Heated Tobacco National Standards Open for Public Comment

Following the initiation of the mandatory national standard for heated tobacco products on April 7, 2026, the State Tobacco Monopoly Administration has completed a draft of the standard. The draft was released for public comment on July 28, with the consultation period ending on September 26, 2026. It is expected to be officially implemented six months after its release. According to China Securities, the establishment of national standards offers a technical basis for regulation, potentially signaling further progress toward opening the domestic market for HNB products. As the market opens, several companies in the tobacco supply chain have already positioned themselves in related segments, positioning them to benefit from the opportunities. Key players to watch include Smoore International Holdings (HNB pod and device solutions), China Tobacco Hong Kong, which manages the export of HNB products under the China Tobacco umbrella, and Huabao International, which specializes in tobacco sheets and new materials.

Market Overview: Strong Gains in Optical Communication and Memory Stocks

Overnight in the US, the Dow Jones Industrial Average rose 613.92 points, or 1.19%, to close at 52,208.06. The S&P 500 gained 121.48 points, or 1.66%, ending at 7,437.63, while the Nasdaq Composite surged 679.24 points, or 2.78%, to 25,122.18. Major tech stocks were mostly higher, with Microsoft climbing over 15%, adding $450 billion to its market capitalization in a single day. Amazon rose nearly 4%, Tesla gained over 3%, and Nvidia advanced more than 2%. The optical communication and memory storage sectors saw significant gains, with Kioxia ADRs jumping nearly 32% and SanDisk rising nearly 26%. Most Chinese ADRs also traded higher, with the Nasdaq Golden Dragon China Index up 1.05%. The Hang Seng Index ADR rose, indicating a 124.04-point increase, or 0.48%, to 25,982.92 compared to the Hong Kong close. WTI crude oil futures for the front-month contract fell $0.50 to close at $83.96 per barrel, a decline of 0.59%. COMEX gold futures for the front-month contract rose $65.80, or 1.61%, to $4,162.8 per ounce.

Key Developments and Outlook

The European Union's executive body announced on Thursday that it will provide 10 billion euros ($11.4 billion) to fund the establishment of seven artificial intelligence mega-factories, aiming to close the AI gap with the United States. The European Commission expressed hope that this public funding would attract an additional 20 billion euros ($22.8 billion) in private investment. Companies can now bid for contracts to build these super-factories, which are planned to be equipped with at least 100,000 cutting-edge AI chips, representing approximately four times the performance of the current data centers operating in the EU.

Apple (NASDAQ: AAPL) shares fell over 8% in after-hours trading after the company projected fourth-quarter fiscal revenue growth of 9% to 11%, which fell short of the market expectation of 12.1%. The company also guided for a fourth-quarter gross margin between 47% and 48%.

HSBC Holdings (HK: 00005) announced that its subsidiary, HSBC Australia, has agreed to sell its A$36 billion Australian home and personal loan portfolio to Blackstone. Pepper Money Limited will act as the servicer, managing the ongoing administration of the loans post-closing. The transaction is expected to result in a modest loss of less than $100 million for the HSBC Group in the first half of 2027. The remaining retail operations of HSBC Australia will be phased out over the next 18 months.

Kingboard Holdings (HK: 00148) issued a profit alert, forecasting a中期 net profit of over HK$2.7 billion for the first half of the year, representing an increase of more than approximately 4% year-on-year. The strong performance is attributed to the sustained supply-demand imbalance in the market for copper-clad laminates and their upstream materials, including electronic glass fiber yarn, cloth, and copper foil. This has led to a significant increase in unit prices for the group's products, as well as higher sales volumes compared to the same period in 2025.

Kingboard Laminates (HK: 01888) also issued a profit alert, projecting a中期 net profit of over HK$2.8 billion, a year-on-year increase of over 200%. The significant profit increase is driven by the same factors: sustained market tightness for copper-clad laminates and upstream materials, leading to higher unit prices and increased sales volumes.

Changfeng Pharma (HK: 02652) plans to place 21.7477 million new H-shares, raising net proceeds of approximately HK$295 million. The placing shares represent about 7.23% of the existing issued H-shares and 5.30% of the total issued shares.

Cinda International Holdings (HK: 00111) reported its interim results, posting a net profit of HK$36.316 million, a year-on-year increase of 119.79%. The company serves as a fully licensed overseas securities institution within the China Cinda Group ecosystem, acting as a hub connecting to international capital markets and an offshore asset management center, providing cross-border investment banking services.

