Core Viewpoint - The development of new tobacco products, particularly heated not burned (HNB) tobacco, is an inevitable trend in the industry, with potential for high-quality growth in the domestic tobacco system as it aligns with global trends [1] Group 1: Global Tobacco Market Trends - The global cigarette market is experiencing an irreversible decline, with smoking rates dropping from 30.75% in 2005 to 21.74% in 2022, and cigarette market volume decreasing from 53,908 billion sticks in 2018 to an estimated 51,561 billion sticks in 2024, reflecting a CAGR of -0.74% [2] - Major international tobacco companies are shifting focus to new tobacco products as a core growth driver, with Philip Morris International aiming for over two-thirds of its revenue to come from new tobacco products by 2030, and British American Tobacco targeting 50% by 2035 [2] Group 2: Domestic Tobacco Market Dynamics - The growth of traditional cigarette consumption in China is under pressure, with production increasing from 23,642 billion sticks in 2019 to 24,655 billion sticks in 2024, reflecting a CAGR of 0.84%, while sales grew from 23,631 billion sticks to 24,507 billion sticks, with a CAGR of 0.73% [4] - The inventory levels in the tobacco industry have risen significantly, from 150 billion yuan in 2010 to 439.4 billion yuan in 2024, indicating high stock levels and increasing difficulty in growth [4] Group 3: HNB Tobacco Development and Regulation - The penetration rate of heated tobacco in Japan has rapidly increased since 2019, with market volume growing from 37.28 billion sticks in 2019 to an estimated 64.50 billion sticks in 2024, achieving a CAGR of 11.59% [3] - The regulatory framework for HNB products in major markets like the US, Japan, and Europe is well-defined, providing a potential reference for domestic regulation in China [5] Group 4: Domestic HNB Product Development - Domestic tobacco companies have made significant progress in HNB product development since 2017, with multiple companies launching HNB devices and pods targeting Southeast Asian markets, and over 50 patents in the field of heated tobacco technology [6] - The current product offerings and technological advancements in the HNB sector provide a solid foundation for the development of the domestic HNB industry [6]

Core Viewpoint - The company demonstrates strong confidence in its future development by repurchasing 8.14 million shares at an average price of 12.26 HKD per share, totaling 99.77 million HKD [1] Business Analysis - The Hilo product's capabilities are being validated, with British American Tobacco (BAT) increasing promotional efforts. In the Japanese market, BAT is actively promoting online and offline marketing activities, achieving a retention rate of approximately 50% among traditional cigarette and heated tobacco consumers, which supports the strong product performance of Hilo [1] - Hilo has significantly increased promotional offers in the Polish market, with Hilo devices bundled with two packs of cartridges priced at only 1 Zloty, and Hilo Plus devices with two packs at 79 Zloty. This strategy, supported by BAT's extensive sales network and marketing resources, is expected to drive continued sales growth of Hilo cartridges, contributing to core profit increments for the company [1] - The core vaping business is recovering and is expected to benefit from the expansion of the European and American markets. In 2024, U.S. regulatory authorities are intensifying efforts against illegal e-cigarettes, which is severely squeezing the market for illegal products. The FDA has cautiously supported the expansion of flavored tobacco, indicating a potential for continued market growth [2] - The European market is transitioning from disposable to refillable and open-system products, with BAT's U.S. market revenue expected to rebound in the second half of 2025. The global core market share is projected to increase by 0.1 percentage points by the end of 2024, with the U.S. market alone expected to grow by 0.7 percentage points [2] - BAT plans to accelerate the global promotion of Hilo by 2026 to capture market share across various segments of heated tobacco, amidst increasing competition from products like IQOS and heated tobacco from Japan. The long-term trend of increasing penetration of new tobacco products overseas is confirmed, with the company leveraging its technological strength and production capacity to maintain a prominent position in the industry [2] - The upward trend in the company's vaping and heated non-burn (HNB) businesses remains unchanged, with positive signals emerging across various operations, suggesting a need for active attention [2] Profit Forecast, Valuation, and Rating - The company forecasts EPS for 2025, 2026, and 2027 to be 0.22, 0.37, and 0.59 CNY respectively, with current stock prices corresponding to PE ratios of 53, 31, and 20 times, maintaining a "buy" rating [3]

