Disclaimer: This article is for industry research purposes only and does not constitute investment advice.
Key Takeaways
● Revenue Growth: Smoore’s revenue rose 19.9% year over year to RMB7.21 billion in the first half of 2026, but gross profit increased just 3.5% and adjusted profit rose only 2.6%.
● Growth Concentration: Heat-not-burn revenue surged 322.1% to RMB962 million. According to 2Firsts calculations, the business contributed about 61.4% of Smoore’s incremental revenue, with growth currently driven mainly by one core customer.
● Business Divergence: Enterprise customer revenue from Europe and other markets increased 29.7%, while U.S. revenue fell 15.6%. Own-brand growth slowed to 1.9%, and China enterprise customer revenue dropped 50.3%.
● Momentum Slowdown: According to 2Firsts calculations, second-quarter revenue growth slowed to about 1.9% year over year from 41.7% in the first quarter, while adjusted profit declined by about 3.4%.
● Growth Quality: Inventory turnover days rose to 57.7 and operating cash flow declined year over year, putting greater focus on customer diversification, profit conversion and the sustainability of growth.
2Firsts
SHENZHEN, China, Aug. 19, 2026
Smoore International Holdings Ltd. (06969.HK) reported its 2026 interim results on the evening of Aug. 19. Revenue for the first half rose 19.9% year over year to RMB7.21 billion, a record for the period, while profit for the period increased 16.2% to RMB572 million.
But the revenue increase did not translate into a comparable improvement in profitability. Gross profit rose just 3.5%, while gross margin fell to 32.2% from 37.3% a year earlier. Adjusted profit for the period increased only 2.6% to RMB757 million.
At the same time, heat-not-burn became Smoore’s largest source of incremental revenue, performance across its traditional e-vapor business diverged by region, and growth in its own-brand business slowed sharply.
Key Data: Revenue Growth Outpaces Profit
In the first half, Smoore’s enterprise customer business generated RMB5.91 billion in revenue, up 24.7% year over year and accounting for 82.0% of total revenue. Own-brand revenue increased just 1.9% to RMB1.30 billion.
Revenue from heat-not-burn (HNB) products and technology services reached RMB962 million, up 322.1% and representing 13.4% of group revenue. Enterprise customer revenue from e-vapor products, atomization products for special purposes and related technology services totaled RMB4.80 billion, up 9.3%.
Smoore’s adjusted profit margin, meanwhile, declined to 10.5% from 12.3% a year earlier.
HNB Contributes More Than 60% of Incremental Revenue as Growth Becomes More Concentrated
According to 2Firsts calculations, Smoore’s first-half revenue increased by approximately RMB1.20 billion year over year. HNB revenue rose from RMB228 million to RMB962 million, an increase of about RMB734 million.
Dividing the RMB734 million increase in HNB revenue by Smoore’s total revenue increase of about RMB1.20 billion shows that HNB contributed approximately 61.4% of the company’s incremental revenue.
According to Smoore’s 2025 annual results, the business generated about RMB1.29 billion in revenue last year and achieved large-scale commercial shipments for the first time.
In the first half of 2026, the company said HNB growth was mainly driven by large-volume shipments to one core customer that began in the second half of 2025. By the end of June, Smoore had supported the customer in launching products across nine markets and was jointly developing next-generation products while pursuing a multi-customer strategy.
Resource allocation is also shifting toward the business. Research and development spending rose 16.9% year over year to RMB845 million in the first half, with Smoore attributing the increase mainly to higher investment in HNB.
HNB has therefore become Smoore’s most important new source of growth. At the same time, the group’s incremental revenue has become more dependent on the business, while HNB itself remains heavily reliant on a core customer at this stage.
Traditional Vaping Business Diverges as Own-Brand Growth Slows
The prominence of HNB also reflects weaker growth momentum in some of Smoore’s other businesses.
First-half enterprise customer revenue from e-vapor products, atomization products for special purposes and related technology services rose 9.3% to RMB4.80 billion, but regional performance diverged sharply.
Revenue from Europe and other markets increased 29.7% to RMB3.25 billion, while U.S. revenue declined 15.6% to RMB1.49 billion. Smoore attributed the U.S. decline mainly to a major customer proactively adjusting its product portfolio.
Growth in the own-brand business also slowed significantly. According to previous 2Firsts reporting, Smoore’s own-brand revenue increased 17.6% in 2025 to RMB2.91 billion. In the first half of 2026, growth slowed to just 1.9%.
Within the segment, own-brand e-vapor revenue increased 2.6%. Revenue from Europe and other markets declined 0.2%, while U.S. revenue rose 19.9%.
The figures indicate that Smoore’s traditional vaping business is not contracting across the board, but growth has become increasingly dependent on selected international markets, while the own-brand business that had previously supported expansion has lost momentum.
