Turn on heat to high. Add the water, sugar, and cinnamon stick to a large pot and begin to boil. When the water starts to boil, add the apples followed by the guavas and cook for five minutes. Turn off the heat, remove the cinnamon stick, and let Ponche cool before mixing into the cocktail.
Add the Gin and the cooled Ponche into a shaker with ice. Shake vigorously until blended. Serve in a chilled martini glass and decorate with smoked cinnamon.