Cinda Securities released a research report stating that new FDA regulations indirectly allow compliant flavored e-cigarettes to enter the market while cracking down on illegal products. This move is favorable for compliant industry leaders to capture market share, and core suppliers are expected to benefit. An inflection point in the U.S. vaping market is emerging. It is recommended to focus on SMOORE INTL (06969), which is deeply tied to global core brands and whose HNB business is also accelerating its growth. Cinda Securities' main views are as follows:

Following the FDA's announcement last week that flavored products passed PMTA for the first time, the FDA issued guidance this weekend on enforcement priorities for unauthorized ENDS and nicotine pouch products. The guidance reiterates that all products without PMTA approval are illegal. However, products that have not yet passed PMTA but meet the following conditions will generally not be prioritized for enforcement: 1) Their application has been accepted and filed, or a supplemental application has been accepted (and more than 180 days have passed); and 2) Their non-tobacco flavored e-cigarette application materials contain complete public health data required by the FDA. Exceptions include products with features clearly appealing to minors (such as cartoon images or toy-like designs) or those posing significant safety risks (e.g., excessively high nicotine content). Other products will be prioritized for enforcement. The FDA also announced plans to establish a webpage listing manufacturers and products that meet the non-priority enforcement criteria.

After the U.S. government restricted vaping products to tobacco and menthol flavors only, compliant industry leaders promptly removed flavored products from the market. It is expected that these leading compliant brands have continuously submitted PMTA applications for flavored products in recent years (which have yet to be approved). This policy adjustment indirectly allows leading companies to directly enter the flavored product market for sales. Leveraging strong distribution channels and product advantages, compliant industry leaders are expected to accelerate their market share growth, and core suppliers are likely to benefit significantly.

It is anticipated that future FDA regulatory efforts will focus more on strict crackdowns on illegal products while relaxing restrictions on compliant flavored products. An inflection point in the U.S. vaping market is expected to emerge, with the non-compliant market likely to face significant pressure while the overall vaping market expands. It is recommended to focus on SMOORE INTL, a core supplier in the global new tobacco market, which is deeply tied to key global vaping brands. Its HNB business is accelerating and becoming a second growth curve. Additionally, SMOORE INTL's U.S. vaping products are expected to have better profit margins, and with improvements in product structure, its core profitability may steadily increase.

Risks include fluctuations in raw material prices and exchange rates, slower-than-expected growth in new tobacco penetration, and intensifying trade frictions.