Huaan Securities reports that on June 9, 2025, British American Tobacco (BAT) announced the launch of its new premium heated product line, glo Hilo, in Japan. By mid-October, sales of glo Hilo in Japan have been strong. The success of its pilot program has generated significant momentum for sales, and a phased launch in key markets is planned for the second half of 2025, which is expected to accelerate revenue growth from heated tobacco products. BAT positions glo Hilo as a "top-tier platform for premium heated tobacco," aiming to directly replace some IQOS users. The company is continuously expanding in the European market, and should strategic pilots in Poland, Italy, and Eastern Europe prove successful, it will facilitate deeper penetration into Western Europe, leveraging traditional tobacco channels to rapidly capture market share through Hilo's technological upgrades. Key insights from Huaan Securities include the following: On June 9, 2025, BAT announced the launch of the glo Hilo premium heated product line in Japan, with nationwide sales commencing on September 1. Initial sales were piloted in Miyagi Prefecture, where the company highlighted features such as TurboStart (5 seconds preheating) and Quartz heating elements, alongside an AMOLED EasyView screen and myglo app capabilities. Subsequent nationwide promotion began on September 1 through retail and experience stores, as well as online via myglo. Japan remains a key market for BAT's heated tobacco products within the APMEA (Asia-Pacific, Middle East and Africa) region, contributing to a 2.5% growth in new category revenues for the company in 2025. By mid-October, sales performance for glo Hilo has been strong, with the product's successful pilot leading to robust sales momentum and a projected growth in heated tobacco revenue. Furthermore, BAT plans to open the glo Ginza flagship store in Tokyo on October 18, 2025, featuring products such as glo Hilo, Hilo Plus, glo HYPER pro, and compatible heated tobacco sticks (virto, neo, KENT, Lucky Strike), to further promote this product line throughout Japan. Japan, as the largest single market for HNB (heat-not-burn) products globally, has positive sales expectations for Glo Hilo, which could directly impact the global market and provide new growth momentum for the company's HP products. BAT held the official launch event for glo Hilo in Warsaw on September 18, 2025, with Poland serving a crucial role as one of the initial promotional markets. The company has shared product information via official BAT/myglo channels in Poland, designating it as one of the first markets for Hilo's international expansion. BAT has set long-term goals of reaching 50 million adult consumers of smoke-free products by 2030 and transitioning to a smoke-free business model by 2035, with Poland being a central market driving this growth. The design and positioning of the glo Hilo product line create differentiation from IQOS, providing potential to capture market share. BAT aims for glo Hilo to be a "premium heated tobacco top-tier platform," directly targeting a portion of the IQOS user base. Continuous expansion in the European market will include strategic pilots in Poland, Italy, and Eastern Europe, facilitating further penetration into Western Europe and aiming to rapidly capture market share through Hilo's technological upgrades. SMOORE INTL (06969) continued its recovery trend in Q3 2025, with its HNB business becoming a core growth engine. For the period ending September 30, the company achieved approximately RMB 4.1968 billion in revenue, marking a historic quarterly high, a 27.2% increase year-on-year, and 27.5% growth compared to Q2 of this year. Revenue from enterprise clients and self-owned brands both recorded positive annual and quarterly growth. BAT plans for Hilo's global promotion in 2025 and anticipates it will support a 3%-5% revenue growth for the group by 2026, with SMOORE poised to benefit from increased product availability for major clients. Risk factors include: the risk of slower-than-expected macroeconomic growth; the risk of company performance falling below expectations; rising raw material costs; currency fluctuation risks; and increased competitive pressures.