In March 2024, China Tobacco International (Hong Kong) announced its 2023 annual results announcement, which mentioned the overall performance of the year, and also displayed the key indicators of the new tobacco sector in the past year.

Steady and enterprising new tobacco business

China Tobacco International (Hong Kong) has been exporting new tobacco products since May 2018, mainly to the Asian market (such as South Korea), and its new tobacco products include heating and non-burning tobacco products. In 2023, China Tobacco International (Hong Kong) 's sales of new tobacco products reached HK $129,979 thousand, representing 1% of the Group' s total annual revenue of HK $11,836,221 thousand in 2023 and an increase of 18% compared to HK $110,133 thousand in 2022.

However, it is worth noting that the proportion of the whole group in the new tobacco sector is 1.3% in 2023, and the proportion of new tobacco in the business of China Tobacco International (Hong Kong) has decreased slightly on the basis of basically flat. At the same time, even if the gross profit margin of the new tobacco sector (4.4%) is higher than before compared with its own, it is still inferior compared with the gross profit margin of the core business segment, such as the cigarette export business segment (13.57%). In the 2023 Annual Report, China Tobacco International (Hong Kong) will continue to export new tobacco products(heat not burn oem) to overseas markets around the world (" New Tobacco product export business "), which can also be seen that China Tobacco International (Hong Kong) attaches importance to this sector.

The growth trend is stronger than the big Three

At the same time, the horizontal comparison of peer giants, China Tobacco International (Hong Kong) new tobacco growth trend is not inferior.

In 2023, China Tobacco International (Hong Kong) exported 677,310,000 pieces of new tobacco products(HNB heatstick), an increase of 174,920,000 pieces, an increase of 35%; Operating income of HK $130 million, an increase of HK $19.8 million, or 18%; Gross profit was HK $57 million, an increase of HK $2.5 million, or 80%.

In its annual report, China Tobacco International (Hong Kong) attributed its growth to the following three points:

First, because of the increase in order demand. In the past year, China Tobacco International (Hong Kong) has strengthened its international market channels and customer expansion efforts, seizing the development opportunities in emerging markets and expanding the depth of key markets;

Second, because the product competitiveness is strong. In the past year, China Tobacco International (Hong Kong) has strengthened the synergy of production, supply and marketing, and developed competitive products in response to the changes in the demand of the target market.

The third is the increase in gross profit level. The rich product portfolio and the continuous optimization of the business structure promoted the increase of the gross profit level.

A horizontal comparison of the annual reports of the other three major tobacco companies (heatstick suppliers)will find that although the absolute number of new tobacco products exported by China Tobacco International (Hong Kong) is not in the same order of magnitude as that of its rivals (PMI125.2 billion, BAT 29.7 billion and JTI 8.8 billion); However, the 35% shipment growth is also three times the highest of the three PMI11.8%, operating income and gross profit growth is significantly ahead.

Target compliance expansion in the future

When it comes to the future development strategy of the export business of new tobacco products(HNB heatstick), China Tobacco International (Hong Kong) also clearly put forward several directions: strengthen the international market dynamic monitoring and demand research, focus on the expansion of key markets and accelerate the development of new markets, continue to promote product upgrades and iterations, optimize the supply chain model, improve market response ability and expand the sales scale of new tobacco products.

At the same time, China Tobacco International (Hong Kong) specifically mentioned "strengthening the protection of intellectual property rights of private brands". Whether this indicates that the group will launch more of its own new tobacco brand lines in the future is worth waiting and seeing in the industry.

Similarly, in terms of social responsibility, the page of China Tobacco International (Hong Kong) emphasizes that it will strengthen the construction of the company's volunteer team, organize community visits, tree planting, coastal cleaning and other activities, and establish a positive external image, which also shows that China Tobacco International (Hong Kong) Group attaches great importance to local compliance, and will continue to accelerate the pace of going overseas in the future.