GTHT released a research report stating that British American Tobacco's (BTI.US) new tobacco business is expected to accelerate growth in the second half of 2025, benefiting the industry chain amid high demand. Currently, the global HNB industry is entering a new product lifecycle, and with major brands actively expanding market cultivation, the industry scale is poised for rapid expansion. The report recommends SMOORE INTL (06969) and British American Tobacco, citing their competitive advantages in product technology and supply chain.
Key insights from GTHT include:
**HNB: Strong Market Reception for New Products, Global Expansion to Accelerate in 2026** Full-year 2025 revenue growth remained steady, impacted by competitive activities and resource reallocation. The Glo brand saw a -1.2 pct decline in market share in key global markets, primarily due to competition in Japan, while the company phased out traditional product lines. The premium product Glo Hilo achieved a 1% share in Japan (2% in the premium segment), with faster market penetration in Poland and Italy. By 2026, Glo aims to stabilize and recover its overall market share, driven by Glo Hilo.
**Vaping Continues to Benefit from Market Optimization, Strong Growth in Modern Oral Products** Improved conditions in the U.S. market boosted H2 2025 revenue (H1 2025: -13% YoY). The Vuse brand gained +0.1 pct in value share across major markets, with the U.S. up +0.7 pct, though growth was partially offset by illicit vaping in Canada. Meanwhile, the premium Vuse Ultra performed well in test markets like Canada, Germany, and France, with a global rollout expected to accelerate in 2026.
In modern oral products, Velo Plus drove triple-digit growth in the U.S., increasing the market share by +9.2 pct to 15.6%, while global share rose +5.9 pct to 31.8%. Velo Plus also entered the European market, adopting promotional strategies similar to those in the U.S. Additionally, Velo Shift received positive feedback in Sweden since September 2025.
**Traditional Cigarettes Remain Stable, New Tobacco to Accelerate in H2 2026, Increased Buybacks** Full-year 2025 cigarette sales maintained steady value share in key markets, though volume share dipped -0.1 pct. The U.S. saw a +0.2 pct rise in value share, with stable volume share, as H2 performance improved due to stronger commercial activities, direct-to-consumer (DTC) initiatives, and overall market recovery (boosted by U.S. employment growth).
The company projects FY2025 revenue and adjusted operating profit growth at ~2%, with new tobacco revenue accelerating to double-digit growth in H2, contributing to mid-single-digit full-year growth. For 2026, performance is expected at the lower end of guidance (3%-5% revenue growth, 5%-8% adjusted EPS growth). Additionally, the buyback program will increase to £1.3 billion in 2026 (up from £1.1 billion in 2025).
**Risks:** Potential shortfalls in U.S. regulatory enforcement and slower-than-expected new product adoption.
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