Jinwu Financial News | According to Dongxing Securities Research, Smore International (06969) achieved revenue of 11.168 billion yuan, -8.0% year over year; net profit of 1,645 billion yuan, or -34.5% year on year; and total comprehensive comprehensive revenue of 1,566 billion yuan, or -37.2% year over year. In '23, the company achieved a gross profit margin of 38.8%, -4.5 pct. This is mainly due to the impact of product structure, including a decline in revenue in the mainland China market with high gross margin and a high increase in revenue from disposable products with low gross margin. Looking ahead to 24 years, the company's gross margin is expected to stabilize or decline slightly. Thanks to improvements in operational efficiency and scale effects, the gross margin of disposable products increased quarterly in '23, hedging the impact of product structure on gross margin to a certain extent in the future. While the company continues to strengthen marketing and operation capabilities and increase R&D investment, management and R&D efficiency has improved. Overall, the cost rate may remain stable.
The bank continued that at present, the company is gradually releasing disposable products, growing rapidly after optimizing its own brand business, has a comprehensive layout of atomization products, has a strong ability to adapt to changes in overseas regulatory policies, and is expected to benefit from strengthened supervision. The company maintains R&D investment in fields such as non-combustion heating and atomization medicine, and is expected to open up a new growth curve.
The bank expects the company's net profit for 2024-2026 to be RMB 17.89, 19.65, and RMB 2,189 billion, with growth rates of 8.76%, 9.81%, and 11.41% respectively. Currently, PE corresponding to the stock price is 21, 19, and 17 times, respectively. The company has a strong competitive advantage in the field of R&D and manufacturing of electronic atomization products, and the scale effect and operating efficiency are constantly improving. Maintain a “Recommended” rating.