1Q26 Results Review: Steady as She Goes

Research evidence excerpt

1Q26 Results Review: Steady as She Goes

Japan | Tobacco

Japan Tobacco EquityMayResearch11, 2026

TARGET | ESTIMATE CHANGE1Q26 Results Review: Steady as She Goes

We see Japan Tobacco as a Combustibles standout with a well-proven RATING HOLD

brand portfolio that is likely to continue gaining share in Developed and PRICE ¥5,769^

Emerging Markets. While 1Q26 growth in Heated Tobacco was particularly PRICE TARGET | % TO PT ¥6,200 (¥5,630) | +7%

strong given retailer inventory expansion, mid-term potential remains 52W HIGH-LOW ¥6,182 - ¥4,139

uncertain given the strong competitive position of PM's IQOS brand. For FLOAT (%) | ADV MM (USD) 62.2% | 145.69

the shares to re-rate, we believe Heated Tobacco would need to become a MARKET CAP ¥10.2T | $65.4B

structural mid-term growth driver. TICKER 2914 JP

^Prior trading day's closing price unless otherwise

noted.

What's new? We increase our F26 vols/sales/EBIT to -1.1%/+6.6%/+10%, accounting for the

1Q beat and the robust perspectives of the business in the US, Turkey, Italy and Germany.

Albeit we expect performance in Japan to slow down in 2Q as retailer inventory normalises FY (Dec) CHANGE TO JEFe JEF vs CONS

following the 1Q stock-up, we believe the Ploom Heated Tobacco product could continue to 2026 2027 2026 2027

gain share in 2H26. PT JPY 6,200. EPS -13% -11% -3% -6%

NA NA NA NA

Combustibles: gaining ground in Western Europe and EMA. The company has continued

to perform well within Combustibles in Western Europe in 1Q26, consistently gaining share Cons EBIT is (B), not (MM)

across Italy and Germany. In EMA, we believe tailwinds could continue in Turkey and the United

States.

Exhibit 1 - Robust performance in Italy offset a

USA combustibles: we expect the recent share gains to continue.