Group 1 - The U.S. non-farm payroll data for July has increased expectations for interest rate cuts in September, leading to a rebound in the Hong Kong stock market [1] - The Federal Reserve is expected to lower interest rates by 25 basis points in each of the next four meetings, according to JPMorgan's updated forecast [1] - The establishment of the Xinjiang Railway Company with a registered capital of 95 billion yuan is anticipated to boost demand for cement by 40 million tons, benefiting various sectors including construction and machinery [2] Group 2 - The lithium carbonate supply side is facing a significant impact as the Jiangxi Jianxia Mine has confirmed a production halt with no short-term plans for resumption [3][6] - The production halt is expected to last over three months, leading to a monthly supply shortage of over 10,000 tons during the peak consumption season [7] - The annual surplus of lithium is projected to decrease from 171,000 tons to approximately 140,000 tons if the production halt extends into 2026, potentially leading to a tight balance in the lithium market [7] Group 3 - Smoore International has released a performance forecast for H1 2025, expecting a year-on-year adjusted net profit change of approximately -1.4% to +24.6% [4] - The company is actively diversifying its business, expanding into the fields of aerosol beauty and medical applications, with a focus on 2025 as a key year for its second growth curve [5] - Smoore's HNB product GloHilo has received positive feedback in Japan, and the company is leveraging its extensive patent portfolio to support its business transformation [4][5]

Market Overview - The Hong Kong stock market experienced a decline of 0.89%, attributed to internal structural issues despite positive market sentiment [1] - Concerns about "stagflation" in the US economy were highlighted, with initial jobless claims rising to 226,000, exceeding economists' expectations of 221,000 [1] - The US added 73,000 jobs in July, below the expected 100,000, while the personal consumption expenditure inflation rate rose to 2.6% year-on-year in June, higher than the anticipated 2.5% [1] Company Performance - Crocs projected a revenue decline of 9% to 11% for Q3, leading to a nearly 30% drop in its stock price, marking its lowest point in three years [1] - Semiconductor companies like SMIC and Hua Hong Semiconductor reported better-than-expected Q2 results, with SMIC's Q3 revenue guidance indicating a 5-7% increase and Hua Hong's a 11.3% increase [2] - AI application company Mingyuan Cloud turned a profit of 12.09 million to 15.41 million RMB, recovering from a loss of 115.37 million RMB last year, driven by product optimization and AI technology [3] Sector Insights - The pharmaceutical sector showed mixed results, with companies like Rongchang Bio and Junshi Biosciences seeing stock increases of over 6%, while Hutchison China MediTech's stock fell nearly 16% despite a significant profit increase due to asset sales [3] - The real estate sector in Hong Kong faced caution, with Wharf Holdings expressing a pessimistic outlook on retail rental prospects, resulting in an 8% stock drop [4] - Gold stocks remained strong, with companies like Zhaojin Mining and Shandong Gold benefiting from a weaker dollar [4] Infrastructure Developments - The establishment of the Xinjiang section of the New Tibet Railway, with a total investment of up to 350 billion RMB, is expected to boost related sectors, leading to stock increases in construction companies [4] - The MSCI announced the addition of 14 new stocks to its China index, including companies like 3SBio and Meituan, indicating potential investment opportunities [6] Emerging Technologies - The low Earth orbit satellite launch pace is accelerating, with multiple successful launches planned for the second half of the year, enhancing China's capabilities in satellite communications [7] - Companies like Interstellar Aerospace Technology are developing AI application satellites and aim to capture a significant market share in optical remote sensing satellites by 2028 [8] Individual Company Strategies - Smoore International is focusing on business transformation, with expectations of improved performance in HNB products following successful launches in Japan [9] - The company is diversifying into aerosol technology for beauty and medical applications, positioning 2025 as a critical year for growth [10]

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]