China Enterprise Customer Business Extends Decline as Procurement Structure Draws Attention
China was another area of notable weakness.
Smoore generated RMB58.22 million in first-half revenue from enterprise customer e-vapor and related businesses in China, down 50.3% year over year. The segment’s share of group revenue fell to 0.8% from 1.9%.
The decline began before 2026. Smoore’s China enterprise customer revenue totaled RMB213 million in 2025, already down 10.9% year over year.
According to 2Firsts calculations, subtracting first-half 2025 revenue of RMB117 million from the full-year figure implies second-half 2025 revenue of approximately RMB95.6 million, down about 18.4% from the first half. First-half 2026 revenue then declined a further 39.1% from that second-half level.
Changes in customer procurement structure provide another clue.
RLX Technology’s 2025 annual report shows that purchases from Shenzhen Smoore Technology Limited accounted for 58% of RLX’s total purchases in 2023, falling to 41% in 2024 and 23% in 2025. RLX also identifies Smoore as a contract manufacturer and third-party operator of a dedicated production facility.
At the same time, China further strengthened full-chain enforcement against tobacco-related illegal activities from late 2025,explicitly covering the illegal production, wholesale, transportation and sale of e-cigarettes.
However, based on 2Firsts’ ongoing monitoring of the domestic market, China’s compliant national-standard e-cigarette market did not show a contraction in the first half of 2026 comparable to the 50.3% decline in Smoore’s China enterprise customer business. RLX also described its mainland China business as making “steady progress” in its first-quarter 2026 results.
The available evidence is therefore insufficient to attribute Smoore’s decline in China enterprise customer revenue simply to a contraction in the domestic end market.
RLX’s declining procurement share does not by itself prove that its sourcing changes caused Smoore’s revenue decline. But changes in procurement by major customers and in supply-chain structure are important variables to watch.
Growth Was Front-Loaded as Margins and Operating Efficiency Remain Under Pressure
The 19.9% first-half revenue increase also masks a sharp difference between the two quarters.
Smoore generated RMB3.86 billion in first-quarter revenue, up 41.7% year over year. According to 2Firsts calculations based on subtracting first-quarter figures from the first-half results, second-quarter revenue was approximately RMB3.35 billion.
Using the same method, second-quarter 2025 revenue was about RMB3.29 billion. That means Smoore’s second-quarter 2026 revenue increased by only about 1.9% year over year.
Adjusted profit showed a similar pattern. Subtracting first-quarter adjusted profit of RMB347 million from the first-half figure of RMB757 million implies second-quarter adjusted profit of approximately RMB410 million. The comparable figure a year earlier was about RMB424 million, representing a decline of roughly 3.4%, according to 2Firsts calculations.
Profitability also remains under pressure. First-half gross margin was 32.2%, down 5.1 percentage points year over year.
However, according to 2Firsts calculations based on subtracting first-half figures from Smoore’s full-year 2025 results, gross margin in the second half of 2025 was approximately 31.7%. On that basis, the first-half 2026 margin represented a modest sequential improvement of around 0.5 percentage points.
Operating indicators also failed to improve in line with revenue. Inventory turnover days increased to 57.7 from 50.0 at the end of 2025. Net cash generated from operating activities declined to about RMB743 million from RMB814 million a year earlier.
In other words, revenue rose by nearly 20%, while operating cash flow did not increase alongside it.
Smoore’s medical atomization business generated RMB147 million in first-half revenue, up 24.8%, but its loss for the period widened to RMB132 million. The company said it is pursuing external equity financing for Transpire Bio to reduce the business’s impact on group profit and cash flow.
Conclusion: A New Growth Engine, but Three Risks Are Becoming Clearer
Smoore has found a new source of scalable growth in the first half of 2026, but its results also highlight three increasingly important risks.
First, growth is becoming more concentrated. HNB accounted for only 13.4% of group revenue but contributed about 61% of incremental revenue, while growth in the business currently comes mainly from one core customer.
Second, profit conversion remains weak. Revenue increased 19.9%, but gross profit rose only 3.5% and adjusted profit increased just 2.6%, indicating that scale expansion has yet to generate a comparable improvement in profitability.
Third, the sustainability of growth is becoming a larger question. First-half growth was heavily concentrated in the first quarter. According to 2Firsts calculations, second-quarter revenue growth slowed to about 1.9% year over year. At the same time, China enterprise customer revenue continued to decline, own-brand growth slowed significantly, and neither operating cash flow nor inventory efficiency improved alongside revenue.
HNB has clearly become Smoore’s new growth engine. The next question is no longer simply how fast the business can expand, but whether Smoore can diversify its customer base, improve profit conversion and sustain group-level growth as performance across its traditional businesses becomes increasingly uneven.
Cover image: Exterior view of Smoore’s office building. Photo by 2Firsts, 2024.
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