GF Securities Issues 'Buy' Rating for CTIHK, Sets Fair Value at HK$26.61 Per Share

GF Securities has published a research report forecasting earnings per share for CTIHK (06055) at HK$1.33, HK$1.53, and HK$1.72 for the years 2026 through 2028, respectively.

By comparing valuations of peer companies such as Smoore International and Huabao International, and considering the short-term pressure on tobacco leaf import volumes and cigarette export shipments in the first half of the year due to international trade relations and adjustments in domestic duty-free market business processes, the report anticipates a gradual improvement in performance starting in the second half of the year.

This expected improvement is linked to the implementation of cooperation agreements with duty-free operators and the recovery of shipment schedules.

Consequently, the firm assigns the company a price-to-earnings ratio of 20 for 2026, corresponding to a fair value of HK$26.61 per share, and initiates coverage with a "Buy" rating.

The report highlights that the company operates five core business segments: tobacco leaf product import, tobacco leaf product export, cigarette export, new tobacco product export, and operations in Brazil.

In 2025, the company achieved revenue of HK$14.579 billion, representing a year-on-year increase of 11.5%, and a net profit attributable to shareholders of HK$980 million, up 14.8% year-on-year.

The net profit margin improved by 0.27 percentage points to 7.18%, indicating a continued enhancement in profitability.

Within this performance, the company's share of national tobacco leaf imports remained above 50%, and its import-export business for tobacco leaves provided a solid foundation, generating combined revenue of HK$12.019 billion in 2025.

This figure constituted 82% of the company's total revenue, forming its core pillar and providing a stable revenue base.

During 2025, the company secured several global exclusive distribution agreements for cigar brands, entering the taxed market and opening up incremental growth space.

Its new tobacco business now covers over 50 countries and regions, with a leading position in heated tobacco product (HNB) offerings.

The report suggests that a gradual easing of domestic regulations could unlock considerable additional growth potential for this segment.