Tech (ISPR.US) has caught the attention of the author, as it has just released its full-year financial performance for 2024. This provides an opportunity to review its breakthroughs and growth over the past year to find the true value of the company.

1. Unleashing the value of global strategic strategy, with double-digit growth in revenue and gross margin.

In this 2024 annual report, the performance of Cloudy Tech can be said to have exceeded market expectations.

In the fiscal year 2024, Foggy Technology achieved revenue of 0.1519 billion US dollars, a year-on-year growth of 31.4%; gross profit reached 29.8 million US dollars, a significant increase of 43.3% compared to the previous fiscal year's 20.8 million US dollars, corresponding to a gross margin of 19.6%, an increase of 1.6 percentage points compared to the 18.0% in fiscal year 2023.

Against the backdrop of a complex macroeconomic environment, Foggy Technology's revenue was able to achieve contra-growth, thanks to the value release of its global strategy.

This is most clearly reflected in the company's sales in various regions. According to the financial report, in fiscal year 2024, U.S. product sales increased by 21.5 million US dollars to 63.1 million US dollars from the same period last year's 41.6 million US dollars, a year-on-year increase of 51.68%; European atomized product sales increased by 11.05% to 65.3 million yuan; sales of atomized products in other markets surged from 0.3 million US dollars in the same period last year to 6 million US dollars.

Currently, Foggy Technology's open atomization equipment and brand - Aspire, has more than 150 distributors globally, covering over 30 countries and regions, with a strong focus on Europe and the Asia-Pacific region (excluding China and Russia). Meanwhile, the company also connects global users through the Amazon e-commerce platform.

In the Ispire CBD atomizer field, as the trend of CBD legalization in North America and Europe becomes increasingly evident, and the CBD atomization market continues to grow rapidly, Ispire, with its technological advantages and market leadership position, further seizes the CBD business market in North America, Europe, and South Africa.

Relying on the dual-drive of CBD atomization equipment and electronic cigarette atomization equipment, Foggy Technology has found the key to accelerating its global layout.

Second, profitability has been significantly enhanced, what did Foggy Technology do right?

While maintaining a significant increase in revenue, what is even more surprising is the company's performance on the profit side. As mentioned above, the company's gross profit and gross margin have also achieved rapid growth. Moreover, compared to the revenue growth rate, the gross profit growth rate is even stronger, with many successful experiences worth learning from.

First, the ability to accurately grasp industry opportunities is a major consensus in the market for FogTech. It is easy to see from the development history of FogTech that FogTech's first performance breakthrough in the aerosolized cannabis business occurred after it opportunistically entered a one-time track. Being able to promptly sense market changes, launch products tailored to consumer needs and usage habits, further locking in end customers, is closely related to the company's excellent operational capabilities.

In this fiscal year, FogTech has actively leveraged this advantage and established strategic cooperation relationships with several leading enterprises in the cannabis and aerosol product industries.

For example, FogTech has established long-term strategic partnerships with international fashion lifestyle brand Hidden Hills Club, leading aerosol product packaging, accessories, supply, and production equipment supplier Dank Pack from South Africa, and international singer-songwriter Burna Boy licensed cooperative production and sales of the BRKFST brand. It provides manufacturing, distribution, and commercialization services for these enterprises. In addition, the company actively cooperates with Hidden Hills, Berify, and Chemular to accelerate innovation in aerosol technology and bring innovative aerosol experiences to consumers.

Why does FogTech actively promote cooperation with companies related to the industry chain? In the author's view, there are mainly two reasons:

Firstly, through cooperation with these internationally renowned brands, it helps further enhance FogTech's brand exposure, thereby assisting the company in expanding its market share.

Secondly, generally speaking, the higher the brand awareness of a brand, the higher the product's gross margin. The logic behind this is that consumers are more willing to pay a premium for well-known brands because they are usually associated with high quality, trust, and status. Therefore, strong brands can often price their products at a premium and reduce the costs of promotions and marketing. This can also bring higher product sales revenue to FogTech, and the company is also more likely to control its costs during the distribution process, thereby strengthening the company's profitability.

Of course, in addition to actively promoting cooperation with major brands to increase product profitability, FogTech has also made great efforts in its production capacity to enhance its profitability.

In February this year, FogTech opened its new 31,000 square feet ISO and GMP certified manufacturing facility in Malaysia. As the production scale of this manufacturing factory expands in the future, economies of scale will be accelerated and reflected in the gross margin.

In addition, large-scale production can reduce procurement costs, enabling Wuma Technology to continuously reduce costs while ensuring quality and stable supply, further enhancing the company's profitability.

