Summary of Conference Call Notes Industry Overview - The Japanese HNB (Heated Not Burned) market has a global penetration rate of 43% in 2024, significantly higher than other countries, indicating substantial growth potential in the new tobacco market [1][3] - The global traditional cigarette market has an HNB penetration rate of less than 6%, highlighting the early development stage of this category [1][8] Market Dynamics - The Japanese new tobacco market is characterized by a "one leader, two strong" structure, with Philip Morris International (PMI) holding a 70% market share, followed by British American Tobacco (BAT) and Japan Tobacco with 15-16% and 14% respectively [1][4] - BAT has shifted some resources from its Hyper product line to Hilo, which is positioned in the high-end market, competing directly with PMI's IQOS [1][10] Product Launch and Promotion - Smoore International launched its new product in Miyagi Prefecture, a region with a high HNB penetration rate of 56%, facilitating product education and promotion [1][5] - The new products are prominently displayed in major convenience stores in Sendai, indicating successful initial promotion [1][5] Product Differentiation - Major brands in Japan have distinct product design philosophies: Japan Tobacco's Pro series uses low-temperature heating, PMI's IQOS is mid-range, and BAT's GLO Helo series targets high-temperature, high-volume consumers [1][6] Global Market Comparison - Other countries lag in HNB development, with penetration rates of 20% in Italy, 18% in South Korea, 16% in Ukraine, and 14% in Poland [1][7] Sales and Distribution - Convenience stores like Seven Eleven have effectively distributed tobacco products, with BAT's PROOM series occupying prime shelf space [1][9] Future Plans and Market Strategy - Smoore plans to fully launch its new products in Japan on September 1 and enter the European market by the end of the year, aiming to validate repurchase rates and consumer acceptance [1][14] - BAT aims to increase its new tobacco revenue share to over 50% within the next decade, reflecting a positive market outlook [1][18] Regulatory and Competitive Challenges - The high entry barriers in the new tobacco industry, coupled with recent regulatory changes in China prohibiting HNB production, pose significant challenges for new entrants [1][17] - Investors should monitor product sales feedback and industry dynamics, as Smoore's competitive advantage is supported by high industry barriers and BAT's brand channel support [1][2][15] Investment Outlook - Investors are encouraged to evaluate the new tobacco industry trends and competitive landscape, as there are positive signs in the Japanese market within a short promotional period [1][20]

Core Viewpoint - Shenzhen Jinjia Group Co., Ltd. reported a significant decline in revenue and net profit for the first half of 2025, indicating challenges in the packaging and new tobacco sectors, while also highlighting ongoing strategic initiatives in innovation and market expansion [4][15][18]. Financial Performance - Total revenue for the reporting period was approximately CNY 1.24 billion, a decrease of 16.56% compared to the same period last year [6][15]. - Net profit attributable to shareholders was approximately CNY 122.17 million, down 32.54% year-on-year [6][15]. - The company did not distribute cash dividends or bonus shares during this period [2]. Business Segments - The packaging industry accounted for 71.55% of total revenue, with a significant decline of 30% year-on-year [15]. - New tobacco products saw a remarkable increase in revenue, rising by 157.67% year-on-year, contributing 19.04% to total revenue [15]. - The company has transitioned from a traditional printing manufacturer to a provider of intelligent packaging solutions, integrating advanced technologies such as RFID and digital production systems [7][9]. Innovation and R&D - The company applied for 32 new patents during the reporting period, maintaining a strong focus on technological innovation [10]. - R&D investment decreased by 18.66% to approximately CNY 65.30 million, reflecting a strategic shift in resource allocation [15]. Market Strategy - The company is focusing on high-value segments in the electronic materials market, particularly semiconductor materials and optoelectronic device packaging [7][9]. - A comprehensive service system has been established for new tobacco products, emphasizing compliance and localized operations in international markets [8][9]. Operational Efficiency - The company has implemented a flexible manufacturing system to enhance responsiveness to customer demands and reduce costs [11][14]. - A robust quality management system is in place, ensuring product quality meets industry standards and customer expectations [11][12].

