Smoore International (6969) H1 2024 earnings summary

Executive summary

• Revenue for H1 2024 was RMB 5,037.2 million, down 1.7% year-over-year, with net profit declining 4.8% to RMB 683.2 million and gross margin rising to 38.0% from 36.2%.

• Self-branded business revenue surged 71.9% year-over-year, now 22.1% of total revenue, driven by strong growth in Europe (+88.0%) and the U.S. (+20.6%), while corporate client (ODM) revenue fell 12.3%.

• Administrative expenses dropped 27.2% due to cost efficiency, offsetting higher R&D and selling expenses.

• Launched new products in closed and open system vaping, with VAPORESSO gaining global market share.

• Interim dividend of HK$ 5.0 cents per share declared, same as prior year.

Financial highlights

• Gross profit increased 3.2% to RMB 1,914.6 million; net profit margin was 13.6%.

• Cash and cash equivalents rose 22.6% to RMB 6,534.9 million as of 30 June 2024.

• R&D expenses increased 23.7% to RMB 760.1 million, now 15.1% of revenue.

• Distribution and selling expenses rose 79.5% to RMB 374.5 million, mainly for international expansion and new product promotion.

• Asset-liability ratio increased to 19.7% (from 16.1%); current ratio declined to 396.2% (from 548.8%).

Outlook and guidance

• Expects regulatory tightening to support compliant product sales recovery and long-term growth in atomization, vaping, heat-not-burn, inhalation therapy, and beauty atomization markets.

• Plans to deepen compliance, accelerate product iteration, and expand customized services for clients.

• Will continue to invest in R&D, especially in heat-not-burn and inhalation therapy, and launch differentiated products.

• Inhalation therapy and beauty atomization businesses are expected to gradually contribute more revenue.

• Aims to launch more innovative products and expand atomization technology applications.