Cinda Securities Co.,Ltd. has released a research note following British American Tobacco PLC (BTI.US)'s announcement of its H1 2026 earnings forecast. The company has maintained its full-year revenue growth expectation of 3% to 5%, with next-generation tobacco revenue growth anticipated to accelerate from low-double digits to mid-double digits. The company holds a cautious view of the overall cigarette industry, expecting a full-year volume decline of -2.5% (previously -2%). Cinda Securities' key points are as follows:
Heat-not-burn (HNB) performance
As of the announcement date (June 2, 2026), core market share for HNB products has declined by 1.6 percentage points, with AME (Americas & Europe) down 0.7 points and APMEA (Asia Pacific, Middle East & Africa) down 2.1 points. This pressure is attributed primarily to intensified competition, with the older Hyper device seen as lacking competitive strength. The company's mid-to-high-end HILO product has achieved a 2.6% market share in Japan, 8.8% in Poland, and 1.5% in Italy (compared to 1.5%, 3.9%, and 1.0% respectively in the 2025 annual report), and has shown strong performance in new markets like Romania and Greece. The company expects a low-double-digit decline for the HNB segment in both H1 and the full year 2026 (mainly due to Japanese inventory fluctuations and competition), but with the expansion of the new HILO and Hyper models (both supplied by Smoore), sales are expected to recover in H2 2026, with global share potentially resuming growth.
Vapor performance
As of the announcement date, the company's market share in core markets for vapor products has increased by 1.3 percentage points, maintaining a leading global position. Performance in the US market has been particularly strong, with share rising by 4.2 points. The AME region's share declined by 1.5 points, mainly due to regulatory changes in the UK and Poland. The company indicated that recent FDA policy developments are viewed positively, and it is actively preparing new product portfolios. The vapor segment is expected to achieve mid-single-digit growth for both H1 and the full year 2026.
Modern oral (pouch) performance
The company's overall share in core markets for oral products has increased by 5.7 percentage points, with modern oral pouches gaining 7.4 points. Benefiting from strong industry trends and market share gains, Velo revenue growth has reached high-double digits as of the report date. In the US market, driven by the strong performance of Velo Plus, the company's share in the modern oral segment has increased by 10.4 percentage points.
Risk factors
Key risks include intensifying industry competition, regulatory volatility, and slower-than-expected growth in global next-generation tobacco penetration rates.
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