Group 1 - The overall performance of HNB remains stable, benefiting from the launch of GloHilo, with Glo's market share in Sendai increasing by 1.5 percentage points [1][2] - In H1 2025, British American Tobacco's (BAT) new oral tobacco segment generated revenue of £470 million, a year-on-year increase of 38%, with sales of 5 billion pouches, up 42%, and a remarkable 206% growth in the U.S. market [1][3] - The U.S. new oral tobacco market exceeds £2 billion, expected to double in size over the next two years [3] Group 2 - The vaping market faced pressure in H1 2025, with BAT's vaping segment revenue declining by 15% year-on-year to £737 million, primarily due to illegal products in the U.S. and Canada, as well as market dynamics in Europe [1] - The launch of GloHilo has led to a 1.5 percentage point increase in market share in Sendai, with a successful entry into the high-end market [2] - BAT's heated tobacco segment generated £444 million in revenue in H1 2025, a slight increase of 1%, with sales of 10.1 billion sticks, up 2%, although declines in certain European markets offset growth [2] Group 3 - The U.S. market for new oral tobacco products is experiencing rapid growth, with the Velo brand capturing a market share of 17% by July 2025, following its launch in May [3] - The global HNB industry is entering a new product lifecycle phase, with major brands actively cultivating the market, indicating potential for accelerated industry expansion [4] - Recommendations are made for investing in companies with competitive product technology and supply chains, specifically British American Tobacco and Smoore International [4]

Financial Data and Key Metrics Changes - Group revenue increased by 1.8%, adjusted gross profit rose by 3%, and adjusted profit from operations grew by 1.9%, with adjusted diluted EPS increasing by 1.7% [10][24][47] - The company anticipates full-year revenue at the top end of the 1% to 2% guidance, maintaining APFO guidance of 1.5% to 2.5% [10][26] Business Line Data and Key Metrics Changes - Smokeless products now account for 18.2% of Group revenue, up 70 basis points from last year, with 1.4 million new smokeless consumers added [4] - New categories revenue increased by 2.4%, driven by modern oral growth of over 40% and heated products rising by more than 3%, while vapor declined by 13% [11][12] - Combustibles revenue increased by 0.8%, with volume decline offset by strong pricing, leading to a gross profit increase of 2.4% [13][14] Market Data and Key Metrics Changes - In the U.S., revenue grew by 3.7%, with combustibles driving the growth, while modern oral revenue increased by 3.9% [16][17] - The AME region saw revenue rise by 3.5%, with combustibles up nearly 3% due to strong volumes in Brazil and Turkey [17] - APMEA experienced a total revenue decline of 4.8%, with combustibles down 7.9%, impacted by regulatory headwinds in Bangladesh and Australia [19][20] Company Strategy and Development Direction - The company is focused on a multi-category strategy to leverage consumer trends towards new categories, with significant investments in modern oral and heated products [28][30] - The introduction of the "Fit to Win" program aims to simplify operations and enhance digital decision-making, targeting £500 million in annualized savings by 2028 [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to revenue and profit growth in the U.S., highlighting the importance of regulatory affairs and enforcement for smokeless alternatives [6][41] - The company remains optimistic about the long-term growth potential of modern oral products, especially in emerging markets [30][31] Other Important Information - The company has increased its 2025 share buyback program by £200 million to £1.1 billion, reflecting strong cash generation and commitment to shareholder returns [4][25] - The company has delivered nearly £900 million in productivity savings since 2023 and aims to exceed £1.2 billion by year-end [21] Q&A Session Summary Question: Can you discuss the early performance of GloHilo in Japan and its rollout plans? - Management reported positive feedback from Japanese consumers, with a tailored product offering leading to early market share gains. The rollout will focus on high-profit pools through the end of the year [52][54] Question: What is the current momentum for VeloPlus in the U.S.? - VeloPlus is maintaining strong momentum with high retention rates and increasing market share, despite competitive pressures [57][58] Question: Can you clarify the Fit to Win program's costs and savings? - The program will have some costs in 2025, with a target of £500 million in annualized savings by 2028, which will be reinvested into growth initiatives [61][62] Question: What is the outlook for the vape business in the AME region? - The vape business is facing challenges in Canada due to regulations, but there is potential for growth as the market transitions to closed systems [66][70] Question: How is the company addressing the illegal vapor market in the U.S.? - Management noted a 40% reduction in illegal vapor shipments, with ongoing efforts to enforce regulations and improve market conditions [74][76] Question: What is the impact of the duty drawback on U.S. business? - The duty drawback is positively impacting the top line, but the company is also seeing growth from improved market share and pricing strategies [97][100] Question: Is there capacity to meet the expected growth in VeloPlus? - The company is well-equipped to handle the growth in VeloPlus, with no anticipated capacity shortages [102]

