Shares of SMOORE INTL (06969) plummeted 5.21% in Wednesday's trading session following the company's release of an interim profit warning. The vaping technology leader's stock came under pressure as investors reacted to projections of a significant decline in first-half earnings for 2025.

According to the company's announcement, SMOORE INTL expects its H1 2025 revenue to reach RMB6.013 billion, representing an 18% year-over-year growth. However, the positive revenue outlook is overshadowed by a forecasted contraction in profitability. The company projects pre-tax profit to range between RMB629 million and RMB769 million, marking a 5% to 23% decrease compared to the same period last year. More alarmingly, net earnings are anticipated to fall between RMB443 million and RMB541.4 million, translating to a steep 21% to 35% year-on-year decline.

The company attributed this profit erosion to three primary factors. Firstly, a substantial RMB176 million increase in non-cash share-based compensation expenses has impacted the bottom line. Secondly, higher distribution and sales expenditures have eaten into profits. Lastly, the company cited significantly elevated legal service fees as a contributing factor to the earnings decline. It's worth noting that excluding the non-cash share-based payments, SMOORE's adjusted earnings would show a less severe decline, ranging from a 9% decrease to a potential 4% increase compared to H1 2024 performance.