Investors, analysts, good morning. I'm very happy to see you all here attending Smoore International Holdings Limited's 2024 annual results announcement. I am Nung Joong Jie from the Capital Markets Department. Let me first introduce our management in attendance today. First of all, our Group Chairman and CEO, Mr. Chen Zhiping; Group Vice President and CFO, Mr. Wang Gui Sheng; Group Vice President and APV Business Department Director, Mr. Lai Baosheng; and our fourth representative here is Group Vice President, Executive Director, Ms. Wang Xin. In this presentation, there are three sessions. First of all, our Chairman speech, and then part two, Mr. Wang Gui Sheng and Madam Wang Xin will present the 2024 annual results and financial performance. Part three will be Q&A. Now, may I pass the floor to Mr. Chen Zhiping to deliver his Chairman's remarks? Honorable investors, friends, thank you very much for coming.
This room is fully filled today. We can see that you have a lot of passion and interest in our company. I, myself, and also my team today have a lot of expectations about the future. I am going to share with you what we feel. When we review the past and look into the future, how do you feel? The reason why I am going to share with you our views about the past and future is that we believe that in 2025, the future development of Smoore will be a very important year. It may be a year of turning point. In that case, let me first report to you our past, present, and future. Looking back, basically, since the establishment of our company, we mainly sold e-cigarettes. This has been our very important core strategy, accounting for 90% of our sales results.
For two or three consecutive years, when our business results grew not as well as before, perhaps you may be paying attention to the reasons behind. We have done a lot of analysis and conclusions. One of the main reasons, as you may understand, is that in these few years, in terms of types and categories of e-cigarettes, we have seen a lot of change. There are disposable cigarettes, which are developing very fast. In these years, the disposable category is a very important segment in our products, in e-cigarettes. A few years ago, when we made strategies, when we looked into the development of this category, we are of the view that this category has its own merits. However, it is not perfect. For example, about its factory and its relationship with the environment. As a result, government concern may be aroused.
As you know, e-cigarettes is an industry closely related with government policy. If the government is concerned about its future development, then there would be a very serious challenge in its sustainability. Another point is our customer structure. We have been working with BAT for a long period of time. Our cooperation has been good. Our approach is also related to their strategies. When we do this work, if we do it in a small scale, then there is not much support for our company. If we do it in a big way, if there is any change in policies, then there will be big ups and downs for our company. Given that, every year during strategy meeting, we will review what we should do with e-cigarettes and disposable products. We allocate a small team to work on it, but then the input is not focused enough.
In that case, business results will not be particularly attractive. When it comes to disposable products, where in the whole industry we are doing relatively okay, however, we are still far away from those good performers. This is regrettable. This is one core factor behind our business results in recent years, which are not very good, which are not up to our expectation. This is mainly because of our worry in relation to the e-cigarettes being impacted by policies. Our investment is not very focused or targeted enough. Now, for open-system products, where we are doing our utmost, the company is giving full support, and the development is getting better and better. Right now, in the open-system product area, our self-branded products are definitely number one, no matter which country you're talking about. We have achieved consecutive growth. Our style is number one.
Our brand reputation, our word-of-mouth, profitability are also very good. This shows that if we focus on doing a certain thing, our capabilities are adequate. In terms of capabilities, we are a company that is worth your trust. That is about our past. Regarding our present, of course, right now, you are more concerned about 2025. Just now, Ms. Wang said that she has a lot of expectations about this year, and I've given it some thought. At present, we believe that this year is a year of turning points, a year of inflection. Today, many of you may be concerned about the future of HNB. I believe you will ask a lot of questions about HNB. Yes, HNB has gone through 11 years of development. Now, it has become a very important market in the new tobacco industry, and the volume is very big.
For e-cigarettes, they are attractive to light smokers, but for the old smokers concerning traditional fruit-flavored e-cigarettes, they do not like them that much. For the old smokers, I think our products are highly attractive. Over the years of hard work, we took 10 years to train and improve ourselves. In the end of 2014, we started to build a team to do R&D, and we have kept on investing into R&D. Over the past years of accumulation, in terms of HNB technology, our understanding, our knowledge, and also our technological achievements are very encouraging to us. We are proud of them. Last year, we made an attempt with our key customer, Skyway. We have made a trial sale, and the results, the achievements of that trial sale are highly encouraging. The customer is very happy. They also have other expectations.
