Jingu Information | Sealand Securities released a research report stating that the total revenue of ctihk (06055) in 2024 H1 was 8.7 billion Hong Kong dollars, up 12.4% year-on-year. The gross margin was 11.1%, an increase of 1.5 percentage points from the same period last year. The net income attributable to the mother was 0.64 billion Hong Kong dollars, an increase of 40.8% year-on-year, with a net margin of 7.4%, up 1.5 percentage points from the same period last year. The diluted EPS was 0.93 Hong Kong dollars, up 40.9% year-on-year. The company announced the distribution of interim dividends starting from 2024, with an interim dividend of 0.15 Hong Kong dollars per share.

The bank stated that the total revenue of the company in 2024 H1 was 8.7 billion Hong Kong dollars, up 12.4% year-on-year. From the breakdown of revenue, 1) the import business revenue of tobacco products in 2024 H1 was 6.8 billion Hong Kong dollars, up 5.5% year-on-year. The import volume of tobacco products for the group in 2024 H1 was 0.096 million tons, up 1% year-on-year. The main reason for the increase in revenue was the overall increase in the selling price of tobacco products compared to the same period last year; 2) the export business revenue of tobacco products was 0.92 billion Hong Kong dollars, up 23.0% year-on-year, mainly due to the increased demand for tobacco products in the international market. At the same time, the company actively organized suitable sources of goods, leading to a year-on-year increase in the export volume of tobacco products. The export volume of tobacco products for the group in 2024 H1 was 0.034 million tons, up 9% year-on-year; 3) the export business revenue of cigarettes was 0.55 billion Hong Kong dollars, up 127.9% year-on-year. The export volume of cigarettes for the group in 2024 H1 was 1.11 billion units, up 96% year-on-year, mainly due to the recovery of tax-free market traffic; 4) the export business revenue of new tobacco products was 0.044 billion Hong Kong dollars, up 28.4% year-on-year, mainly due to the company's strengthened cultivation of key brands and increased marketing efforts, leading to an increase in demand for key market orders; 5) the operating business revenue in Brazil was 0.39 billion Hong Kong dollars, up 42.8% year-on-year, mainly due to a significant increase in the proportion of sales of high-priced finished tobacco sales.

The bank further pointed out that as the only listed company in the China tobacco system with tobacco as its main business, and backed by a solid barrier to entry, the bank believes that the optimization of the company's export business product structure and the expansion of its self-operated business scale will drive an overall increase in the company's gross margin. Adjusting profit forecasts, the company is expected to have a revenue of 13.4/14.7/15.9 billion Hong Kong dollars in 2024E-2026E, up 13%/10%/8% year-on-year; net income attributable to the mother is expected to be 0.85/0.97/1.07 billion Hong Kong dollars, up 42%/14%/10% year-on-year. The closing price on August 30, 2024 was 16.72 Hong Kong dollars, corresponding to a 2024E-2026E PE valuation of 13.6/11.9/10.8X. The bank is bullish on the company's "endogenous and exogenous" growth-driven strategy and maintains a "buy" rating.