CICC: Maintains CTIHK(06055) outperform rating, lowers target price to 30 HKD.

Zhongjin released a research report stating that based on the impact of the rhythm of tobacco leaf imports and cigarette exports, it has lowered CTIHK (06055) 2026/27 net profit forecast 15%/14% to HK$0.89/1.15 billion. The current stock price corresponds to 16/13 times P/E for 2026/27. It maintains an outperform rating on the industry, considering profit forecast adjustments and changes in market risk preferences, and lowered the target price by 30% to HK$30, corresponding to 23/18 times P/E for 2026/27, with 44% upside potential. Key points from Zhongjin are as follows: 1H26 Net profit is expected to decline by 10-15% CTIHK released a 1H26 performance forecast, with revenue expected to decline by 25-30% year-on-year to HK$7.22-7.74 billion, and net profit attributable to shareholders expected to decline by 10-15% year-on-year to HK$0.6-0.64 billion. The performance is in line with the bank's expectations, with the pressure on performance mainly due to the temporary impact of the rhythm of tobacco leaf imports and cigarette exports. 1. The rhythm of tobacco leaf imports is affected by macro factors, and is expected to stabilize and increase in the medium to long term. According to the company's announcement, the quantity of tobacco leaves imported from regions such as the United States in 1H26 is expected to decline year-on-year due to factors such as international trade relations and shipping rhythms, resulting in pressure on revenue and gross margin. The bank believes that overseas tobacco leaves are the main component of domestic cigarette blending, and the core foundation of the company's tobacco leaf import business in the domestic cigarette consumption structure. From 2019 to 2025, the CAGR of tobacco leaf import revenue is 12.8%. The macro environment and the tobacco planting cycle only affect short-term rhythms, and tobacco leaf imports are expected to stabilize and increase in the medium to long term. 2. Adjustments in the domestic duty-free process affect cigarette exports, with expected growth in 2H26 recovery. According to the company's announcement, due to adjustments in the domestic duty-free market business processes, the rhythm of domestic duty-free cigarette exports was delayed in 1H26, leading to temporary pressure on cigarette export revenue. The bank believes that with the implementation of new business processes in July 26, the company's cigarette export volume is expected to gradually recover and grow in 2H26, and business model optimization is expected to drive an increase in gross profit margin. In the medium to long term, the company will focus on cigar and taxed channel expansion, promoting continued growth in cigarette exports. 3. Positive on the company's unique value as the exclusive capital market operation and international business expansion platform for China Tobacco, and the synergy of "internal + external extension" in the medium and long term. The bank believes that 1) internally: the company's tobacco leaf import business establishes the foundation, and the expansion and structural improvement of cigarette exports, tobacco leaf exports, and Brazil business operations are expected to drive revenue and profit upwards in sync, with accelerated expansion of new tobacco markets overseas; 2) externally: the company continues to focus on the construction of capital operation platforms, actively seeking high-quality targets that align with strategic objectives to strengthen global competitiveness through external growth. Risk warning: risks of trade frictions and exchange rate fluctuations; risks of tobacco consumption decline.