Investment Rating - The investment rating for the company is "Buy" and is maintained [10] Core Insights - The company is expected to achieve revenue of 14.256 billion HKD and adjusted net profit of 1.530 billion HKD in 2025, representing a year-on-year increase of 21% and 1% respectively [2][7] - The company plans to distribute a dividend of 0.4 HKD per share for the year 2025, resulting in a dividend payout ratio of 234.4% [2][7] - The HNB (Heat-not-Burn) and vaping segments are performing positively, with HNB revenue expected to grow significantly due to new product launches in key markets [11] Revenue Summary - For 2025, the company anticipates a total revenue of 14.256 billion HKD, with a breakdown of 8.243 billion HKD in H2 and 4.046 billion HKD in Q4, showing year-on-year growth rates of 22% and 16% respectively [2][7] - The TOB (Tobacco Operating Business) is projected to contribute 80% of total revenue, with a 22% increase in revenue, while the TOC (Tobacco Operating Company) is expected to grow by 18% [11] Profitability Summary - The gross margin is expected to decline by 3.3 percentage points to 34.1% due to changes in product mix, with increased costs in stock-based compensation and legal services impacting profitability [11] - The company is projected to achieve adjusted net profits of 1.158 billion HKD, 2.020 billion HKD, and 2.770 billion HKD for the years 2026 to 2028, with corresponding PE ratios of 31, 24, and 18 [11] Long-term Outlook - The long-term outlook for HNB and vaping products is positive, with expected compound annual growth rates of 11.5% from 2025 to 2030 [11] - The company is also exploring new business opportunities in medical vaping and other specialized applications, with FDA certification for its manufacturing facility in the U.S. [11]

Investment Rating - The investment rating for the company is maintained at "Buy" with a target price of HKD 16.00 [1] Core Insights - The company achieved a revenue of RMB 14.256 billion in 2025, representing a year-on-year increase of 20.8%, with adjusted profit reaching RMB 1.53 billion, up 1.3% year-on-year. The growth was driven by the recovery of the aerosol business in Europe and the U.S., as well as the ramp-up of the HNB (Heated Not Burned) business [1][2] - The report anticipates continued recovery in the aerosol business and further progress in the HNB sector, supported by a multi-client and multi-product strategy [1][3] Summary by Sections Aerosol Business - The ToB (Business to Business) segment generated revenue of RMB 10.058 billion in 2025, a 10.5% increase year-on-year, benefiting from regulatory enforcement in Europe and the U.S. The revenue breakdown includes RMB 5.77 billion from Europe, RMB 4.07 billion from the U.S., and RMB 210 million from mainland China [2] - The ToC (Business to Consumer) segment achieved revenue of RMB 2.911 billion, up 17.6% year-on-year, with significant growth in overseas markets driven by the VAPORESSO brand [2] HNB Business - The HNB segment reported revenue of RMB 1.29 billion, a staggering increase of 475.4% year-on-year, driven by the launch of high-end products in key markets [3] - The company plans to expand the Glo Hilo product line into more markets and accelerate the commercialization of other HNB technology platforms in 2026 [3] Financial Performance - The gross margin for 2025 was 34.1%, down 3.3 percentage points year-on-year, primarily due to changes in business structure and rising raw material costs. The total expense ratio decreased to 23.0% in the second half of 2025 [4] - Adjusted net profit margin for 2025 was 10.7%, reflecting a decline of 2.1 percentage points year-on-year [4] Profit Forecast and Valuation - The adjusted net profit forecasts for 2026, 2027, and 2028 are RMB 1.652 billion, RMB 2.253 billion, and RMB 2.841 billion, respectively. The adjusted EPS for these years is projected to be RMB 0.27, RMB 0.36, and RMB 0.46 [5] - The company is assigned a target PE of 40 times for 2027, leading to a target price of HKD 16.00, based on the expected growth in the HNB and aerosol businesses [5]