They do look forward to future development. We are self-confident in this as well. This year, it is going to lay a strong foundation for us, and in the future, I believe it is going to have a big supporting effect. Besides our e-cigarettes, as you know, as expected, e-cigarette policies are as expected, but they came later than expected. Now, in Europe, there are policies about disposable, and the US enforces laws on disposable. In recent period, you can see that many brand companies are being targeted at. There are policies about disposable products. For our open-system products, for example, in the US, there are companies which are good at closed-system products as well. In terms of e-cigarettes, we believe that this year, we will see some growth amidst stability, and we are cautiously optimistic about the future.
Regarding the others, all along, we have built our strategies. We have our atomization platform. We are entering into more and more industries, for example, special purpose atomization, and also inhalation therapy, beauty atomization, and so on. Moyo was launched last year, and we have achieved very good results. In these three segments, we will continue to work hard, and we need to lay a stronger foundation in terms of technology. In 2025, overall speaking, there will be opportunities for e-cigarettes. For the other three, beauty, inhalation therapy, and also special purpose atomization, we will continue to lay a strong foundation. Right now, the condition is quite good. In different segments, we have built very good competitiveness. Such competitiveness is based on very good technology, which in turn leads to very good products. We will solidify our position in 2025.
Regarding the future, I personally and also our senior executives, our management, and all colleagues in the company are full of strong expectations. We have built very good strategies. Last year, during investors' meeting, we had already introduced our strategy. In 2023, we had come up with a strategy that is in 2023, 2025, 2027, 2030, 8531 strategy. The purpose is that we hope that in these four segments or five segments, e-cigarettes, HNB, beauty, inhalation therapy, and special purpose atomization, we hope that they will all bloom. They will all blossom and bloom by 2030. By 2030, they will all bloom and blossom, supporting Smoore to become a great enterprise. Our goal is to promote, lead, and create an atomization industry. It is not only about a certain category or tobacco and so on.
For atomization technology, actually, in traditional industries, there can be new changes arising with new categories. In terms of its functions, convenience, effective use, its effects and outcomes, there will be very rich atomization products and technologies in the industry in order to boost the replacement of old technologies. That is our idea about 8531. Now we are moving towards such idea. Of course, we have three adherences. We firmly believe in the beautiful future of atomization. We believe in long-term work and operation. What's the third one? Oh, I'm nervous. Okay. We would like to insist on innovation and invention. These are our three adherences. We firmly believe that atomization business is going to improve. As Mr. Jack Ma of Alibaba said, as long as you believe, then you will become better. Over the years, we have been digging deep.
In the past few years, so much investment has been made. People ask, what are the outcomes? Reading from the financial statements, up till now, we have already spent RMB 7 billion of R&D expenses. For R&D, today we may be painful, tomorrow we'll be happy, and the day after tomorrow we'll feel painful again. There is the need for a lot of patience to continue the investment. With such continuous investment, in these segments, it seems that we are not focused enough, but what we are doing is the same thing. That is atomization technology. In the future, how can we solve the problem about not being focused or targeted enough? On all different segments and verticals, we have built our competitiveness. We have laid good foundation, and we are now doing preparation for future high-speed growth. How?
The point is to solve problems about our company's governance, productivity, and efficiency. We have introduced the point about management upgrade. We have to enhance our management quality. There are three pathways. First, we issued a lot of stock incentives. They are long-term stock incentives, which are related to business results. If results are good, then people can have a share. Otherwise, no. At the same time, we have to look at personal results, of course. That's why everybody is working very hard. With stock incentives, we need to have very good management skills. We need to have performance management. This is a very important focus in our work. The third one is organizational design. Because we have a number of different segments and rich categories among different businesses, there are differences and differentiation. They are divided into smaller groups, big departments.
In that case, we are weakening the functions of different divisions, and we are beefing up the establishment of the departments. In other words, for the group level, there may not be enough understanding of different business departments. As a result, there might be wrong decisions made. By doing that, by management upgrade, we will be able to enhance our management. For the layout in different segments, right now, it is quite good. If we are able to release other productivity in terms of management, organization, and stock incentives and so on, if we can do a good job on all these fronts, our future will be very bright. Our mission is to improve life. In the coming six years, this is a cycle of atomization technology bonus.