Summary of Key Points from Conference Call Records Industry Overview - The conference call discusses the **vaping industry in the United States** and its regulatory environment, particularly focusing on the impact of flavor bans and compliance issues on market dynamics [1][4][5]. Core Insights and Arguments - Following the ban on fruit-flavored vaping products in the U.S., the market experienced a temporary decline, but disposable e-cigarettes have since dominated the market due to regulatory loopholes, capturing **80% of the market share** [1][4]. - The **illegal vaping market** grew from **$12.9 billion** in 2021 to **$21 billion** in 2024, marking a **63% increase**, while the compliant market shrank by **14%** to **$5.87 billion** [1][4][5]. - The U.S. government has been criticized for insufficient regulation of disposable e-cigarettes, which has led to a significant squeeze on compliant brands like British American Tobacco and G O, with Views experiencing a **5% decline** in 2024 [1][5]. - Starting in 2024, U.S. Customs has tightened regulations on e-cigarette imports, increasing costs and limiting the influx of illegal products, which is expected to improve the operating environment for compliant products [1][6]. - The FDA approved four menthol-flavored e-cigarettes in June 2024 and 20 ZYN nicotine pouches in January 2025, indicating a potential easing of restrictions on certain flavors, which could benefit compliant product sales [1][9]. Additional Important Content - China's exports of e-cigarettes to the U.S. totaled **$812 million** in May 2025, reflecting a **7.38%** month-over-month decline and a **19.52%** year-over-year decline [1][7]. - The European market has begun tightening regulations on disposable e-cigarettes and certain flavors since 2024, which primarily affects domestic white-label companies while benefiting international brands [1][10]. - The global new tobacco industry is transitioning into a healthier development phase after experiencing regulatory restrictions, with heated tobacco and nicotine pouch products expected to see significant growth in the coming years [2][12]. - The domestic market in China has stabilized since the implementation of the e-cigarette law in 2022, allowing only traditional flavor sales, with a focus on heated tobacco and nicotine products as key growth areas [2][13].

Investment Rating - Industry rating is maintained as "Outperform the Market" [7] Core Insights - British American Tobacco (BAT) is accelerating product and channel strategy adjustments, with high-end products entering travel retail channels for the first time [1] - In the first half of 2025, China's e-cigarette export value decreased, with the UK becoming the largest export destination, replacing the US [2][3] Summary by Sections Product and Channel Strategy - BAT is collaborating with Gebr. Heinemann to promote reusable high-end devices with eco-friendly designs, including features like a ClearView™ display and Bluetooth connectivity [1] - The focus is on expanding travel retail business, particularly in airport retail environments [1] Export Data - In the first half of 2025, the export value of e-cigarettes and similar devices from China was $1.5 billion, a year-on-year increase of 8.94%, while other nicotine products saw a 19.37% decrease [2] - The average export price for e-cigarettes was $3.68 per unit, with a June export price of $45.33 per kilogram [2] Regional Performance - The top five export destinations in the first half of 2025 accounted for 61.71% of total exports, with the UK taking the lead in June [3] - The US remains the largest market despite a 14.31% year-on-year decrease in export value [3] Market Recommendations - Suggested companies to focus on include Smoore International, Yinghe Technology, and others in the vaping supply chain [5]

Group 1 - The core viewpoint of the news highlights the recent stock performance of Shunhao Co., which saw a 6.15% increase, reaching a price of 7.94 yuan per share, with a total market capitalization of 8.416 billion yuan [1] - Shunhao Co. is a leading manufacturer in the vacuum aluminum transfer paper industry, holding a 15% market share in its main products, and operates in five major industry chains including eco-friendly packaging materials and industrial hemp [1] - The company has a global presence with nearly 2,000 employees and around 30 subsidiaries, supported by 256 patents, which strengthens its technological foundation in the industry [1] Group 2 - As of March 31, Shunhao Co. had 52,100 shareholders, with an average of 20,400 circulating shares per shareholder [2] - For the first quarter of 2025, Shunhao Co. reported a revenue of 325 million yuan, reflecting a year-on-year decrease of 11.03%, and a net profit attributable to shareholders of 13.33 million yuan, down 31.89% year-on-year [2]

