UBS: Downgrades SMOORE INTL (06969) to "Sell" with target price raised to HKD 10.72.

UBS released a research report stating that it downgraded the rating of SMOORE INTL (06969) from "neutral" to "sell" mainly due to high valuation and a relatively conservative view on the profit contribution of the new Heat-Not-Burn (HNB) product launched by its key customer British American Tobacco (BAT). After BAT announced the launch of the new HNB product, Smoore's stock price has risen by about 35%, indicating investors' optimism about its prospects. The target price has been raised from HKD 7.5 to HKD 10.72. However, UBS expects BAT to officially launch this new product in the second half of this year, and the actual results may not be observable until next year. Currently, Smoore's stock is trading at a 2025 P/E ratio of about 42 times, which is considered to be overvalued compared to the global tobacco industry average P/E ratio of 11 times for 2025 and the Chinese consumer industry average P/E ratio of 34 times. The bank's profit forecast for Smoore is 9% to 11% lower than market expectations.