We believe that we will succeed so that we can pay back to investors' trust. Then both we and you can be able to make money. Thank you.
Thank you, Mr. Chen, for the excellent remarks. Now let's move on to part two. First of all, we will ask Mr. Wang Gui Sheng, CFO, to present the 2024 financial performance, please.
Thank you, investors, for joining this session. Let me present the 2024 annual results highlights. Later on, we can discuss if you have any questions. First, our key financial metrics. In 2024, revenue was RMB 11.79 billion, up 5.3% year-on-year. Actually, in terms of trend, in the second half of the year, growth rate is better than first half. For the whole year, you can see this trend. We are quite healthy towards the latter stage. Gross margin 37.4%. In 2023, it is 38.7%.
There is a small decline because in the second half, for our ODM yield growth rate, it has risen. For this part of gross margin, it is slightly lower. For selling expenses, it grew from RMB 526 million to RMB 919 million, a big increase. The reason is for our self-branded business. In 2024, it grew very well as a result. For the open-system products, their market share globally has risen a lot. We also made investment into brands. As Mr. Chen said, our beauty atomization business was just launched in 2024. We made some investment in marketing work. From compliance's point of view, there is provisioning of certain expenses, administrative expenses. The increase is the same as revenue growth from RMB 867 million to RMB 914 million, up 5.4% year-on-year.
In the future, for internal management, we will continue to enhance our efficiency, hoping to reduce the share of administrative expenses of social revenue. R&D, in 2024, there is a small increase from RMB 1.48 billion to RMB 1.57 billion. As Mr. Chen said, we will be more focused. In some areas, there is increase. In other areas, there is decrease. In relatively mature businesses like traditional electronic vaping products, the development and investment has decreased. For medical, HNB, product developments, and solutions, we made more investment. Profit before tax, RMB 1.655 billion, down 14.5%. In 2024, profit tax expenses have increased RMB 100 million odd. After-tax profit, down 4.8%. If you look at the whole year comprehensive income, we're only down 9.5%. The decrease has narrowed because in 2024, you can see the trend of USD RMB exchange rate.
For currency assets, we have increased holdings of USD assets. At the end of the year, when they are converted into RMB, there is exchange rate gain. For the whole year, comprehensive income was RMB 1.416 billion. Earnings per share, RMB 0.2142. Final dividend, HKD 0.05. For the whole year, HKD 0.10. Payout ratio is 40.2%. In the past few years since listing, we maintained a 35% dividend payout. This year, we increased our dividend payout ratio. Dividend amount will not be lower than that in 2023. Now, let me share with you our revenue for different segments. In 2024, for self-branded business, revenue was RMB 2.48 billion. Revenue growth was not big in total, but the structure is changing. For self-branded business, its share in 2023 was 16.5%. It rose to 21% of total revenue.
In the future, self-branded business is going to be more and more important. ODM business, total revenue, RMB 9.32 billion, 79% of total revenue. That's the overall position. For self-branded business and ODM business, now let me give you a regional breakdown. Self-branded business, RMB 2.48 billion revenue. First, for the whole year, there is a 30% growth in the first half because the base is lower. There is 72% growth, but in the second half, the base is getting bigger. The growth rate is only 13.3%. It has come down. For self-branded business, right now, main contribution is from Europe and other overseas products. RMB 2.02 billion, US market, $402 million. In terms of these big regions, our market share is within the top players. For China market, last year, there was RMB 30 million revenue. Most was from Moyo, the beauty atomization products.
They were launched in the first half. Main contribution to revenue was in the second half, especially in September, October, November. Before and after double 11, even though the contribution is not big, the trend is quite good. First of all, for purchase of consumables, for pod-based products, the price is getting higher and repeat purchase rate is getting higher with independent third parties recommending and driving sales to the product. The occasions were more and more, so we think that in 2025, beauty atomization products will perform better. For ODM business, last year, RMB 9.32 billion revenue. There is a small decline, down 0.3%. If we look closer, basically in the first half, there is an 11% decline. In the second half, up 9.7%. As such, in the second half, our overall revenue stabilized. The trend is actually positive.