Summary of Smoore International Conference Call Company Overview - Smoore International primarily engages in the manufacturing of vaping products, serving major tobacco companies and domestic brands. The global market for vaping products is approximately $20 billion, with Smoore holding a significant position in this sector, including key clients like British American Tobacco [3][4]. Industry Challenges - Since 2021, Smoore has faced significant challenges, including: - The ban on fruit-flavored e-cigarettes in China since Q3 2022, leading to a drastic revenue decline from nearly 5 billion RMB [2][4]. - The illegal e-cigarette market in the U.S. capturing over 75% of market share, stalling growth for compliant products [4]. - The rise of disposable e-cigarettes in Europe, negatively impacting overall profit margins, with disposable e-cigarettes having a gross margin below 20% compared to over 50% for traditional products [5][7]. Current Development Logic - Smoore's current strategy focuses on: - Stabilizing its traditional vaping business by deepening ties with core clients and maintaining technological leadership [6]. - Actively expanding into the heated not burned (HNB) product category as a second growth avenue [2][6]. Market Dynamics - The U.S. market's compliance process is influenced by the regulation of illegal products. If fruit-flavored products are allowed, the compliant market demand could significantly expand [2][7]. - In Europe, the transition from disposable to refillable and open-system products is expected to enhance profitability, especially following bans on disposable e-cigarettes in the UK and France [10]. Key Factors for Market Expansion - The expansion of the compliant market hinges on the potential lifting of the fruit-flavored e-cigarette ban. Signals indicate that the FDA may relax restrictions, which could greatly boost demand [8][9]. HNB Market Potential - The global HNB market is valued at $38 billion, with rapid growth observed. North America has low penetration, but significant potential exists, especially with upcoming product launches from Philip Morris [11][12]. - Smoore's technological advantages in HNB products position it well for competition, with expectations of achieving a market share of around 30% in the mid-term [12]. Future Outlook - Smoore aims for a market capitalization target of 300 billion to 500 billion, driven primarily by HNB business growth and potential policy changes in the U.S. regarding vaping products [15]. - The company is also exploring new business avenues such as medical vaping, which holds considerable long-term potential [13][14]. Conclusion - Smoore International is navigating a challenging landscape with strategic focus areas in traditional vaping and HNB products. The company's future growth will depend on regulatory changes, market dynamics, and successful product launches.

Core Viewpoint - Smoore International (06969) saw a stock increase of over 5%, currently trading at 21.28 HKD with a transaction volume of 1.42 billion HKD, driven by positive outlooks on new tobacco products from British American Tobacco (BAT) [1] Group 1: Company Performance - In the first half of 2025, BAT reported revenue from new tobacco products at 1.651 billion GBP, reflecting a year-on-year growth of 2.4% [1] - Adjusted gross profit for BAT reached 1.006 billion GBP, up 6.8%, with an adjusted gross margin of 59.5%, an increase of 2.5 percentage points [1] - Profit contribution from product categories was 179 million GBP, marking a significant increase of 39% [1] Group 2: Market Outlook - BAT anticipates accelerated growth in its new tobacco business in the second half of 2025, projecting a mid-single-digit revenue growth for the entire year [1] - Smoore International is viewed positively as a core supplier, benefiting from BAT's substantial resource and marketing investments in GloHilo, which has received favorable feedback from trials in Japan and early deployments in several European countries [1] - The overall performance of Heat-Not-Burn (HNB) products is stable, supported by the launch of GloHilo, which has increased its market share by 1.5 percentage points in Sendai [1] - The global HNB industry is entering a new product lifecycle phase, with major brands actively engaging in market cultivation, suggesting potential for accelerated industry expansion [1]

Core Viewpoint - The article highlights the robust growth trend in the new tobacco industry, as evidenced by British American Tobacco's performance in the first half of 2025, particularly in the heated tobacco and new oral tobacco segments [1]. Group 1: Investment Recommendations - The global HNB (Heated Not Burned) industry is entering a new product lifecycle phase, with major brands actively engaging in market cultivation, leading to accelerated industry expansion [2]. - The vaping market faced challenges in the first half of 2025, with British American Tobacco's vaping business generating £737 million in revenue, a decrease of 15% year-on-year, primarily due to illegal products in the U.S. and Canada, as well as market dynamics in Europe and other regions [2]. - The company has exited markets like Malaysia and Saudi Arabia to improve investment returns, while the U.S. has seen a clearance of illegal disposable brand inventories, which will take time to impact the market [2]. Group 2: Performance Analysis - The overall performance of HNB products remained stable, with British American Tobacco's HNB business achieving £444 million in revenue, a slight increase of 1% year-on-year, and heated stick sales reaching 10.1 billion units, up 2% [3]. - The introduction of Glo Hilo has helped expand market share in trial regions, with a 1.5 percentage point increase in Glo's market share in Sendai [3]. - The new oral tobacco segment has shown significant growth, with revenue reaching £470 million, a 38% increase year-on-year, and sales volume of 5 billion pouches, up 42% [3]. - The U.S. market for new oral tobacco has surged, with a 206% increase in sales, and the Velo brand capturing a market share of 17% by July 2025, making it the fastest-growing brand in this category [3].

