Smoore International Holdings Limited (HKEX: 06969) Announces 2025 Annual Results – Key Highlights and Detailed Insights

Record Revenue Growth in 2025, But Profitability Pressured by Rising Costs and Expenses

Smoore International Holdings Limited, the global leader in atomization technology, has announced its audited results for the year ended 31 December 2025. The Board has also proposed a final dividend of HK20 cents per ordinary share, subject to approval at the forthcoming AGM.

1. Financial Highlights

• Revenue: Reached a record RMB14.26 billion, up 20.8% from RMB11.80 billion in 2024.
• Gross Profit: Increased 10.1% to RMB4.86 billion (2024: RMB4.41 billion).
• Gross Profit Margin: Declined to 34.1% from 37.4% due to a shift in product mix toward lower-margin products.
• Profit for the Year: Decreased 18.5% to RMB1.06 billion (2024: RMB1.30 billion).
• Total Comprehensive Income: Dropped 33.2% to RMB946 million (2024: RMB1.42 billion).
• Adjusted Profit (excluding share-based payments): Slight increase of 1.3% to RMB1.53 billion.
• Cash and Cash Equivalents: Ended at RMB7.32 billion, up from RMB5.17 billion in 2024.
• Current Ratio: 257.4% (2024: 320.3%), reflecting decreased current assets and increased current liabilities.
• Gearing Ratio: 30.5% (2024: 26.2%).

2. Segment and Regional Performance

• ToB (Corporate Client Oriented) Business:
  • Revenue: RMB11.34 billion, up 21.7% year-on-year.
  • Accounted for 79.6% of total revenue (2024: 79.0%).
  • Driven by growth in electronic vaping and a significant contribution from heat-not-burn (HNB) products (over RMB1.2 billion).
  • Europe & International: Revenue surged 38.5% to RMB7.06 billion, fueled by regulatory bans on disposables that benefited compliant players and the successful rollout of HNB products in key markets (Japan, Poland, Italy).
  • U.S. Market: Revenue grew modestly by 2.1% to RMB4.07 billion. The market benefited from stricter enforcement against non-compliant products, with Smoore’s ODM customers holding over 40% market share in tracked channels. Special purpose atomization business was restructured for efficiency.
  • Mainland China: Revenue decreased 10.9% to RMB213 million, impacted by local market dynamics.
• Self-Branded Business:
  • Revenue: RMB2.91 billion, up 17.6% year-on-year.
  • Accounted for 20.4% of total revenue (2024: 21.0%).
  • Europe & International: RMB2.34 billion (up 15.7%), mainly from electronic vaping products.
  • U.S.: RMB525 million (up 23.8%).
  • China: RMB44.8 million (up 65.8%), mainly from beauty atomization products.

3. Cost, Expense, and Margin Pressures

• Gross profit margin fell due to higher raw material and labor costs as a percentage of revenue, and a greater proportion of lower-margin products.
• Distribution and Selling Expenses: Slight decrease by 0.7% to RMB913 million; as a percentage of revenue dropped to 6.4% (2024: 7.8%).
• Administrative Expenses: Jumped 40.6% to RMB1.29 billion, mainly due to a sharp increase in non-cash share-based payment expenses and legal/compliance costs.
• R&D Expenses: Decreased 3.1% to RMB1.52 billion, with enhanced efficiency and greater capitalization of development costs. R&D as a percentage of revenue dropped to 10.7% (2024: 13.3%).
• Other Income/Expenses: Notably, Smoore recorded a litigation settlement and related expenses of RMB176 million, and a net foreign exchange loss of RMB151 million (compared to a gain of RMB26 million in 2024).
• Income Tax Expense: Increased 17.7% to RMB414 million, mainly due to increased tax provisions for international expansion.