In January, February 2025, and also in the U.S. law enforcement area, Europe, there is a ban on disposable. As a result, our product trend is quite satisfactory. ODM business, regional breakdown, Europe, RMB 5.1 billion revenue, up 0.3%. U.S., RMB 3.99 billion revenue, a small decline by 2.4%. This is mainly because for special purpose atomization products, last year, some customers faced operating cash flow pressure. As a result, that affected shipment. We made channel adjustment. We believe that in 2025, the adjustment would be smooth. For the other products, they are quite stable. China market, revenue was RMB 240 million. China standard products as well as technical service revenue, they are the main things. RMB 240 million, up 25%. I mentioned technical services just now. In this financial statement, product sales revenue and technical services are included as our group's revenue. Why did we do this?
Because in the future, there will be more sustainable things from customers. We do R&D for customers. We offer our IPs to generate revenue. That is a future growth trend. This time, concerning our corporate clients, there is RMB 200 million revenue from technical services. There are big medical institutions and big customers who are willing to pay big fees for us to do R&D for them. For big tobacco companies, they also gave us some money for us to do R&D. That generates income or revenue. Expenses, such as now selling expenses, increased to RMB 919 million from RMB 387 million. Administrative expenses, RMB 914 million. For R&D expenses, we have done a breakdown. In 2023, RMB 1.48 billion or RMB 1.4 billion. It increased to RMB 1.57 billion. There is electronic vaping, HNB, RMB 1.033 billion, RMB 1.34 billion, more or less the same as last year.
Main growth is from HNB products R&D. Traditional electronic vaping, there is a decrease in R&D expenses. Atomization products for special purpose, the expenses came down from RMB 171 million to RMB 145 million. Inhalation therapy and DOT atomization, it increased from RMB 277 million to RMB 392 million, mainly because of inhalation therapy. For inhalation therapy, we are not doing early-stage high-risk research. The product pipelines are confirmed already, so the entry points have been confirmed. We have reached consensus with FDA, so we are doing development according to plan and schedule. For our medical teams' development work, no matter whether they are working for customers or for ourselves, at present, we have completed our milestones earlier than expected. We are faster than expected. The expenses have not gone over budgets. For our customers, they are very happy, and they made earlier payments of our R&D fees.
That is all in my parts about financials. Now, I will pass the floor to Ms. Wang Xin to review our business.
Right. Thank you, Mr. Guisheng. Investors, good morning. I am very honored to share with you Smoore's business plan and our 2024 results review. Looking at our overall business overview, to us, atomization is a brand new distribution approach. The contents being atomized will lead to different functions and different applications. With this technology, as I said earlier, e-cigarettes or electronic vaping is the biggest contributor for us with the longest history. With the introduction of HNB, it is a nicotine delivery system. The big application is nicotine delivery, and then there is special purpose atomization and so on. In the past few years, we explored a lot about atomization, life sciences, and we have more understanding of targets of atomization.
We added in inhalation therapy and beauty atomization. For atomization, there is absorption in human bodies. Things can be more effective and other outcomes as well. Overall speaking, if you look at our atomization industry, there are two unique points. First, globalization. 1.3 billion smokers or 600 million COPD patients. Basically, we are serving global customers. All along, Smoore has been capitalizing on our R&D and production. We offer to our customers total atomization product solutions. Right now, for beauty atomization, we are still only exploring within mainland China. Based on contribution, we divide our business into core business and emerging business. Now I'm going to share with you our progress in 2024. First, our self-branded products, Vaporesso. This is the 10th year for us.
In the past 10 years, in many mainstream overseas markets, we are number one in market share. Our brand reputation is very high. We serve almost 5 million open system users. Vaporesso team is reviewing what our core competencies and also our strengths. Basically, our products and our marketing. On products, on one hand, we continue to build traditional upgrade of open system products, flavor, and so on. In the past few years, we have nurtured many disposable e-cigarette users. In some countries, they started to ban disposable products. How can we more conveniently offer better open-style open system products with better experience? Apart from products, there is marketing. We are facing consumers. We are a globalized brand in the past five years with localized marketing. Our team has put in a lot of effort.
