Investment Rating - The report maintains an "Outperform" rating for the industry [4]. Core Insights - The report highlights the potential for valuation recovery in the home furnishing sector in Q4, with many companies currently at historical low valuations and attractive dividend yields, suggesting a timely opportunity for left-side positioning [3]. - The introduction of new HNB products by British American Tobacco (BAT) in European markets is expected to enhance market share, with a target of reaching 50 million consumers of smoke-free products by 2030 and transitioning to a smoke-free enterprise by 2035 [3]. Summary by Sections Home Furnishing - The report notes that in August, the residential construction area decreased by 28.4% year-on-year, while the sales area of residential properties saw a 10% decline [8]. - Despite the pressure on the real estate sector, the report emphasizes the opportunity for investment in home furnishing companies due to their low valuations and high dividend yields [8]. - Key companies to watch include leading brands in soft furnishings and custom furniture, such as Kuka Home, Sophia, and Oppein [8]. Paper and Packaging - As of September 19, 2025, the prices for various paper products showed mixed trends, with double glue paper at 4800 RMB/ton (down 18.75 RMB), while corrugated paper increased to 2791.25 RMB/ton (up 20 RMB) [8]. - The report suggests focusing on companies with strong supply chain management and fiber supply, such as Nine Dragons Paper and Sun Paper [8]. Light Industry Consumption - In August, sales of sanitary napkins on e-commerce platforms increased by 5.8% year-on-year, with the Nais Princess brand showing a significant growth of 41% [10]. - The report anticipates a boost in sales for personal care brands as the e-commerce sales season approaches, highlighting companies like Dengkang Oral Care and Steady Medical [10]. Export Chain - The report notes that the recent interest rate cut by the Federal Reserve may lead to improved demand in the U.S. real estate sector, positively impacting export-oriented home furnishing companies [10]. - Companies to monitor in the export chain include Zhongxin Co., Jiangxin Home, and Zhejiang Natural [10]. New Tobacco Products - The report discusses the launch of BAT's GLO HILO in several European markets, projecting a continued increase in market share for HNB products [10]. - It recommends focusing on companies that have established partnerships in the electronic cigarette and HNB product sectors, such as Smoore International [10].

Investment Rating - The report maintains an "Outperform" rating for the industry [5] Core Insights - The report highlights the expected acceleration in the new tobacco sector for British American Tobacco in the second half of 2025, driven by strong performance in oral tobacco products and the phased launch of new products [2][6] - The 618 shopping festival is anticipated to boost domestic brands in personal care and outdoor sports, with significant growth potential for companies like Morning Glory and others leveraging IP strategies [2][6] Summary by Sections Home Furnishing - The home furnishing sector is expected to gradually recover as consumer confidence improves, with many companies currently valued at historical lows. Key players to watch include custom furniture leaders like Oppein and Sophia [6][10] Paper and Packaging - As of June 6, 2025, prices for various paper products remain stable, with white cardboard prices increasing slightly. The report suggests a cautious outlook due to overall weak terminal demand [6][54] - The paper industry saw a 1.6% year-on-year decline in revenue from January to April 2025, but fixed asset investment increased by 7.6% during the same period [66][68] Light Industry Consumption - The report notes that domestic brands in personal care are rapidly expanding their market presence, particularly through platforms like Douyin. Companies such as Dekang and Baiya are highlighted for their growth potential [6][8] Export Chain - The report indicates a robust outlook for export-oriented companies, with shipping costs rising due to increased demand for goods from China. Companies like Zhongxin and Zhejiang Nature are recommended for investment [6][8] New Tobacco - British American Tobacco's new tobacco segment is projected to see significant growth in the latter half of 2025, with a full-year growth expectation of mid-single digits, driven by strong performance in oral tobacco and the introduction of new products [6][8] Textile and Apparel - The textile and apparel sector has shown resilience, with notable sales increases during the 618 shopping festival. Brands like Anta and Li Ning are recommended for their strong performance [6][10]

Investment Rating - The industry investment rating is "Positive" [2] Core Insights - The report highlights the accelerating global shift towards smoke-free products, with leading tobacco companies increasing their R&D investments and product offerings in the new tobacco sector. Major companies like Philip Morris International, British American Tobacco, Japan Tobacco, and Imperial Brands are projected to see revenue growth in new tobacco products of 15.0%, 2.5%, 21.1%, and 24.2% respectively for 2024, with significant future targets set for smoke-free revenue contributions [11][12][6] Summary by Sections New Tobacco Development - The report emphasizes the trend towards a smoke-free era, with leading companies adapting to changing consumer habits and increasing their focus on new tobacco products. For instance, Philip Morris aims for over two-thirds of its revenue to come from new tobacco products by 2030 [11][12] Regulatory Environment - The report notes a continued high-pressure regulatory environment overseas, with several countries implementing bans on disposable e-cigarettes and the FDA accelerating the PMTA process for new products. This regulatory landscape is expected to influence market dynamics and product iterations [3][12] Domestic Suppliers - Domestic suppliers are positioned to enhance their global market share. For example, Smoore International reported a revenue of 34.75 billion CNY in Q4 2024, with a year-on-year growth of 8.8%. The company is focusing on HNB products as a growth driver [4][15] - China Tobacco Hong Kong reported a revenue of 43.70 billion HKD in H2 2024, with a significant net profit increase of 48.4% year-on-year, indicating robust performance and strategic growth initiatives [4][17] - Yingqu Technology reported a revenue of 10.34 billion CNY in Q4 2024, with a focus on vertical integration in manufacturing, which is expected to enhance its market share as HNB penetration increases globally [5][18] Investment Recommendations - The report suggests focusing on leading tobacco companies like Smoore International and China Tobacco Hong Kong, as well as Yingqu Technology, due to their strategic positioning and growth potential in the evolving tobacco landscape [6][18]