Group 1 - The core viewpoint of the report is that Smoore International (06969) is positioned to benefit from the expansion of the compliant vaping market in Europe and the US, supported by its strong technological capabilities and production capacity [1] - The company has announced a share buyback of 8.14 million shares at an average price of HKD 12.26, totaling HKD 99.77 million, reflecting confidence in its future development [1] Group 2 - Hilo's product strength is being validated, with British American Tobacco (BAT) increasing promotional efforts, leading to a retention rate of approximately 50% among traditional cigarette and heated tobacco consumers [2] - Hilo's sales are expected to increase significantly due to BAT's extensive sales network and marketing resources, contributing to Smoore's core profit growth [2] Group 3 - The core vaping business is recovering and is expected to benefit from the expansion of the compliant market in Europe and the US, with the FDA cautiously supporting the expansion of flavored tobacco products [3] - BAT anticipates that the US market will not hinder the overall growth of new tobacco business revenue, with a projected market share increase of 0.7 percentage points in the US by the end of 2024 [3] Group 4 - The company is projected to have earnings per share (EPS) of 0.22, 0.37, and 0.59 yuan for the years 2025 to 2027, with corresponding price-to-earnings (PE) ratios of 53, 31, and 20 times [4]

Group 1 - The core viewpoint of the report is that Smoore International (06969) is positioned to benefit from the expansion of the compliant vaping market in Europe and the US, leveraging its technological strength and production capacity to deepen ties with major tobacco groups [1] - The company’s vapor and HNB (Heat-Not-Burn) business trends remain positive, with continuous positive signals emerging across various business segments, suggesting a strong investment opportunity [1] - The company has executed a significant share buyback of 8.14 million shares at an average price of HKD 12.26, totaling HKD 99.77 million, reflecting confidence in its future development [2] Group 2 - Hilo's product strength is being validated, with British American Tobacco (BAT) increasing promotional efforts, leading to a retention rate of approximately 50% among traditional cigarette and heated tobacco consumers, which supports future sales growth of Hilo cartridges [3] - The core vaping business is recovering and is expected to benefit from the expansion of the compliant market in Europe and the US, with regulatory actions against illegal e-cigarettes creating a more favorable environment for compliant products [4] - BAT anticipates that the US market will not hinder overall revenue growth for new tobacco products in 2026, with plans to accelerate the global promotion of Hilo to capture market share across different segments [4]

Investment Rating - The report maintains a "Buy" rating for the company, expecting a price increase of over 15% in the next 6-12 months [5]. Core Views - The company demonstrates confidence in its future development by repurchasing 8.14 million shares at an average price of 12.26 HKD, totaling 99.77 million HKD [2]. - The Hilo product line is gaining traction, with strong promotional efforts from British American Tobacco (BAT) leading to a 50% retention rate among traditional and heated tobacco consumers, which supports future sales growth [3]. - The core vaping business is recovering, benefiting from regulatory crackdowns on illegal e-cigarettes in the U.S. and a shift in European markets towards compliant products. BAT expects revenue recovery in the U.S. market by the second half of 2025, with a projected market share increase [4]. - The company is well-positioned to capitalize on the expanding compliant vaping market in Europe and the U.S., with a focus on accelerating the global promotion of Hilo products by 2026 [4]. Financial Summary - The company’s projected earnings per share (EPS) for 2025-2027 are 0.22, 0.37, and 0.59 CNY, respectively, with corresponding price-to-earnings (P/E) ratios of 53, 31, and 20 [5]. - Revenue is expected to grow from 11,168 million CNY in 2023 to 20,462 million CNY by 2027, reflecting a compound annual growth rate (CAGR) of approximately 20.48% [10]. - The net profit is projected to recover from 1,303 million CNY in 2024 to 3,656 million CNY by 2027, indicating a significant growth trajectory [10].

Group 1 - The core viewpoint is that British American Tobacco (BTI.US) is expected to see accelerated growth in its new tobacco business in the second half of 2025, benefiting from a favorable industry environment and product lifecycle expansion [1] - The HNB (Heated Not Burned) segment is showing positive feedback for new products, with a goal for global expansion in 2026, despite a slight decline in market share for the Glo brand in 2025 due to competition [1] - The Glo Hilo product has achieved a 1% market share in Japan and is gaining traction in Poland and Italy, with expectations for stabilization and recovery in market share by 2026 [1] Group 2 - The vaping segment continues to benefit from an improved market environment, with a projected revenue increase in the second half of 2025, following a 13% year-on-year decline in the first half [2] - The Vuse brand has seen a 0.1 percentage point increase in market share, particularly in the U.S. where it rose by 0.7 percentage points, despite some growth being impacted by illegal vaping products in Canada [2] - The new oral tobacco product Velo Plus is expected to drive significant growth in the U.S. market, with a projected increase in market share by 9.2 percentage points to 15.6% and a global market share increase of 5.9 percentage points to 31.8% [2] Group 3 - Traditional cigarette operations remain stable, with a slight decline in market share of 0.1 percentage points, but a positive outlook for the second half of 2025 driven by improved conditions in the U.S. market [3] - The company anticipates a revenue and adjusted operating profit growth of approximately 2% for the fiscal year 2025, with accelerated growth in new tobacco revenue expected to achieve double-digit growth in the second half [3] - The company plans to increase its share buyback program to £1.3 billion in 2026, up from £1.1 billion in 2025 [3]

