Shares in the tobacco concept sector experienced a broad rally on Thursday. HUABAO INTL (00336) rose 6.47% to HK$3.29, SMOORE INTL (06969) gained 4.4% to HK$9.25, and CTIHK (06055) advanced 3.29% to HK$24.48.

Following the initiation of the mandatory national standard development for heated cigarettes in April 2026, the State Tobacco Monopoly Administration has now completed a draft for comment on the "Heated Cigarettes" national standard. The draft was published on July 28, with a public comment period ending on September 26, 2026, and is expected to be formally implemented six months after its release.

Strategic implications of the regulatory shift

CITIC Securities believes that the establishment of these national standards provides a technical basis for regulation, potentially signaling that the opening of the domestic market for HNB (Heat-Not-Burn) products is moving forward. As the domestic market for HNB products progresses toward liberalization, several tobacco supply chain companies have already begun positioning themselves in related segments, positioning them to benefit from the market opportunities created by HNB's market opening. Investors are advised to watch SMOORE INTL (06969) (which provides integrated HNB pods and devices solutions), CTIHK (06055) (responsible for exporting HNB products under the CNTC umbrella), and HUABAO INTL (00336) (engaged in reconstituted tobacco sheets and new tobacco materials).