Investment Rating - The report maintains an "Outperform" rating for the light industry sector [6][10]. Core Insights - Recent financial reports from major overseas tobacco companies for H1 2025 show overall stable performance, with new tobacco products continuing to drive growth. British American Tobacco, Philip Morris International, and Japan Tobacco have all raised their annual forecasts [18]. Summary by Relevant Sections British American Tobacco (BAT) - For H1 2025, BAT reported revenues of £12.069 billion, a decrease of 2.2% year-on-year, with new tobacco products accounting for 13.7% of total revenue [2][19]. - The revenue from heated tobacco products was £440 million, showing a slight increase of 0.8%, while the revenue from new oral tobacco products surged by 38.1% to £470 million [20][21]. Philip Morris International (PMI) - PMI's Q2 2025 net revenue reached $10.14 billion, reflecting a year-on-year increase of 7.1%, with smoke-free tobacco products making up 41.6% of total revenue [3][28]. - The global shipment of heated tobacco units was 38.8 billion, up 9.2% year-on-year, with IQOS market share in Japan increasing to 31.7% [29]. Japan Tobacco - Japan Tobacco reported Q2 2025 revenues of ¥907.6 billion, a 9.4% increase year-on-year, with heated tobacco product shipments rising by 31.2% [4][38]. - The company has adjusted its annual revenue growth forecast to 8.4% and operating profit growth to 14.6% [38]. Altria - Altria's Q2 2025 revenue was $6.1 billion, down 1.7% year-on-year, with oral tobacco product revenue increasing by 5.9% [5][12]. Market Overview - The light industry sector experienced a relative return of +0.16% last week, despite a decline of 1.59% in the overall sector [6][9]. - Furniture retail sales in June increased by 28.7% year-on-year, while building materials sales saw a decline of 8.9% [6][12]. Investment Recommendations - The report recommends focusing on leading companies in the home furnishing sector, such as Oppein Home, Sophia, and Kuka Home, as well as in the paper and packaging sectors, highlighting Sun Paper and Yutong Technology as key investment opportunities [9][16].

Investment Rating - The report maintains an "Accumulate" rating for the industry, indicating a positive outlook for future performance [1]. Core Insights - Philip Morris International (PMI) reported Q2 2025 revenue of $10.1 billion, with an organic year-over-year growth of 6.8%. For the first half of 2025, revenue reached $19.4 billion, up 6.5% year-over-year. The revenue from smoke-free products was $4.2 billion, reflecting a 14.5% organic growth and accounting for 41% of total revenue [4][9]. - The Heat-Not-Burn (HNB) segment continues to grow, with Q2 HNB sales reaching 38.8 billion units, a year-over-year increase of 9.2%. Excluding channel inventory effects, the growth rate was 11.4%. As of Q2 2025, the number of HNB users reached 34 million, with Japan's HNB penetration rate increasing to 48% [4][10]. - British American Tobacco (BAT) reported H1 2025 revenue of £12.569 billion, a 1.8% increase year-over-year at constant exchange rates. The revenue from new tobacco products was £1.651 billion, up 2.4%, representing 18.2% of total revenue [4][10]. Summary by Sections Industry Trends - The global tobacco industry is approaching a market size of nearly $1 trillion, with new tobacco products growing at a faster pace and expected to capture more market share. Major players like PMI and BAT are increasing their focus on smoke-free products, particularly HNB [4][12]. Company Performance - PMI's Q2 2025 performance highlights include a 14.5% increase in smoke-free product revenue and a 100% increase in electronic vapor product sales. The company maintains a full-year sales growth forecast of 10-12% for HNB products [4][9]. - BAT's H1 2025 results show a mixed performance in new tobacco products, with HNB revenue growing modestly while electronic vapor products faced challenges due to regulatory issues [4][10]. Investment Recommendations - The report suggests monitoring companies linked to new tobacco products, such as Smoore International, a leading OEM for BAT's HNB products, and Yingqu Technology, the manufacturer for PMI's IQOS [4][12].