Geek+ (HK: 02590) stated that all its autonomous mobile robot models currently sold in the US have valid FCC certifications, and therefore, they are not subject to relevant restrictions. The company is advancing its long-term strategy of localizing manufacturing, supply chain, R&D, and product testing. The board announced that a new production base in the US will commence operations in due course, ensuring that subsequent new products comply with US regulatory standards and maintain long-term market access.

Sunshine Guojian Pharmaceutical (HK: 06887) announced that its degludec insulin injection has received market approval from the National Medical Products Administration (NMPA). With this approval, the group now has six insulin products approved in the Chinese market, forming a comprehensive portfolio covering second to fourth-generation products, and spanning basal, prandial, and premix clinical applications.

Sigenergy (HK: 06656) issued a profit alert, forecasting a中期 profit attributable to shareholders of approximately RMB 2.35 billion to RMB 2.45 billion, a year-on-year increase of about 190% to 210%. The board attributes the growth primarily to increased sales volumes driven by the continued growth of core markets and an increase in market share.

Haichang Ocean Park (HK: 02255) announced that its two major shareholders will transfer a combined 21.75% equity stake to introduce a new investor. Following the transaction, Mr. Qu Cheng's stake will drop to 19.13%, and Sunriver Starrysea's stake will decrease to 25.92%, ceasing to be the controlling shareholder. HH SeaPark Holding and its ultimate beneficial owner, Mr. Mei Zhiming, will hold a 21.75% stake, becoming a major shareholder of the company.

Deepintoc (HK: 01384) reported its 2026 interim results, with revenue reaching approximately RMB 284 million, a year-on-year increase of 115%. Gross profit was about RMB 160 million, up 120.5%. Net loss narrowed by 89.6%, and adjusted net loss narrowed by 48.5% year-on-year. The company attributed the revenue growth to the upgrade of its FastAGI enterprise AI solution to the DeepexiOS AI enterprise operating system platform, which drove significant revenue increases.

Simcere Pharmaceutical (HK: 02096) issued a profit alert, expecting first-half revenue to be between RMB 4.55 billion and RMB 4.61 billion, a year-on-year increase of approximately 26.9% to 28.6%. The company anticipates a profit attributable to equity holders of the company of about RMB 810 million to RMB 860 million, representing an increase of 34.8% to 43.1% compared to the restated profit of RMB 601 million for the first half of 2025.

Yingpai Pharmaceutical (HK: 07630) announced an exclusive licensing agreement with PHARMANOVIA for senaparib in Europe, the Middle East and North Africa (MENA), Australia, and New Zealand. The deal could yield a total consideration of up to €423.5 million, including upfront payments, near-term regulatory milestone payments, commercial milestone payments upon meeting sales thresholds, and tiered royalties based on a mid-teen percentage of net product sales. This exclusive partnership marks the group's first step in bringing its validated treatment to patients outside of China.

Meitu (HK: 01357) expects its adjusted net profit attributable to shareholders for the first half of the year to achieve a year-on-year growth of 36% to 40%. This strong growth is primarily driven by revenue increases in the company's core "Imaging and Design Products" business, which is fueled by both the continued growth in paid subscribers and an increase in average revenue per paying user. Notably, growth in paid subscribers from international markets continues to outpace that from mainland China, validating the effectiveness of the company's globalization strategy.

Luoshi Robotics (HK: 03752) issued a profit alert, reporting first-half 2026 revenue of over RMB 400 million, a year-on-year increase of over 127.4%. The company achieved a positive adjusted net profit during the period, turning profitable. The significant change in revenue structure is primarily due to the rapid growth in sales of its embodied intelligent robots, which are expected to account for over 30% of revenue. The launch of new robotic products, increasing market demand, growing brand awareness, and expanding sales channels also contributed to the strong performance.

Stock Focus: Yum China Holdings (HK: 09987)

Yum China reported its second-quarter financial results, with total revenue increasing 13% year-on-year to $3.1 billion. Operating profit rose 14% to $348 million, net income increased 14% to $244 million, and diluted earnings per share grew 21% to $0.70. CEO Ms. Joey Wat commented, "We delivered strong results in the second quarter, marking the ninth consecutive quarter of simultaneous growth in system sales, operating profit, and operating margin. Despite a volatile market environment, our revenue growth continued to outpace the industry. Same-store sales growth improved sequentially to 1%, driven by the fourteenth consecutive quarter of same-store transaction growth. Our store opening pace accelerated compared to the prior year. KFC delivered strong operational performance with system sales up 7% and improved restaurant margins. Pizza Hut returned to positive same-store sales growth, with net new store openings nearly doubling compared to the same period last year."