Investment Rating - The investment rating for the company is "Buy" [5] Core Insights - The company has achieved record-high annual revenue, with multiple business segments showing positive progress, including heated non-combustion products, vaporized e-cigarettes, and medical aerosol business [2][9] - The company is expected to maintain a strong growth trajectory, with projected revenues increasing from 11.8 billion RMB in 2024 to 21.3 billion RMB by 2028, reflecting a compound annual growth rate (CAGR) of approximately 14% [3][10] - The net profit forecast for 2026-2028 is adjusted to 1.05 billion RMB, 1.82 billion RMB, and 2.18 billion RMB respectively, indicating a significant recovery in profitability [9] Financial Summary - Total revenue is projected to grow from 11,799 million RMB in 2024 to 21,276 million RMB in 2028, with year-on-year growth rates of 6%, 21%, 15%, 14%, and 14% respectively [3][10] - Gross profit is expected to increase from 4,412 million RMB in 2024 to 7,245 million RMB in 2028, with a gross margin of 34.1% in 2025 [3][10] - The company's net profit is forecasted to decline to 1,052 million RMB in 2026 before rebounding to 1,820 million RMB in 2027 and 2,180 million RMB in 2028, with a notable increase in profit margins in the later years [3][10] Business Performance - In the second half of 2025, revenue from enterprise customers reached 6.605 billion RMB, a year-on-year increase of 22%, while retail customer revenue was 1.637 billion RMB, up 23% year-on-year [9] - The company’s HNB (Heated Non-Combustion) revenue exceeded 1.2 billion RMB in 2025, supported by the successful launch of high-end products in key markets [9] - The traditional vaporization business is expected to benefit from global regulatory changes, enhancing brand market share [9] Market Position - The company is positioned as a core supplier in the heated non-combustion industry, benefiting from long-term R&D investments that create a strong technological moat [9] - The company is expected to achieve a target price of 12.00 HKD based on a PE ratio of 65.0X for 2026, reflecting a premium valuation due to its leading market position and growth potential [9]

Investment Rating - The investment rating for the company is "Buy" [1] Core Insights - The report indicates that the new tobacco business is progressing steadily, with guidance for double-digit growth in 2026 [2] - The company expects revenue growth of 4% in 2026, followed by 3% in 2027 and 2028, with net profit growth of 6%, 7%, and 5% respectively [8] Financial Summary - Total revenue (in million GBP) is projected as follows: 2024: 25,867; 2025: 25,610; 2026E: 26,634; 2027E: 27,433; 2028E: 28,256, with a year-on-year change of -5%, -1%, 4%, 3%, and 3% respectively [5] - Gross profit is expected to increase from 2,406 in 2024 to 11,906 in 2028 [5] - Net profit is projected to rise from 3,068 in 2024 to 9,246 in 2028, with significant growth in 2025 [5] - The PE ratio is forecasted to decrease from 43.03 in 2024 to 14.28 in 2028, indicating improved valuation [5] Market Performance - The stock has a 52-week price range of $36.35 to $63.22, with a current market capitalization of $132 billion [5] - The report highlights a recovery in the vaping business, with the VUSE brand returning to growth in the second half of 2025 [8] - The company is also focusing on new product launches in the heated tobacco segment, with expectations for improved market performance [8]

Investment Rating - The investment rating for the company is "Buy" [1] Core Insights - The report indicates that the new tobacco business is progressing steadily, with guidance for double-digit growth in 2026 [2] - The company expects revenue growth of 4% in 2026, followed by 3% in both 2027 and 2028, with net profit growth of 6%, 7%, and 5% respectively during the same period [8] Financial Summary - Total revenue (in million GBP) is projected as follows: 2024: 25,867; 2025: 25,610; 2026E: 26,634; 2027E: 27,433; 2028E: 28,256, with a year-on-year change of -5%, -1%, +4%, +3%, and +3% respectively [5] - Gross profit is expected to increase from 2,406 million GBP in 2024 to 11,906 million GBP in 2028 [5] - Net profit is forecasted to rise from 3,068 million GBP in 2024 to 9,246 million GBP in 2028, with year-on-year changes of -121%, +153%, +6%, +7%, and +5% respectively [5] - The price-to-earnings (PE) ratio is projected to decrease from 43.03 in 2024 to 14.28 in 2028 [5] Market Performance - The company's stock price has ranged between 36.35 and 63.22 USD over the past 52 weeks, with a current market capitalization of 132,002 million USD [5]