Financial Data and Key Metrics Changes - Group revenue increased by 1.8%, adjusted gross profit rose by 3%, and adjusted profit from operations grew by 1.9% [8][24] - Adjusted diluted EPS increased by 1.7% [21] - The company anticipates full-year revenue at the top end of the 1% to 2% guidance [8][24] Business Line Data and Key Metrics Changes - Smokeless products now account for 18.2% of group revenue, up 70 basis points year-over-year, with 1.4 million new smokeless consumers added [3] - New categories revenue increased by 2.4%, driven by modern oral growth of over 40% and heated products growth of more than 3% [9] - Combustibles revenue increased by 0.8%, with volume decline offset by strong pricing [11] Market Data and Key Metrics Changes - In the U.S., combustibles revenue grew by 3.8%, marking a return to revenue and profit growth for the first time since 2022 [13] - The AME region saw revenue rise by 3.5%, with combustibles up nearly 3% [15] - APMEA region experienced a total revenue decline of 4.8%, with combustibles down 7.9% [17] Company Strategy and Development Direction - The company is focused on quality growth and balancing top and bottom line delivery, with a strong emphasis on cash generation [4][6] - A multi-category strategy is being pursued to capitalize on consumer trends towards new categories [26] - The introduction of the "Fit to Win" program aims to simplify operations and enhance agility, targeting £500 million in annualized savings by 2028 [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the pathway ahead, highlighting the transformation of the nicotine industry and the company's readiness to benefit from these changes [26] - The company remains optimistic about regulatory developments in the U.S. that could improve the market for smokeless products [40] - Future growth is expected to be driven by continued strength in the U.S. and the rollout of new products [24][45] Other Important Information - The company has increased its 2025 share buyback program by £200 million to £1.1 billion [3][23] - The company has delivered nearly £900 million in productivity savings since 2023 and aims to exceed £1.2 billion by year-end [18] Q&A Session Summary Question: Can you discuss the early performance of the GloHilo launch in Japan? - Feedback from consumers has been positive, with competitive offers tailored for the Japanese market [53][54] Question: What is the momentum for VeloPlus in the U.S.? - VeloPlus is maintaining strong momentum with a high retention rate of 70% and increasing market share [56] Question: Can you clarify the Fit to Win program's costs? - There will be some costs in 2025, but these are included in the guidance, with £500 million in annualized savings targeted by 2028 [60] Question: What is the performance of the vape business in the AME region? - The vape business has faced challenges in Canada due to regulations, but there is potential for growth as the market transitions to closed systems [68] Question: How is the company addressing the illegal vapor market in the U.S.? - The company is seeing a 40% reduction in illicit vapor shipments, and there is optimism about regulatory enforcement improving the market [72][74]

Core Viewpoint - Zheshang Securities maintains a "Buy" rating for Smoore International (06969.HK), highlighting the favorable regulatory environment for HNB products compared to vaping products, which is expected to accelerate market penetration [1] Group 1: Market Position and Competitive Landscape - The competitive landscape for HNB products is more favorable than that for vaping products, suggesting a better market position for Smoore International [1] - The product experience of HNB is improving, which is anticipated to enhance penetration rates [1] Group 2: Future Growth Projections - Smoore International is expected to achieve revenues of 12.89 billion, 15.31 billion, and 18.35 billion from 2025 to 2027 [1] - The projected net profit attributable to the parent company is forecasted to be 1.32 billion, 2.00 billion, and 2.73 billion for the same period [1] Group 3: Strategic Developments - The launch of British American Tobacco's new generation GloHilo product in Japan on September 1 is expected to benefit Smoore International as a core supplier [1] - The medical business is identified as the next important growth area for Smoore International [1]

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]