In each core country, there is very professional, large, localized marketing team and capabilities. In terms of market insights, store management, channel promotion, brand interaction, we have done many different activities. Apart from brand and activities, Mr. Lai, founder of Vaporesso, he is the Chief Brand Officer. He has been developing our innovation system. He says that when other people do not have something, we must have it. Structure, product delivery, and so on is such that we believe when our innovation base is strengthening for Vaporesso, our products and marketing will perform better in the future. Next, our disposable business. This business has been controversial, but such products have their own strengths. For Smoore, for our own layouts, we are based on differentiated products, and we are meeting market needs in a compliant way.
Now, for non-TBD markets, in July last year, together with customers, we introduced the first adjustable flavor products. With technology, the overall flavor experience will improve and upgrade. For the new opportunities, we know that for traditional global smokers, they are very fragmented. In every country, there are different flavors. In the Middle East, there is the Hulkhan smokers, which is big. Now we are developing electronic Hulkhan, delivering better taste and flavor. For disposable products, they are no longer one-dimension technology competition. Basically, from technology to product delivery, product design, convenience, and so on, all these dimensions are being evaluated. For European markets, all along, no matter whether it is Smoore or our customers, we attach importance to this compliant and sustainable market. In 2024, we are happy to see that on one hand, there may be some worries about the compliance issue.
In August 2024, the U.K. presented guidelines on long puff products in relation to product registration. For flavored big puff products, there is clear definition. Since regulation has been clearer, no matter whether we talk about 2+N and all-in-one products, we capitalize on our technology R&D advantage. In terms of delivery and also electronic vaping or other products, we have introduced different products. For disposable, especially flavored long puff products, we have done a lot of adequate preparation with our customers. Next, pod-based products. As said earlier, our Vaporesso open-system products, we have designated products to face up to such growth. For pod-based products, we are also prepared for the change in relation to disposable. Our views, our big customers, they have introduced a brand new battery. What is the starting point? That is to lower the entry barriers for pod-based products.
It is easy to convert to ensure the same flavor experience and choice. Besides, in terms of our technology R&D, no matter whether we're talking about a traditional upgrade, better flavor, better atomization, and in the past one to two years, for disposable products, there is higher burst power experience. We hope to deliver better burst power in the future. That's about pod-based. Pod-based is a very familiar vertical to us. We are confident that in this area, customers and users can feel all the technology characteristics. For pod-based products, in the future, they will be a more important category, offering more pleasurable use experience to global users. The U.S. market last year was very busy as a market. In terms of policies and other dimensions, there are changes. Overall speaking, there are two points.
First, in terms of flavor, especially menthol, it was approved. In emerging tobacco in the US, at least menthol flavor can exist. This year in January, coffee, cinnamon have been approved for our products. In terms of approval pathway, I think it is going to be science-based in terms of approval. That is about compliance. There is possibility about flavors. Besides, law enforcement is being strengthened and upgraded. There is joint law enforcement with the Department of Justice. On federal level, in February this year, New York State had a number of lawsuits against e-cigarettes. On state level, the whole market is getting back to rational condition. For our key customers, they are well prepared. They have started to use different technologies to achieve differentiation and to enhance control and management. For our self-branded products, we are doing the same thing.
For the US market, the new government attaches much importance to efficiency. We believe that policy strength is going to strengthen law enforcement. For compliance, I think approval is going to be clearer and transparent. For those companies that have technology capabilities that are compliant, their products can flow faster into the US market. We are optimistic. Our HNB 2024 is a milestone year. Our key customers have launched data already, and we are highly encouraged. For the function of these products, reaction response in the market has been very good. Our customers have prepared for accelerated global deployments or layouts. Smoore is technologically leading. We have done 10 years of R&D. We have very rich technology reserve. Given that, we understand that tobacco is a globalized situation. Smokers in different countries have their own demands. There are different players as well.
We actively select other market leaders of different countries for cooperation so that our products can get to adult smokers in a more effective way so that they can experience HNB products. That is all about our core products in 2024. Because of time, for emerging businesses or new businesses, I am going to be brief. Inhalation therapy, Transpire Bio. This is the first time that we introduce this concept, Transpire Bio, for their own proprietary product line. They are progressing in 2024 with a US-listed company. We have signed a joint R&D cooperation agreement, and we already reached not only one milestone earlier than expected. That is because of our strength and efficiency. That is the best testimony. The last part is beauty atomization. On 8 March last year, International Women's Day, that was the launch date of Moyo.