Investment Rating - The report assigns an "Accumulate" rating for the industry, indicating a positive outlook for investment opportunities in the new tobacco sector [4]. Core Insights - The new tobacco business of British American Tobacco is expected to accelerate growth in the second half of 2025, benefiting from a favorable industry environment [2]. - The global HNB (Heated Not Burned) industry is entering a new product lifecycle, with major brands actively engaging in market cultivation, leading to accelerated industry expansion [4]. - The Glo brand's market share is projected to stabilize and recover in 2026, primarily driven by the Glo Hilo product [4]. Summary by Sections HNB Market Performance - The Glo Hilo product has received positive feedback, with a market share of 1% in Japan and faster acquisition of market share in Poland and Italy [4]. - The overall revenue growth for 2025 is expected to be steady, influenced by competitive activities and resource reallocation [4]. E-Cigarette and New Products - The vaping market is benefiting from an improved market environment, with the Vuse brand gaining a 0.1 percentage point increase in market share, particularly in the U.S. where it rose by 0.7 percentage points [4]. - The Velo Plus product is driving significant growth in the U.S. market, achieving a 9.2 percentage point increase in market share to 15.6% [4]. Traditional Cigarette Business - The traditional cigarette business remains stable, with a slight decline in market share of 0.1 percentage points globally, but a 0.2 percentage point increase in the U.S. [4]. - The company anticipates a revenue growth of approximately 2% for the fiscal year 2025, with new tobacco revenue accelerating and expected to achieve double-digit growth in the second half of 2025 [4].

Core Viewpoint - British American Tobacco (BTI.US) has provided a cautious earnings outlook for 2026, primarily due to regulatory pressures and intense competition in the U.S. e-cigarette market, which offsets strong growth in other areas of its business [1][2] Group 1: Earnings Guidance - The company expects its 2026 revenue growth to be at the lower end of its mid-term target range of 3%-5%, with adjusted operating profit growth anticipated at 4%-6% [2] - For 2025, the company forecasts revenue and adjusted operating profit growth of approximately 2% [2][3] - The stock buyback plan has been increased from £1.1 billion to £1.3 billion (approximately $1.7 billion) [1] Group 2: Market Challenges - The U.S. e-cigarette market, valued at $22 billion, is facing significant challenges from a surge of non-compliant products, impacting profitability [1] - The CEO noted that about 70% of the U.S. e-cigarette market remains unregulated, creating uncertainty about when it will become a growth driver [1] - Additional pressures include stricter tobacco regulations in Australia and ongoing investments in emerging product categories, which may suppress profit growth [2] Group 3: Analyst Insights - Analysts have pointed out that the recent earnings guidance may not align with market expectations, despite the stock's strong performance, which has seen a 50% increase year-to-date [2] - The company has provided conservative growth guidance for the fourth consecutive year, leading some analysts to find competitors like Imperial Brands (IMBBY.US) more attractive in terms of valuation and growth potential [2]