Investment Rating - The industry investment rating is "Positive" [2] Core Insights - The report highlights the accelerating global shift towards smoke-free products, with leading tobacco companies increasing their R&D investments and product offerings in the new tobacco sector. Major companies like Philip Morris International, British American Tobacco, Japan Tobacco, and Imperial Brands are projected to see revenue growth in new tobacco products of 15.0%, 2.5%, 21.1%, and 24.2% respectively for 2024, with significant future targets for smoke-free revenue [11][12] - Compliance is emphasized as a key development theme, with ongoing regulatory pressures in overseas markets leading to a decline in disposable vape products. The report anticipates a recovery in the compliant market and an acceleration in product iteration [3][12] - Domestic suppliers are poised for growth, with companies like Smoore International and China Tobacco Hong Kong showing stable revenue performance and plans for innovation and international expansion [4][6] Summary by Sections New Tobacco Development - The report discusses the increasing penetration of new tobacco products, which is changing consumer habits. Leading companies are focusing on R&D and product innovation, with significant revenue growth expected in the coming years [11][12] - Philip Morris aims for over two-thirds of its revenue to come from new tobacco products by 2030, while British American Tobacco and Japan Tobacco have set similar ambitious targets for 2035 [11][12] Regulatory Environment - The report notes a high-pressure regulatory environment in overseas markets, with new bans on disposable vapes in Belgium, France, and the UK. The FDA in the US is also accelerating its approval processes for new products [3][12] Financial Performance of Key Players - Smoore International reported a revenue of 34.75 billion CNY in Q4 2024, with a year-on-year increase of 8.8%. The company is focusing on HNB products as a growth driver [4][15] - China Tobacco Hong Kong achieved a revenue of 43.70 billion HKD in H2 2024, with a net profit increase of 48.4%. The company is optimizing its product and channel structure for better profitability [4][17] - Yingqu Technology reported a revenue of 10.34 billion CNY in Q4 2024, with a focus on vertical integration in the manufacturing of smoking devices [5][18] Investment Recommendations - The report suggests focusing on leading companies like Smoore International and China Tobacco Hong Kong, as well as Yingqu Technology, due to their strong growth potential and strategic positioning in the evolving market [6][18]

Core Viewpoint - The strong performance of Philip Morris International's (PMI) Q1 2025 results indicates significant growth potential for the heated tobacco product (HNB) market, which is relevant for Smoore International as a key supplier in this sector [1][2] Group 1: Company Performance - Smoore International's stock rose over 3%, currently trading at 13 HKD with a transaction volume of 73.1681 million HKD [1] - PMI's Smoke-Free Products (SFP) revenue increased by 20.4% year-on-year, with gross profit rising by 33.1% and a gross margin exceeding 70%, up by 6.7 percentage points [1] - The shipment volume for PMI's products grew by 14.4% year-on-year, with HNB, oral tobacco, and e-cigarettes increasing by 12%, 27%, and 107% respectively [1] Group 2: Market Insights - The international tobacco giants are advancing their smoke-free strategies, with PMI's Q1 performance aligning with expectations for HNB growth, particularly in the U.S. market [2] - The HNB market has substantial growth potential, with regulatory advantages over vaping products, including lower appeal to youth and easier harm reduction validation [2] - The competitive landscape for HNB is favorable due to fewer participating manufacturers, and British American Tobacco's new Glo Hilo product shows significant improvements in performance and user experience compared to both leading products and previous generations [2]

Investment Rating - The investment rating for the company is "Buy" [4] Core Insights - The report highlights the strong performance of Philip Morris International's (PMI) Smoke-Free Products (SFP) in Q1 2025, with a revenue increase of 20.4% year-on-year and a gross profit increase of 33.1%, resulting in a gross margin exceeding 70% [1][3] - The report emphasizes the growth potential of the Heat-Not-Burn (HNB) market, particularly in the U.S. where trials have shown strong market feedback, and the company expects double-digit growth for IQOS sales throughout the year [2][3] - The new nicotine pouch ZYN has shown impressive growth, with a 53% increase in shipments in the U.S. and similar growth internationally, indicating a robust demand for innovative tobacco products [2][3] Summary by Sections Company Performance - PMI's HNB products, including IQOS, have captured over 70% market share, with a shipment increase of 12% for HNB products in Q1 2025 [1][2] - The gross margin for IQOS has improved significantly due to scale efficiencies and productivity enhancements [1] Market Trends - The HNB penetration rate in Japan continues to rise, reaching 47.8% in March 2025, indicating ongoing market growth even in mature markets [1][2] - The U.S. HNB market is poised for expansion, with ongoing trials expected to lead to broader market entry [2] Financial Projections - The company is projected to achieve revenues of HK$128.9 billion, HK$151.1 billion, and HK$173.5 billion for the years 2025 to 2027, with year-on-year growth rates of 9%, 17%, and 15% respectively [3][9] - Net profit forecasts for the same period are HK$13.2 billion, HK$19.2 billion, and HK$24.8 billion, reflecting growth rates of 2%, 45%, and 29% [3][9]