4. Strategic and Operational Developments

• HNB Business: Marked its first year of meaningful contribution, exceeding RMB1.2 billion in revenue. Smoore supported a strategic customer in launching premium HNB products in multiple markets, confirming the successful commercialization of a decade-long investment.
• R&D and Innovation: The company’s “three-generation-development-model” improved efficiency and commercialization timelines. 2,056 new patents were filed in 2025, with a cumulative total of 11,309 patents globally.
• Inhalation Therapy: Subsidiary Transpire Bio Inc. received US FDA Establishment Inspection Report for its Florida facility and is working with leading CDMOs to build manufacturing capacity for drug-device combination products.
• Manufacturing and Operations: Enhanced automation, digitalization, and quality control to meet complex, multi-market customer requirements and regulatory changes.
• Compliance: Smoore reinforced its compliance framework, regarding it as a core competitive advantage, especially in light of shifting global regulations.

5. Forward Guidance and Market Outlook

• Global HNB market projected to reach US\$74.2 billion by 2030 (CAGR 10%). Smoore aims for deeper collaboration with strategic customers and accelerated commercialization.
• Global electronic vaping market expected to reach US\$97.1 billion by 2030 (CAGR 8%). Regulatory changes favor compliant, technologically advanced companies.
• Special purpose atomization market forecast to grow at 12.5% CAGR to US\$3.28 billion by 2030.
• China’s skincare market (including beauty atomization) to reach RMB305.7 billion by 2029, presenting strong growth opportunities.
• Smoore will continue to prioritize R&D efficiency, cost optimization, automation, and ESG initiatives in 2026.

6. Dividends and Capital Management

• Final Dividend Proposed: HK20 cents per share, subject to AGM approval.
• Total dividends for 2025 (including interim): HK40 cents per share (2024: HK10 cents).
• The company maintains a robust cash position and no bank borrowings. Gearing ratio increased due to higher current liabilities.

7. Legal Matters and Risks

• Antitrust Litigation: Smoore is a defendant in a consolidated antitrust litigation in the U.S. District Court for the Northern District of California. Amended complaints were filed in January 2026. No provision has been made, but this remains a potentially material risk.
• Foreign Exchange Risk: The company recorded a significant forex loss in 2025. Approximately 60% of revenue is in USD, while 70% of costs are in RMB. A 10% movement in the USD/RMB exchange rate could materially impact total comprehensive income by over RMB1.17 billion, highlighting significant currency sensitivity.

8. Other Notable Corporate Actions

• No material acquisitions, disposals, or significant investments during the Review Period.
• Capital expenditures surged to RMB1.30 billion, mainly for equipment, R&D, and headquarters building.
• Unutilized proceeds from IPO and the 2021 share placement are being deployed in line with previously disclosed plans, with timelines extended due to regulatory and market changes.

9. Shareholder and Governance Information

• The Board remains majority independent non-executive directors. The roles of Chairman and CEO remain combined for strategic reasons, with checks and balances in place.
• No purchases, sales, or redemptions of shares (including treasury shares) during 2025.
• Public float remains above 25%.
• Annual General Meeting scheduled for 22 May 2026; final dividend record date is 4 June 2026.

Potential Price-Sensitive/Shareholder-Relevant Issues

• Record revenue growth (+20.8%) and the successful commercial launch of HNB products in key markets are strong positives and could be price sensitive.
• Steep rise in share-based payment and compliance expenses, as well as substantial foreign exchange losses, have weighed on profitability. Gross margin compression is a cautionary signal for investors.
• Pending U.S. antitrust litigation remains a material risk and could affect market sentiment and share price if negative outcomes or large settlements arise.
• Currency risk is high – a 10% move in USD/RMB could swing total comprehensive income by over RMB1.17 billion.
• The proposed final dividend (HK20 cents) is a notable increase and may support share price.
• Capital expenditure and deployment of IPO/placement proceeds are proceeding but with extended timelines, potentially affecting growth expectations.

Disclaimer: This article is intended for informational purposes only and does not constitute investment advice. Investors should conduct their own research or consult with a professional advisor before making investment decisions. The information is based on the 2025 audited results and management commentary of Smoore International Holdings Limited and may be subject to change or interpretation. Market risks, legal uncertainties, and other factors could materially affect future results and share price performance.

View SMOORE INTL Historical chart here