HK Stock Market Move | HUABAO INTL (00336) rises by over 15% in the morning, rapid growth in overseas business of new materials for tobacco use, company's mid-year net profit nearly triples.

HUABAO INTL (00336) surged more than 15% in the morning session, as of the time of writing, it has risen by 14.18% to HK$4.51, with a turnover of HK$2.14 billion. In terms of news, HUABAO INTL previously released its performance, reporting a revenue of RMB 1.621 billion in the first half of the year, a year-on-year increase of 2.5%; the company's equity holders' net profit attributable to shareholders was RMB 118 million, a year-on-year increase of 298.1%; basic earnings per share were 3.66 cents; it plans to distribute a mid-year dividend of HK$0.12 per share and a special dividend of HK$0.32 per share. The increase in revenue was mainly due to the rapid growth of overseas business in the smoking materials sector, with revenue from smoking materials increasing by 45.3% year-on-year to RMB 238 million, as well as the gradual release of production capacity and the development of new customers, leading to a 7.6% year-on-year increase in revenue from fragrance materials to RMB 405 million. It is reported that HUABAO INTL is a leading domestic producer of smoking fragrances. Guotai Junan Securities pointed out that HNB tobacco heating does not ignite at a lower temperature than cigarettes, reducing a large amount of aromatic components generated through heat synthesis and thermal cracking, hence requiring more flavor and fragrance ingredients to replicate and simulate the taste of cigarettes. For the same quality of tobacco leaf, the amount of fragrance needed for HNB tobacco is 6-10 times that of traditional tobacco. However, considering that the HNB cartridge is half the length of a traditional cigarette, overall, the amount of flavoring used in a single HNB cigarette is 3-5 times that of traditional tobacco.