Group 1 - The core viewpoint is that the A-share market is experiencing a "slow bull" trend, with high-growth sectors being the preferred choice for investment [1][2] - Policy support is expected to strengthen with the upcoming Fourth Plenary Session in October, particularly in hard technology and new productivity sectors [1][2] - Recent increases in overseas AI industry capital expenditure are positively influencing market sentiment [1][2] Group 2 - A total of 12 out of the 15 leading companies with the highest gains since June are linked to overseas expansion, particularly in the AI supply chain and innovative pharmaceuticals [2][3] - The market consensus has been strong since August, but the intensity of sector rotation has decreased to a new low since April of the previous year [2][3] - The focus should be on high-growth sectors such as solid-state batteries, energy storage, and innovative pharmaceuticals, while also considering new consumption trends [1][2] Group 3 - The current market sentiment is characterized by a high degree of volatility, with a potential for a significant upward trend if new catalysts emerge [3][4] - The upcoming October meeting is anticipated to clarify the direction of the "14th Five-Year Plan," likely emphasizing technological innovation and new productivity [3][4] - The market is expected to see a shift towards cyclical trades as the economy transitions from service to manufacturing sectors [4]

Core Insights - The global oral tobacco market is projected to reach $11.232 billion in 2024, reflecting a year-on-year growth of 57.57%, and is expected to grow to $25.148 billion by 2028, with a CAGR of 22.32% from 2024 to 2028 [1][2] - The North American and European markets are experiencing high growth rates, while the Asian and African markets are in early stages, indicating significant potential for rapid development in emerging markets [1][2] - The FDA's approval of flavored oral tobacco products is anticipated to act as a catalyst for market growth, potentially increasing the overall market ceiling [1][4] Market Overview - The retail market for oral tobacco is highly concentrated, with Philip Morris International, British American Tobacco, and Altria Group holding market shares of 41.1%, 24.6%, and 13.8% respectively, totaling 79.5% of the market [2] - In 2024, the North American oral tobacco market is expected to reach $8.775 billion, growing by 58.30% year-on-year, while the European market is projected to reach $2.415 billion, with a year-on-year growth of 56.12% [1][2] Company Performance - Philip Morris International's ZYN nicotine pouch sales are projected to be 644 million boxes in 2024, a year-on-year increase of 52.93%, with U.S. sales accounting for 581 million boxes, up 51.49% [2] - British American Tobacco's oral tobacco sales, including brands like Velo and Grizzly, are expected to reach 8.3 billion pouches in 2024, reflecting a year-on-year growth of 55%, with U.S. sales surging by 234% [2] Regulatory Developments - The FDA has authorized the sale of 20 ZYN nicotine pouch products, which are deemed to have lower harmful components compared to traditional cigarettes and most smokeless tobacco products, aligning with public health standards [4] - The approval of flavored products is expected to enhance market growth and expand the market's potential [4] Industry Opportunities - Jin Cheng Pharmaceutical is increasing its production capacity to 200 tons per year, focusing on high-purity nicotine for new tobacco products, which positions the company to benefit from the expanding oral tobacco market [5][6] - The company has received various certifications, including FDA PMTA approval, which enhances its competitive edge in the market [6] Investment Recommendations - Companies to watch in the oral tobacco supply chain include Jin Cheng Pharmaceutical (300233.SZ) and Run Du Co., Ltd. (002923.SZ) [7]

Investment Rating - Industry rating is maintained as "Outperform the Market" [6] Core Viewpoints - The global oral tobacco market is experiencing rapid growth, with a projected market size of USD 11.232 billion in 2024, reflecting a year-on-year increase of 57.57%, and expected to reach USD 25.148 billion by 2028, with a CAGR of 22.32% from 2024 to 2028 [1] - The North American market is expected to reach USD 8.775 billion in 2024, with a year-on-year growth of 58.30%, and projected to grow to USD 19.449 billion by 2028, with a CAGR of 22.01% [1] - The European market is projected to reach USD 2.415 billion in 2024, with a year-on-year increase of 56.12%, and expected to grow to USD 5.608 billion by 2028, with a CAGR of 23.45% [1] - The top three companies in the oral tobacco retail market in 2024 are Philip Morris International, British American Tobacco, and Altria Group, holding market shares of 41.1%, 24.6%, and 13.8% respectively, totaling 79.5% of the market [1] Summary by Sections Market Growth - The oral tobacco market is expected to see significant growth in both established and emerging markets, with North America and Europe leading in growth rates [1] - Emerging markets in Asia and Africa are in the early stages but are anticipated to realize their market potential rapidly as the oral tobacco market develops [1] Company Performance - Philip Morris International's ZYN nicotine pouch sales are projected to reach 644 million boxes in 2024, a year-on-year increase of 52.93%, with U.S. sales at 581 million boxes, up 51.49% [2] - British American Tobacco's oral tobacco sales are expected to reach 8.3 billion pouches in 2024, with U.S. sales significantly increasing by 234% [2] Regulatory Developments - The FDA has authorized the sale of 20 ZYN nicotine pouch products, which are expected to catalyze market growth due to their lower harmful component levels compared to traditional tobacco products [3] - The approval of flavored products by the FDA is anticipated to further enhance market growth and expand the overall market potential [3] Industry Supply Chain - Jincheng Pharmaceutical is positioned as a key supplier in the nicotine market, with an increase in production capacity to 200 tons per year, which is expected to positively impact sales and market positioning [4] - The report suggests focusing on companies within the oral tobacco supply chain, including Jincheng Pharmaceutical and others in the vaping and tobacco supply sectors [4]

