Differences from the market: The current market uses more domestic and foreign valuation systems for companies, but we believe that the company's business matrix is rich and is continuously diversifying (that is, the underlying technology and business models are similar). The different life cycles of different business lines should give different valuation multiples. Based on the above logic, this report attempts to sort out and analyze the development and valuation logic of its various business segments.
Electronic atomization business: Under the trend of stricter global regulations, the short-term growth rate of the market is under pressure, but there is still broad room for long-term growth. The company's regulatory uncertainty at home and abroad is gradually being released (US partner customer PMTA continues to receive tobacco monopoly licenses through + three domestic subsidiaries, including the main players), and emphasis is placed on valuation premiums brought about by a clear competitive pattern.
Cannabis atomization business: In the global marijuana legalization process, the short-term growth rate and long-term growth space are impressive. The company's competitive advantage is strong, and it is worth a higher valuation factor.
HNB cigarette products: The potential space for the domestic HNB market is broad. The company has forward-looking layout of relevant technology and established deep cooperation with China Tobacco. If sales are released, the company's performance can be expected to be released after sales are released.
Atomization of medicine, beauty, health care, etc.: Although no products have been officially launched yet, corresponding market space can be expected. The company has abundant technical reserves, and will contribute to the increase in performance and valuation after the product is implemented.
Investment advice and profit forecasting: Although the sector was greatly disrupted by the pandemic+industry pain period, looking at the long term, global tobacco control and harm reduction is still the general trend. The industry is expected to usher in a new round of growth after continuous regulation of global regulations. Focusing on the short to medium term supply and demand side also has marginal positive drivers. On the demand side, the US PMTA review process is expected to accelerate, and regulations on disposable cigarettes are also becoming stricter. Although domestic demand is shrinking under taste restrictions in the short term, the attitude towards total volume management also emphasizes respect for the market and supply and demand. On the supply side, Logic Pro & Power and NJOY have further proved Smore's strong strength through PMTA, and domestic licensing system management will further optimize the competitive pattern. We are optimistic that the company will re-develop the core competitiveness created by the enterprise's genes, and the reporting side is also expected to experience significant improvements after the industry's painful period. We expect the company to achieve net profit of 35.7/45.4/5.73 billion yuan respectively in 22-24, compared to -32%/+27%/+26%, respectively. The corresponding share price on the 3rd will be 25X, maintaining “strong recommendation”
ratings.
Risk warning: Risks related to policy supervision, risks related to technology iteration.