As a result, with Wuma Technology's continuous business expansion and investment in production lines, the company has gradually built its unique competitive advantage in the industry. This will continuously strengthen its profitability and provide security for the company's long-term healthy operation.

What else can we look forward to in the future for Wuma Technology?

Despite the impressive financial data this time, Wuma Technology is not satisfied with its current performance and is still exploring more possibilities.

During this performance conference call, Jim McCormick, Chief Financial Officer of Wuma Technology, stated that the company's performance in the 2024 fiscal year reflects its successful execution in various business sectors, especially considering the huge market size in the international market. The company views this as a major strategic focus for revenue, profit margin, and future profit growth.

For example, the cooperation with Dank Pack. It is understood that in this financial report, the company's sales of atomized products in other markets mainly come from contributions in the South Africa region. It can be seen that through this cooperation, Wuma Technology has rapidly expanded its influence in the South African market, combined with its successful experience in North America and Europe, it can further solidify its leading position in the local atomization track. Looking ahead, once this path is smooth, it is not ruled out that there will be more corresponding market cooperation actions in the future. With the leading advantage of Wuma Technology in the industry, its global expansion will be more effortless, achieving rapid penetration and occupation of local markets.

Furthermore, Wuma Technology recently submitted its first PMTA application in four years, involving four flavors of disposable e-cigarette products, aiming to re-enter the American e-cigarette market. In the application, the company emphasizes the use of advanced age grading technology to address concerns of the Food and Drug Administration (FDA) that fruit-flavored e-cigarettes are highly attractive to young people, and may lead to nicotine addiction and brain development issues. Through this technology, Wuma Technology aims to prevent young people from accessing these products effectively, while ensuring that adult consumers can make purchases. Given that few companies currently use age grading technology for PMTA applications, Wuma Technology has the opportunity to become the first company to return to the U.S. fruit-flavored e-cigarette market using this technology, establishing a first-mover advantage.

With this technology, Wuma Technology aims to effectively prevent young people from accessing these products, while ensuring that adult consumers can make purchases. Given that few companies currently use age grading technology for PMTA applications, Wuma Technology has the opportunity to become the first company to return to the U.S. fruit-flavored e-cigarette market using this technology, establishing a first-mover advantage.

From a policy perspective, the DEA of the USA plans to hold a public hearing on December 2 this year to discuss the proposal to adjust cannabis-related products from the dangerous drugs category in Schedule I of the Controlled Substances Act to Schedule III. Once this proposal is successfully approved and legalized at the federal level, companies engaged in the cannabis business will not need to comply with Section 280E of the Internal Revenue Code, allowing them to enjoy the same tax deductions as other legal businesses.

On one hand, this can effectively alleviate the cash flow pressure faced by FogMa Technology's customers and improve their ability to make timely payments, which to some extent can reduce FogMa Technology's accounts receivable and reduce its bad debt risk, while improving the company's cash flow situation and enhancing its financial stability. On the other hand, the legalization of cannabis products will drive companies in the cannabis business to expand their business scope, enter more states and even the national market, thereby further increasing their sales revenue.

More importantly, with the legalization and decriminalization of cannabis, it can increase consumer acceptance of cannabis products to some extent. As underground market users shift to legitimate channel products, the US CBD market will continue to experience high growth, providing excellent development opportunities for related companies in the industry.

From a market perspective, with the rapid development of the CBD market, the CBD vaporization equipment market is also showing rapid growth. Leading companies in the industry like FogMa Technology are seizing rare opportunities. Euromonitor International forecasts a 19.2% growth rate for the recreational CBD market from 2021 to 2025. By 2025, the global CBD market size may reach 9.6 billion.

Image Source: Euromonitor International Forecast

Clearly, faced with vast market development opportunities, FogMa Technology, actively expanding production capacity and increasing sales regions, the certainty of future performance growth has become increasingly higher, significantly enhancing the company's long-term investment attractiveness.

IV. Conclusion

Given the financial report demonstrates great growth potential, the capital markets have also given positive feedback. On the day when the financial report was released, Wumajia Technology's stock price surged more than 23% intraday, ending with an increase of 11.34%. However, compared to similar companies, Wumajia Technology's stock price is still at the bottom of the valuation, highlighting its elasticity. Data shows that as of the close on September 27th, Wumajia Technology's P/S ratio is only 2.46 times, much lower than the industry average of 3.61 times.

However, considering the company as a leading enterprise in CBD atomizers and actively developing in multiple opportunities, it is more capable of achieving steady growth compared to peers. Its scarcity value is evident, and it should rightly enjoy a certain premium. For such a company with good internal and external growth capabilities, investors should pay more attention.