The new e-cigarette deal is about to land and related listed companies have begun to act

The Finance Association (Chengdu, reporter Xiong Jianan). Recently, the Ministry of Industry and Information Technology and the State Tobacco Monopoly Administration jointly drafted the "Decision on Amending the Implementation Regulations of the Tobacco Monopoly Law of the People‘s Republic of China" (Draft for Solicitation of Comments). The opinions stated that e-cigarettes will refer to cigarettes Implementation of relevant regulations. On the day following the announcement of the above opinions, the market value of three related listed companies led by Fogcore Technology (RLX.N) shrank by 200 billion yuan in total.

    The above-mentioned solicitation of opinions aims to strengthen the supervision of China‘s e-cigarettes and new tobacco products. Now that the New Deal is about to land, the reporter has noticed that a wide range of regulations and clean-ups have occurred in the industry. The relevant person told the Cailian Press that e-cigarettes are expected to bid farewell to the barbaric growth, or will be the first to issue business licenses to leading companies. At the same time, the reporter learned from multiple channels that Tianyin Holdings (000829.SZ) is currently the national generation of all products of BODE electronic cigarettes, including the new electronic atomization cigarettes jointly produced by BOD and Yunnan China Tobacco." "Small yellow croaker", the product has now begun production and will be available soon.

The New Deal is coming soon, e-cigarettes are expected to bid farewell to barbaric growth

    "According to the news so far, it will be the first to issue business licenses to head companies such as RELX, BOD and Ono." An industry source told reporters.

    However, an industry analyst denied this. He believes that in the future, the supply chain will be the first to formulate standards. "First of all, the criteria for determining top companies based on market share or the number of stores have not yet been determined, and on what basis they will be awarded to top companies and not to other companies. Secondly, e-cigarettes are currently in the midst of being fully integrated into monopoly and barbaric growth. Looking for a balance, so in the future, we will definitely formulate standards first. Only with standards can we control e-liquid, nicotine, production, and research and development." He said.

    It is understood that the scale of the e-cigarette market in my country has expanded rapidly in recent years, but due to the lack of effective supervision, the rapid development of e-cigarettes has also exposed a series of problems, which has aroused social concern. According to the data from Tianyan Check, from 2011 to 2018, the growth rate of registration of e-cigarette-related companies was relatively slow, and the growth rate began to accelerate in 2019, with a total of 4650 registered that year, a year-on-year increase of 100%. The industry will usher in an unprecedented outbreak in 2020. A total of 17,900 related companies were registered throughout the year, a year-on-year increase of 284.6%.

    At the same time, due to the lack of effective supervision and related taxation regulations, the disorderly development of the e-cigarette industry has caused a large loss of national fiscal and tax revenue. It is understood that the current tax burden rate of e-cigarette companies is only about 13%, which is a huge gap compared with the comprehensive tax burden rate of cigarettes of about 67%.

    The reporter combed and found that after the release of the above-mentioned solicitation of opinions, a wide range of regulations and cleanups immediately appeared in the industry. "Last year the e-cigarette market was too messy, and the barriers to entry were also very low. You can make a brand for me with a factory costing 300,000 yuan. So why ban online sales and sales to minors is to clean up scattered small companies or Individuals." The above-mentioned industry figures frankly told reporters.

    According to the analysis of the China Commercial Industry Research Institute, a large number of small e-cigarette brands will be eliminated in the future. The past era of low threshold and free operation may come to an end, and the e-cigarette industry will enter the era of licensed operation.

Related listed companies have already started actions

    The reporter noticed that while the industry is undergoing extensive cleanup and regulation, relevant listed companies have also begun to take action.

    The reporter learned from multiple channels that Tianyin Holdings is the national generation of all products of BODE e-cigarettes, including the new electronic atomized cigarette small yellow croaker jointly produced by BOD and Yunnan China Tobacco. The small yellow croaker has already started production and will be available soon.

    In addition, another domestic 3C national packaging giant Ai Shide (002416.SZ) has also cooperated with RELX. In only half a year, it has created the data of "1000 stores, 50% repurchase rate, and 8 times sales growth". In the first three quarters of 2020, the sales of “No. 1 Machine” (a subsidiary of Ai Shide) accounted for 15.1% of RELX’s total brand, making it the largest agent of RELX.

    It is worth mentioning that the electronic atomization brand Myst Labs recently released a new product "Little Hero" series, and announced the research and development progress of the new non-nicotine salt formula "Nicotine Y"-it has entered the formula debugging from the laboratory stage second stage. In addition, it is understood that Xiwu has completed the B round of tens of millions of dollars in financing.

    According to the data of the Electronic Cigarette Industry Committee of the China Electronic Chamber of Commerce, in 2021, the export value of e-cigarettes is predicted to be 63.2 billion yuan, and the domestic sales are 18.5 billion yuan. By 2025, the export value is expected to reach 169.7 billion yuan, and the domestic sales to 49.8 billion people are expected to be exported and Domestic sales have a compound annual growth rate of 28%.

    New Era Securities believes that the above-mentioned policies will have a certain impact on market sentiment in the short-term, but medium- and long-term supervision and regulation are conducive to the healthy development of the industry. Small and medium-sized brands are restricted in the future to accelerate the liquidation, which is good for leading brands and manufacturers to increase growth barriers.

    Reprinted on the Cloud Palm Finance app