Investment Rating - The report suggests that the domestic HNB (Heated Not Burned) industry is on the verge of significant growth, driven by international tobacco giants shifting towards new tobacco products [5]. Core Insights - 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 size decreasing from 53,908 billion sticks in 2018 to an estimated 51,561 billion sticks in 2024, reflecting a CAGR of -0.74% [1][13]. - Major tobacco companies, including Philip Morris International (PMI), are focusing on new tobacco products as a core growth driver, with PMI planning for over two-thirds of its revenue to come from new tobacco products by 2030 [1][20]. - The Japanese market serves as a reference point, showing that the rapid penetration of heated tobacco products has not negatively impacted tax revenues, with the market size growing from 37.28 billion sticks in 2019 to 64.50 billion sticks in 2024, a CAGR of 11.59% [2][51]. Summary by Sections Section 1: HNB as a Core Development Category - International tobacco giants are increasingly focusing on new tobacco products as a long-term performance core, with significant contributions to profitability [1.1]. - The global market for heated tobacco and electronic cigarettes is projected to grow, with sales expected to reach $38.85 billion and $23.04 billion respectively by 2024, reflecting growth rates of 12.7% and 9.5% [1.1][13]. Section 2: Domestic Tobacco Industry Challenges - The traditional cigarette market in China is under pressure, with production increasing from 23,642 billion sticks in 2019 to 24,655 billion sticks in 2024, but at a slowing growth rate [3][55]. - The inventory levels in the tobacco industry have risen significantly, from 150 billion yuan in 2010 to approximately 4,394 billion yuan in 2024, indicating a high stock level [3][56]. Section 3: Regulatory Framework for HNB - The regulatory landscape for heated tobacco products is becoming clearer globally, with established frameworks in the US, Japan, and Europe, providing a roadmap for compliance [4][62]. - The US has implemented a structured regulatory process for HNB products, which includes pre-market tobacco application (PMTA) requirements, ensuring a predictable compliance environment [4][66]. Section 4: Domestic Product Development and Market Readiness - Chinese tobacco companies have made significant strides in developing HNB products, with several companies launching domestic HNB devices and achieving a substantial number of patents in the field [4][5]. - The report emphasizes the importance of product innovation and international expansion for the high-quality development of the domestic tobacco industry [3][5]. Section 5: Company Analysis - Companies like Huabao International and Smoore International are highlighted for their strong technical reserves and potential for growth in the HNB sector, with Huabao expected to benefit from its leading position in the flavoring segment [5][5.1][5.2].

Investment Rating - The report assigns an "Accumulate" rating for the industry, indicating a potential increase of over 15% relative to the CSI 300 index [4][9]. Core Insights - The rise of the "Reward Economy" signifies a new consumption paradigm, driven by consumers seeking non-essential goods or experiential services to achieve immediate pleasure and psychological relief amidst work and life pressures [2][4]. - The "Reward Economy" reflects a significant shift in consumer decision-making logic, where spending is not solely based on functional needs but also on self-care and emotional fulfillment, showcasing a blend of rational and emotional spending behaviors [4]. - Recent developments driving the "Reward Economy" include endorsements from state media recognizing its value and innovative product launches by cultural and creative companies that attract market attention [4]. Summary by Sections Investment Recommendations - Key industry-related stocks include Shifeng Culture, Guangbo Co., Deyi Culture, and Chuangyuan Co. [4]. Market Trends - The "Reward Economy" is emerging as a new engine for domestic demand and consumption expansion, particularly among younger demographics [4]. - The report highlights that the "Reward Economy" is distinct from the traditional "lipstick effect," emphasizing proactive consumer behavior rather than reactive spending during economic downturns [4]. Recent Developments - Notable events include the collaboration between Chuangyuan Co. and major brands for product launches, and Shifeng Culture's focus on technological innovation in the toy industry, aiming for high-end and intelligent product development [4].

Investment Rating - The report assigns an "Overweight" rating for the electronic cigarette industry, indicating a potential increase in value relative to the market index [4]. Core Insights - The electronic cigarette industry is entering a new product life and regulatory enforcement cycle, with major brands actively engaging in market cultivation, leading to accelerated industry expansion [2][4]. - The Chinese government has issued strict regulations to combat illegal activities related to electronic cigarettes, which is expected to expedite the exit of non-compliant production capacity from the market [4]. - The report highlights that leading compliant manufacturers, such as Smoore International, are likely to benefit from the tightening regulations [4]. Summary by Sections Regulatory Environment - The State Council has emphasized comprehensive regulation of electronic cigarettes, including strict measures against illegal production, wholesale, transportation, and sales [4]. - The focus is on international cooperation to tackle non-compliant electronic cigarette exports, which will help clear out the industry [4]. Market Dynamics - Smoore International is expected to see improvements in its aerosol business due to changes in regulatory environments in the US and Europe, with a potential recovery in 2026 [4]. - British American Tobacco anticipates a single-digit decline in its aerosol business in the second half of 2025, a significant improvement compared to a 13% decline in the first half of 2025 [4]. Financial Projections - Smoore International's earnings per share (EPS) are projected to be 0.17 RMB for 2025, increasing to 0.41 RMB by 2027, with a price-to-earnings (PE) ratio decreasing from 67 in 2025 to 28 in 2027 [5]. - British American Tobacco's EPS is forecasted to rise from 2.83 GBP in 2025 to 3.09 GBP in 2027, maintaining a stable PE ratio of 15 [5].

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].