Guojin Securities released a research report stating that SMOORE INTL (06969), as a core supplier to leading tobacco giants, continues to see incremental contributions from its self-developed open-system products. The company is well-positioned to benefit from the expansion of compliant vaping markets in Europe and the U.S. The long-term trend of rising penetration rates for next-generation tobacco products overseas remains intact, with SMOORE leveraging its technological prowess and mass-production capabilities to solidify partnerships with major tobacco groups, securing a dominant position in the industry's growth trajectory. The upward momentum in its vaping and HNB businesses remains unchanged, with positive signals emerging across all segments, warranting close attention. The firm maintains its "Buy" rating.
Key highlights from Guojin Securities include:
**Share Buyback Reflects Confidence** On December 11, the company announced the purchase of 8.14 million shares at an average price of HKD 12.26 per share, totaling HKD 99.77 million, as part of its equity incentive plan. This substantial one-day buyback underscores management's confidence in future growth.
**Hilo Product Strength Validated; BAT Expands Promotions** According to BAT's 2025 earnings preview, the company has intensified online and offline marketing efforts in Japan, with strong consumer resonance for its product branding and performance. Retention rates among traditional cigarette and heated tobacco users stand at approximately 50%, validating Hilo's product excellence and laying a solid foundation for future cartridge sales growth. BAT recently ramped up promotions in Poland, offering Hilo devices bundled with two cartridge packs for just 1 zloty, while Hilo Plus bundles are priced at 79 zloty. With BAT's extensive sales network and robust marketing resources, Hilo cartridge sales are expected to scale up, driving core profit growth for SMOORE.
**Core Vaping Business Recovery; Expansion in Europe & U.S.** Since 2024, U.S. regulators have intensified crackdowns on illegal vaping products, squeezing the illicit market. The FDA has cautiously signaled support for expanding flavored product availability, which could further boost the compliant market. Meanwhile, countries like the UK and France have banned disposable e-cigarettes, driving a shift toward refillable and open-system products in Europe. In 2H 2025, BAT's U.S. revenue showed signs of recovery, with its global market share rising 0.1 ppts from late 2024 (up 0.7 ppts in the U.S.). BAT expects the U.S. market to no longer drag on next-gen tobacco revenue growth by 2026, indicating ongoing recovery in the vaping segment. Looking ahead, amid intensifying competition in heated tobacco (led by IQOS and Japan Tobacco), BAT plans to accelerate Hilo's global rollout in 2026 to capture market share across premium to mid-low-tier segments.
**Earnings Forecast & Risks** Guojin Securities projects 2025–2027 EPS of RMB 0.22/0.37/0.59, with the current share price implying a P/E of 53x/31x/20x. Risks include weaker-than-expected overseas regulatory enforcement, sluggish new product adoption, and significant currency fluctuations.
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