In the past few years, as said, atomization is a brand new delivery system for beauty. It is a new thing, so people take time to gradually understand it. Moyo introduces different functions like whitening, anti-wrinkles, anti-allergies, and so on in different niches. We have achieved good response and feedback. This year, we have entered the 2B market. In medical beauty or aesthetics, we see more and more regulation. We hope to be able to play a bigger role. Last year, we introduced the salt light therapy device, but this is still in exploration. We have a lot of confidence, hoping that our products can be able to get more certification or verification. We have the 8531 strategy to us. We have to make sure that we have globalized layouts for all our four business segments.
Number two, we promote and create and lead the atomization industry. R&D technology is the main engine of development, and it is now included in our corporate culture and philosophy. What I would like to share with you is that our primary, secondary, and tertiary growth curve is not that we are now in the latter stage, so we no longer have first growth curve, but we have almost 100 million users for our traditional products or e-cigarettes. They are still important. At any time point when our users reach a significant cluster, that would become a bigger segment or vertical. E-cigarettes and electronic vapor is still an important foundation. HNB, we have confidence in converting the smokers and for beauty and medical areas when we can serve more users. Together, we can serve the mission of atomization, improving people's lives. That's all in my presentation. Thank you.
Thank you very much, Mr. Wang Gui Sheng and Ms. Wang Xin, for presenting and reviewing our business results and for sharing with us future strategies. Now, part three, Q&A. First, we will invite investors and analysts here on site to ask questions.
Please state your name and the organization you are from.
Thank you. Mr. Chan, Mr. Wang, Mr. Lai, I am from Huatai Consumption. I am happy to have this chance to ask questions. Chairman Chen said or shared with us the past and future of Smoore, and he talked about future development direction in the coming five years. I have two questions. In December 2024, because of the chairman's stock incentive plan, there was some adjustment, which is very innovative. It is pegged to market cap. Behind this peg with market cap, what are the considerations?
How did you determine 30 million, 40 million, 50 million goal in relation to market cap? How big confidence do you have in reaching this goal? Second question is, earlier, the Chairman said regarding HNB, much attention is given to it. Last year, with big customer, you introduced new HNB products. For your new products being launched, how is customer feedback in the future for HNB products? What will be the progress of launch in the global market? These are my two questions. Thank you.
First question. Mr. Chen asked me to answer. For our strategies, there are a few segments for us. There is big room and potential in these segments. In these segments, we have very good technology and products. For our team, we have much confidence. In terms of reaching targets, there are different difficulties and challenges, but we have confidence.
On one hand, Chairman Chen is also our CEO. We need to offer to him a reasonable incentive plan. We have overcome a lot of challenges and difficulties to achieve that. For the subsequent adjustments, it is highly in line with shareholders' interests. We have thought of a peg with market cap. There is some challenge. We are all united in our company. That is the direction we are working together. That is the background. Thank you. Regarding my stock incentive, basically, this is related with our company's development. I think that confidence is very important. Confidence comes from internal colleagues. That confidence is very important. Whether or not a lot of stock options are given to us, are given to me, I do not care too much. This company is established by me. I have strong passion in it.
With stock incentives, last year, we issued stock option incentives to many colleagues. I am using this way to tell them that I am full of confidence in the future. Our company is not small. We have 30,000 people and a few thousand some other workers. They may not know full information. Many focus on technology, innovation, and R&D. A lot of things are still kept confidential. My colleagues trust me a lot. They have confidence in me. I want to tell them that our future is definitely very bright. As long as we work together in a concerted way, we will have a very bright future. We can achieve our company's vision of delivering happy lives for all colleagues. That point is very important. That is the background.
At present, if we talk about 80 billion, 300 billion, 500 billion, you may think that that is a bit very boastful. In the capital market, we are talking about like 80 billion. The main source of confidence is internally. We have been talking about that 8531 strategy, the success of it or high market cap depends a lot on whether HNB can succeed. You are all investors. You will read the financial statements of other companies. They sold like 40 billion. Their revenue, gross margin are public to all. We choose good products. We have done many years of research. We have confidence in our products. We also have good marketing and channels and good customers. With the combination of these, the market is already very developed. In the future, development is going to be even better.
