Huachuang Securities has reiterated a "Strong Buy" rating on SMOORE INTL (06969) with a target price of HK$21.90. The company is a global leader in the e-vaporization industry, benefiting from high technological barriers. Amid tightening regulations, its e-cigarette business is expected to continue gaining market share, while its HNB (heat-not-burn) segment could become a second growth driver, supporting long-term growth prospects.

Based on the company's Q3 2025 performance and HNB expansion progress, Huachuang Securities has revised its earnings forecasts. It now expects net profits attributable to shareholders of RMB 1.058 billion, RMB 2.064 billion, and RMB 2.621 billion for 2025-2027 (previously RMB 1.514 billion, RMB 2.029 billion, and RMB 2.455 billion), corresponding to P/E ratios of 76x, 39x, and 30x, respectively.

Key highlights from Huachuang Securities' analysis include:

**Q3 2025 Performance Overview** For the first nine months of 2025, SMOORE INTL reported revenue of RMB 10.21 billion (+21.8% YoY), net profit of RMB 809 million (-23.8% YoY), and adjusted net profit of RMB 1.182 billion (+0.1% YoY). In Q3 alone, revenue reached RMB 4.197 billion (+27.2% YoY), net profit was RMB 317 million (-16.4% YoY), and adjusted net profit stood at RMB 444 million (+4.0% YoY).

**Positive Market Reception for HNB Products** In Q3 2025, SMOORE INTL successfully launched new HNB products in collaboration with strategic clients across major global markets, driving significant shipment growth and strong revenue performance both YoY and QoQ. According to 2Firsts, users have praised Glo Hilo for its stylish design, flavor delivery, and odor control compared to IQOS. With Glo Hilo expanding in European markets, penetration rates are expected to accelerate.

**E-Vaporization Business Benefits from Regulatory Tightening** As global regulators intensify crackdowns on non-compliant products, SMOORE INTL's business is poised for recovery. A recent U.S. poll found that 80% of voters support stricter enforcement against illegal e-cigarettes. Additionally, the company's in-house brand has maintained steady revenue growth, supported by new flagship products and enhanced localized operations.

**Adjusted Net Margin Under Pressure, Expense Ratio Optimized** In Q3 2025, SMOORE INTL's adjusted net margin was approximately 10.6%, down 2.4 percentage points YoY, likely due to product mix (early-stage HNB sales include a higher proportion of lower-margin hardware). However, the company has steadily improved its sales, management, and R&D expense ratios, which should support future profit expansion.