Group 1 - The core viewpoint of the report is that Nobon Co., Ltd. is positioned as a leading differentiated supplier of water-jet non-woven fabrics, with a comprehensive growth strategy across materials, products, and branding, leading to a "buy" rating [1][5]. - Nobon has been focusing on the water-jet non-woven fabric sector since its establishment in 2002, holding over a hundred domestic and international patents, and offering a wide range of products across various fields including beauty materials, household cleaning, industrial materials, and medical materials [2][3]. - The company is projected to achieve a revenue of 2.24 billion yuan in 2024, with a CAGR of 15.3% from 2019 to 2024, indicating steady revenue growth [2]. Group 2 - The non-woven fabric industry in China is expected to see a supply-demand rebalancing in 2024, driven by capacity reduction and increased consumer hygiene awareness, which will lead to a recovery in profitability [3]. - The production of water-jet non-woven fabrics in China increased from 640,000 tons in 2015 to 1.51 million tons in 2023, with its share of the total non-woven fabric market rising from 13.2% to 18.5% during the same period [3]. - Nobon is leveraging its advanced production processes and R&D capabilities to maintain its leading position in the market, benefiting from strong demand in emerging consumer segments such as cotton soft towels and oral tobacco [3]. Group 3 - Nobon is focusing on three key areas for growth: 1) Roll materials, where technological upgrades are enhancing competitiveness and market share [4]. 2) Finished products, with a strong production capacity and quality control, particularly through its subsidiary, Hangzhou Guoguang [4]. 3) Own brand development, with the launch of the "Xiaozhijia" brand aimed at creating a second growth curve [4]. - The company expects net profits of 130 million yuan, 160 million yuan, and 190 million yuan for 2025, 2026, and 2027 respectively, with corresponding P/E ratios of 28X, 23X, and 20X [5].

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].

Group 1 - The stock of Smoore International (06969) increased by over 6%, currently up 6.29% at HKD 21.64, with a trading volume of HKD 501 million [1] - Smoore International is holding a board meeting today to consider and approve the interim results for the six months ending June 30, 2025, and to declare an interim dividend if applicable [1] - The company anticipates revenue of RMB 6.013 billion for the first half of 2025, representing an 18% year-on-year growth; however, it expects a pre-tax profit of approximately RMB 629 million to RMB 769 million, a decrease of 5% to 23% year-on-year [1] Group 2 - The decline in profit is primarily attributed to an increase of RMB 176 million in non-cash share-based payment expenses, as well as significant growth in distribution, sales expenses, and legal service costs [1] - UBS noted that the preliminary results indicate an 18% year-on-year revenue growth for the first half, driven by a recovery in the vape business, with increased shipments ahead of U.S. tariffs [1] - The company expects a year-on-year decline in net profit of 21% to 35% in the second half, mainly due to high expenses related to stock options granted in the fourth quarter and S&D [1] Group 3 - Zheshang Securities believes that British American Tobacco is heavily investing in resources and marketing for Glo Hilo, with positive trial feedback in Japan and early deployments in some European countries, indicating a favorable outlook for future volume growth [1] - Additionally, the growth of oral tobacco remains strong, and the regulation of illegal vaping products is expected to lead to a recovery, maintaining a positive outlook for core supplier Smoore International [1]

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].

Group 1 - The global tobacco market is projected to reach $951.4 billion in 2024, with a year-on-year growth of 2.6% [1] - Cigarettes and cigars are expected to account for $775.6 billion, while new tobacco products will reach $87 billion, showing significant growth in the latter category at 13.1% [1] - The new tobacco sector, including e-cigarettes and heated tobacco products, is anticipated to grow, with e-cigarettes projected at $23 billion and heated tobacco at $38.9 billion, reflecting growth rates of 9% and 13% respectively [1] Group 2 - Smoore International (06969) is positioned as a leading manufacturer of vaporized electronic products, with positive feedback on its Glo Hilo product linked to British American Tobacco [2] - The HNB business of Smoore International is expected to show strong growth and profitability potential by 2026 as market penetration increases [2] - China Tobacco Hong Kong (06055) is advancing its exclusive cigarette export business through a framework agreement with Mongkun Company, which is expected to enhance revenue and profitability [2]