We think that all these are possible besides. We have four other segments: inhalation therapy, beauty atomization, special purpose atomization, and e-cigarettes. The risk can hedge against one another. One plus one bigger than two for each new business. If it is not within Smoore, if it is independent, if it is spun off, it is a very good innovation. The segment is broad enough. There is much room for technology innovation. It is not the same as traditional product. After innovation, traditional products become much better with better experience. It is a way to hedge risk. There is now support from the company one plus one plus one plus one, so on. There will be full development. Many investors have done the calculation. There are many models. I trust your models. For the models that I know, they can all be realized.
The most important risk is from our internal colleagues because we are a team working on so many things. We need to do corporate governance to enhance efficiency. Can the founder spirit be realized in our work? I think that is very important. Let me supplement. I am prudently optimistic about whether the target can be achieved. I have the conviction of winning for HNB feedback. Feedback about current sales. For feedback about current sales to a certain extent, we are doing trial sales with our big customer. We had a meeting with our key customer about trial sale. We do look forward to that feedback. In the feedback process, the conclusion is exciting and encouraging.
For consumers, the merits of the products are, I guess you know, some investors, some personal investors flew to Saraway and tried the products, and they sent an email to thank me for creating such great product. Five seconds are very different from 20 seconds. If you wait 20 seconds and if you wait five seconds, this is a big improvement in consumption experience. Convenience is the biggest merit. Number two, based on market research, consumers are of the view that our products deliver better flavor. Its taste, its flavor is closer to real tobacco. For traditional old smokers, they account for a quite big share. They are buying Halo. For e-cigarettes, they have been based on flavor and taste. That is an important standard.
Thirdly, the idea designed by our key customer in terms of color match and also the external appearance, customer feedback is quite good. The ID's design is well-liked. The first is most important. Five seconds. Number two, flavor and taste. Number three, ID looks quite good. For progress of future global launch, last year, our key customer obtained quite positive feedback. In their annual report, you will be able to read it. This year, they plan for proactive global layouts, and they want to enhance introduction of or enhance production capacity. They are talking about capacity building globally. They will be expanding the scale. That is the progress. In 2025, I believe, of course, we need time. We can't expect that it will explode right away after launch, unlike those famous KOLs. There is the need for good experience and then transmission.
There is a process. In 2025, I think it is important to constitute a good trend first. There will not be much performance in terms of revenue.
Thank you for the answer.
Because of time constraints, we will only allow one question from each investor. This lady on the first row.
Thank you. Mr. Chan, Ms. Wang, Mr. Lai, Ms. Wang Xin. I am Sijoanan from CICC. I am sure investors are happy and excited listening to your blueprints. We are happy to witness and accompany your development journey. I am concerned about Europe, about disposable. How is consumers' habit and switch to different categories? For key customers' orders and your self-branded products, how is sales? Can you give us some idea?
Let me take this question. For Europe, starting last year, there was work done on disposable on 1st June in U.K. for stores.
The disposable products have to be removed from shelves. Last year, at the end of last year, in Q4, now we can see clearly that hot-based products, closed system products, open system products, they are growing in physical stores. Our local teams have been doing calculations. That is what happens in stores. Hot-based products, room for getting onto shelves are such that there are more and more SKUs. For actual sales, we also saw the same trend. Hot-based products and open system products show uptrend. After the disposable products issue, for users, they want to get more convenience and easy-to-use products with better experience comparing with old hot-based products. In terms of our closed and open system products, we have done a lot of technology and product design innovations. They have been gradually launched to the market. I don't know whether I've answered your question.
Next one, please. This lady.
Management. I am Lydia from CT. My question is, for the primary growth curve, first growth curve, it accounts for a big share of your revenue and profit. Given current regulation and change in customers, consumer habit, or behavior, how do you see will be business progress of this part? For HNB, I have a small follow-up question. It may take time, but after coming up with a basic estimate, when can we see a considerable scale and also certain success? Thank you.