Core Viewpoint - The report from Guojin Securities indicates that the decline in traditional cigarette sales is an irreversible trend, with tobacco giants focusing on new tobacco products as a core driver for long-term development. The European market is transitioning from disposable to refillable and open products, creating new opportunities for compliant companies [1]. Group 1: Philip Morris International - In Q1-Q3 2025, Philip Morris International's new tobacco business generated revenue of 12.5 billion yuan, a year-on-year increase of 16.0%, with revenue contribution rising by 3.0 percentage points to 41.3% [1]. - In Q3 2025, the revenue from new tobacco products increased by 18.9% to 4.4 billion USD, continuing a favorable growth trend [1]. - The HNB shipment volume reached 116.7 billion sticks in Q1-Q3 2025, a year-on-year increase of 12.2%, with Q3 shipments up by 15.5% to 40.836 billion sticks [2]. Group 2: British American Tobacco - In H1 2025, British American Tobacco's new tobacco business revenue was 1.689 billion GBP, a year-on-year decrease of 1.2%, with vapor products down 15.0% and HNB products down 3.2% [3]. - The Glo market share increased by 0.4 percentage points to 16.8% by H1 2025, with Glo Hilo launched in Japan, Poland, and Italy since September 2025 [3]. Group 3: Altria - In Q1-Q3 2025, Altria's oral tobacco business revenue was 2.096 billion USD, a slight year-on-year increase of 0.6%, while Q3 revenue decreased by 4.6% [4]. - The On! brand achieved sales of 134 million cans in Q1-Q3 2025, a year-on-year increase of 14.8% [4]. - Altria has completed the redesign of NJOY ACE and is assessing the possibility of re-entering the U.S. market after resolving patent disputes [4]. Group 4: Imperial Brands - In FY2025, Imperial Brands' new tobacco business revenue was 368 million GBP, a year-on-year increase of 11.9%, with European new tobacco revenue growing by 7.7% [5]. - The company launched new products in the UK, France, Italy, and Greece, contributing to stable revenue growth in the European market [5]. Group 5: Japan Tobacco - In Q1-Q3 2025, Japan Tobacco's new tobacco business generated revenue of 91.3 billion JPY, a year-on-year increase of 20.7%, with sales volume up by 27.0% [7]. - The Ploom Aura product has achieved cumulative sales of over 2 million units, marking the fastest record in Japanese tobacco history [7]. - Japan Tobacco plans to invest 650 billion JPY in Ploom Aura's development and marketing from 2025 to 2027, indicating a focus on the competitive HNB market [7]. Group 6: Investment Recommendations - The report recommends focusing on Smoore International (06969) due to the significant expansion of the compliant vapor market in Europe and the ongoing global promotion of Hilo [8]. - It also suggests paying attention to the new tobacco industry chain, including vapor, HNB, and oral tobacco products [8].

Summary of the Conference Call for WuXi Technology Company Overview - The company discussed is WuXi Technology, focusing on the electronic vaporization industry. Key Financial Performance - Non-GAAP operating profit reached RMB 188 million, marking the eighth consecutive quarter of positive results [2][3] - Non-GAAP operating profit margin increased by 6 percentage points year-on-year, indicating significant enhancement in profitability [2][3] - Net revenue amounted to RMB 1.1 billion, reflecting a year-on-year growth of 49% and a quarter-on-quarter increase of 28%, showcasing rapid business growth and strong market demand [2][3] International Market Strategy and Achievements - The international market strategy has yielded strong results, particularly in Asian markets through the introduction of popular products and effective local operations [4] - Investment in a leading European electronic vaporization company has contributed significantly to revenue since its consolidation in June 2025 [4] - In the UK, the company maintained its market position and revenue growth by shifting consumer focus to reusable products following a ban on single-use items [4] Development in Key Markets - The domestic market in China has seen positive changes due to enhanced regulatory enforcement, curbing illegal product re-exports [5] - The Asia-Pacific region has excelled with innovative product designs and user appeal, while Europe presents growth opportunities due to its mature regulatory framework [5] Future Revenue Outlook and R&D Focus - For 2026, the company plans to selectively expand its brand presence while ensuring regulatory clarity and market maturity [6] - R&D will focus on valuable product upgrades, including flavor authenticity, ergonomic design, and overall aesthetic performance, leveraging technology to enhance product performance [6] Channel Innovation in the Asian Market - The company is innovating channels in the Asian market by reshaping the consumer experience in electronic vaporizer stores [7] - A franchise retail model has been adopted, attracting over 450 partner stores in one East Asian country, significantly boosting brand influence and channel management capabilities [7] Integration Progress and European Expansion Strategy - The integration of the UK electronic vaporization company is in its early stages, focusing on maintaining brand assets and operational strength [8] - The company aims to transform the business into a multi-brand retail distribution platform, enhancing efficiency through supply chain and capital advantages [8] Modern Oral Products Development - The modern oral segment is one of the fastest-growing categories in the new tobacco field, with the launch of ultra-thin, fast-dissolving oral films at the Interzum exhibition in Germany receiving high industry recognition [9] - The company plans to gradually introduce this category in various markets while maintaining a cautious revenue outlook in the short term [9]