Investment Rating - The investment rating for the company is "Positive" [2] Core Insights - The company reported a Q1 2025 revenue of $9.301 billion, representing a year-on-year increase of 5.8%, and an adjusted year-on-year increase of 10.2%. The new tobacco revenue reached $3.895 billion, with a year-on-year growth of 15.0% and an adjusted growth of 20.4%. The new tobacco segment now accounts for 41.9% of total revenue, up 3.4 percentage points year-on-year, moving closer to the company's target of two-thirds by 2030 [2][3] - The net profit for Q1 2025 was $2.690 billion, reflecting a year-on-year increase of 25.2%, driven by product mix optimization and price increases in both new tobacco and traditional cigarettes [2] - The company’s HNB (Heated Not Burned) product sales reached 37.09 billion units in Q1 2025, marking an 11.9% year-on-year increase, with a global penetration rate of 5.7%, up 0.5 percentage points year-on-year [3] - In Japan, the adjusted sales growth for IQOS reached 9.3%, with a penetration rate of 32.4%, surpassing 50% market share in 13 major cities and 8 prefectures [3] - The company’s nicotine pouch sales were 5.3 billion units in Q1 2025, showing a year-on-year increase of 27.2%, with strong performance in both the U.S. and non-U.S. markets [4] - The company anticipates a global tobacco market decline of approximately 1% in 2025, while projecting a 12%-14% increase in new tobacco product sales, with HNB sales expected to grow by 10%-12% [4] - The company aims for IQOS to capture a 10% market share in the U.S. cigarette and HNB market by 2030 [4]

Summary of the Conference Call on Oral Tobacco Market Industry Overview - The oral tobacco market, particularly nicotine pouch products, is experiencing rapid expansion, with the U.S. market growing 300 times from 2016 to 2021 and seven times from 2019 to mid-2022, indicating high industry vitality. The global market size is expected to reach $20-30 billion by 2030 [1][4] Key Insights and Arguments - The production threshold for oral tobacco is relatively low, but high-quality product development requires significant R&D investment. Philip Morris International (PMI) plans to invest $1.5 billion in R&D by 2025, focusing on raw material processing, formula design, nicotine release technology, and flavor optimization [1][5] - The oral tobacco industry participants are mainly pharmaceutical companies and e-cigarette firms. Pharmaceutical companies like Jingcheng Rundu and Henuo have advantages in release technology and nicotine supply, while e-cigarette companies rely on overseas channels for market coverage [1][6] - The cost structure of oral tobacco products includes low costs for cellulose, nicotine, and flavoring agents, totaling approximately 0.5-0.9 RMB per box, while packaging and labeling costs are higher, around 1 RMB per box. The technology content of non-woven fabric affects taste and nicotine release [1][8] Market Pricing and Cost Distribution - The retail price of oral tobacco products ranges from $5 to $10, with brand manufacturers' ex-factory prices around $2-3 and contract manufacturers' prices between $0.7 and $1. The material cost is approximately $0.2-0.3 [1][8] Regulatory Environment - Global regulations on oral tobacco vary. In the U.S., the FDA regulates it, requiring PMTA certification; European countries have different policies, with some regulated as food and others as tobacco. China currently has a relatively lenient regulatory environment, making it easy to purchase through e-commerce platforms [3][9] Market Share and Competitive Landscape - Large traditional tobacco companies dominate the global vaping and oral tobacco market, holding an 80% market share, with PMI accounting for 50% and British American Tobacco for 20%. The concentration in the oral tobacco market is higher than in the vaping market, with large companies having advantages in scale and R&D [3][10] Growth Trends and Future Outlook - The oral tobacco market is projected to grow at a compound annual growth rate (CAGR) of 30% in the coming years, with recent growth rates around 50%. Despite the current small market size, it shows significant potential compared to the $1 trillion traditional tobacco market [4][12] - PMI is the only nicotine pouch supplier in the U.S. that has passed FDA review, with total sales of 1 billion cans in 2024, of which nicotine pouches account for about 60%, achieving a 50% year-on-year growth [13] Domestic Market Developments - Domestic companies like Jingcheng Rundu are beginning to ramp up production, with expectations to reach 1-10 million boxes in the latter half of 2025. The rapid growth in overseas demand is increasing orders for domestic contract manufacturers [14][15] Conclusion - The oral tobacco market is characterized by high growth potential, significant R&D investment requirements, and a competitive landscape dominated by large traditional tobacco companies. The regulatory environment varies globally, impacting market dynamics. The focus should be on how domestic manufacturers can penetrate the overseas market and the overall supply capacity to meet rising demand [16]