Thank you. As what Mr. Lai just said and also Chairman Chen said, for e-cigarettes in the past years, policies are getting clearer and more certain. There are switches among different categories.
As such as now, we use our technology to create competitive products in terms of experience, value for money, and so on in order to support switch in categories. For ODM and self-branded business, we have done enough preparation. When regulation is clearer, then we can offer solutions for customers to feel that our products offer strength. For HNB, as other executives have shared, it is a long-term continuous process. It takes time to build capacity. In 2025, it is a year of inflection. In 2026 and 2027, we believe there will be good growth potential.
Thank you. Ms. Wang Xin, the lady on the second row.
Thank you, management, for the opportunity. I am Carol Xia from Morgan Stanley. My question is about HNB. Mr. Chen talked about Films International. A lot of time and investments have been made.
He said it took 10 years to make a good start. From R&D to launch to market, how much time was spent? How can we help customers to expedite lead time to market? In 2025, what are your expectations about growth rate?
First question is for the lead time for H&P from R&D to launch in market, right? What is your second question?
How can you help your customers to accelerate lead time to market and the reasons?
Oh, okay. R&D to market launch, how much time is needed? I believe you are asking about the Halo product, right? I spent 10 years to do R&D for H&P. There was a lot of early accumulation for Halo product. Basically, it was a special technology. From start of project to last year, it took 10 years, roughly. We are very strong in film.
For HNB, you asked for some reasons. What is your question? Or how can we empower customers? Basically, first of all, we recommended good products to them. They are quite satisfied. That is why they have decided to launch it. That is the first empowerment. I am lucky that they are very happy. Everybody is happy. The second empowerment is production because if you look at our technology, it is different from traditional cigarettes. The production process is different. The overall production process is designed by our own automation department. It is made by themselves. Equipment is provided by us. Empowerment is shown in these two areas mainly. There is also a question about self-branded products, right?
Let me take this question. As Ms. Wang said, in 2024, for self-branded products, we have achieved quite good growth globally. In these years, our strategies have not changed.
We did innovations so as to achieve product iteration and improve customer experience and barriers to entry. Number two, localization. Localized marketing and operation in important markets like the US, U.K., France. Last year, we gradually set up stronger local teams. This year, we will still work on these two areas and strengthen them. This year, in key markets locally, we will set up product centers. The purpose is to strengthen our market insights and our understanding about trends of change so that we can react faster to the market. At the same time, Smoore has strong technology. How can we make sure that we can produce products that can better satisfy customers' needs and deliver better customer experience? We will do localized production as well. We will strengthen ourselves on these fronts.
Looking at the external environments, I think it is favorable to our rechargeable products in the US and in Europe this year. By making these moves, we have confidence to achieve expected growth. Okay. Because of time, we will now take the last question. The gentleman on the second row, please.
Thank you for giving me this chance. I am from Huatai Securities. My question is about global regulation. In the US, we have seen that there are some new products being launched that can effectively guard against minors using the products or minors smoking for flavored cigarettes. Relaxed regulation. What is the progress? In Europe, you talked about many product innovations like long puff, higher puff count products. For these products, what is the impact on your business results in terms of pricing and profits? Thank you.
In each session, investors are concerned about policy impact on our company. In the US, overall speaking, in the past two years, in terms of flavor, whether or not a flavor can be approved, you may have some queries and doubts. Last year, we saw a precedent already. For example, menthol taste for cigarettes and also this year, coffee and cinnamon taste. In the year 2022 now, FDA's approval of e-cigarettes flavor. I think this is an issue that they need to work out so that policies can be clearer and more transparent. There are new officials being appointed. You talked about technology development like Bluetooth and other technologies that can solve identity verification issues that can help approval of our products. For flavored products, whether or not certain flavor can be approved, the overall industry is now more optimistic. Secondly, Europe.
Just now, I already shared with you that at present, products in Europe are divided into compliance, high puff count products, and other flavored products. For small, we are interpreting the policies. We have already got some approved products into Europe. As Mr. Lai said, at the end of the day, product iteration is important. In Europe, like customer experience and also value for money, we will be able to deliver compliance products, bringing better user experience. This can be seen in customer structure and product structure. In Europe, we believe we'll see stable growth. There will be more contribution to our revenue and profits. Time flies.