CTIHK (06055) demonstrates solid performance while enhancing profitability through product structure and business model optimization, maintaining steady dividend growth to reward shareholders. The company continues to play its role as an integration platform for overseas tobacco business operations. Revenue forecasts for 2025/2026 are projected at HK$15.39 billion and HK$16.47 billion respectively, with net profit attributable to shareholders expected at HK$946 million and HK$1.063 billion respectively, earning a "Buy" rating.
**Mid-term 2025 Results Meet Expectations with Continued Dividend Growth**
CTIHK recorded mid-term 2025 revenue of HK$10.316 billion, representing an 18.5% year-over-year increase. Gross profit reached HK$946 million, down 1.8% year-over-year, while net profit attributable to shareholders was HK$706 million, up 9.8% year-over-year. The company maintains its steady dividend growth policy with an interim dividend per share of HK$0.19, representing a 26.7% year-over-year increase. The company's mid-term performance aligns with expectations.
**Three Core Business Segments Drive Main Revenue and Profits**
The company's three core business segments - tobacco leaf import business, tobacco leaf export business, and cigarette export business - contribute 81.4%, 11.2%, and 5.3% of revenue respectively, totaling 98.0%. Their gross profit contributions are 72.6%, 6.7%, and 15.0% respectively, totaling 94.3%.
**Tobacco Leaf Import Business**: The company's tobacco leaf import business generated mid-term 2025 revenue of HK$8.399 billion, up 23.5% year-over-year, with gross profit of HK$687 million, down 7.7% year-over-year. The gross profit decline was primarily due to tobacco leaf procurement costs from CBT rising faster than selling prices.
**Tobacco Leaf Export Business**: This business segment achieved mid-term 2025 revenue of HK$1.156 billion, up 25.9% year-over-year, with gross profit of HK$63.1 million, up 124.1% year-over-year. This improvement was mainly due to the company's active expansion into new markets and customer acquisition, resulting in increases in both export volume and unit prices.
**Cigarette Export Business Profitability Continues to Improve**: By mid-term 2025, the company's cigarette export business generated revenue of HK$552 million, up 0.8% year-over-year, with gross profit of HK$142 million, up 16.8% year-over-year. The gross margin continued to improve, primarily due to the company's increased efforts in expanding self-operated channels, scaling up self-operated business, and continuously introducing new products.
**Profitability Still Has Room for Improvement**
The company's mid-term 2025 gross margin and net profit margin attributable to shareholders were 9.2% and 6.8% respectively. The company continues to optimize its product structure and business model. Except for the tobacco leaf import business gross margin decline, all other business segments achieved gross margin improvements.
**Risk Factors**: Geopolitical risks, industry policy changes, foreign exchange fluctuation risks, and seasonal impacts on tobacco leaf cultivation.
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