On July 10, the "first share of electronic cigarettes" Smol International (06969.HK) (hereinafter referred to as: Smol) was born on the Hong Kong Stock Exchange.
Maskking vape
On the day of listing, the share price of Smolar soared by 150%, and the market value once reached HK$178 billion. The Red Star Capital Bureau noted that this giant company, known as the "Foxconn of the e-cigarette industry", had a profit of 2.1 billion in 2019.
The listing of leading companies has once again attracted attention to this long-dead industry.
However, the regulation of the e-cigarette industry has also tightened again. On July 14, the State Tobacco Monopoly Administration and the State Administration for Market Supervision and Administration formulated the "Special Inspection Action Plan for the Electronic Cigarette Market" to comprehensively clean up the sale of electronic cigarettes on the Internet with stricter regulatory measures and stricter governance methods.
On July 18, an e-cigarette "micro-business" told the Red Star Capital Bureau that they used to sell e-cigarettes in the Moments of Friends, but now they plan to spend 80,000 to 100,000 in the second half of the year to open an offline e-cigarette store in Chongqing. , "There used to be many customers, but now there are not many, but you have to be more at ease when you leave the store with the cable."
The subsidiary was once the first "10 times shares" on the New OTC Market
In fact, this is not the first time Simer has been on the stage of the capital market.
According to the information from Tianyan Check, Shenzhen Mcwell Technology Co., Ltd. (hereinafter referred to as "Mcwell") was established in 2009, listed on the New OTC Market in 2015, and delisted in 2019. Before delisting, McWell had reached a market value of 8.53 billion yuan, and on the last trading day, it was quoted at 134.8 yuan.
When it was listed on the NEEQ, McWell's issue price was 11.8 yuan. In 4 years, McWell also became the first "10 times stock" on the NEEQ.
Today, in terms of equity relations, Mcwell is a subsidiary of Simer, and 95% of the equity belongs to the latter. Even though 2019 was a critical year for public opinion disputes on e-cigarettes, after the delisting of the New OTC Market, Smole started its plan to go to Hong Kong for an IPO without stopping, and it was still favored by capital.
By this year, in the IPO stage, Smolar introduced 10 cornerstone investors to subscribe a total of 2.636 billion Hong Kong dollars, recording an oversubscription of 115 times, and freezing funds exceeding 100 billion yuan. After being listed on the Hong Kong Stock Exchange at an issue price of 12.4 Hong Kong dollars per share on July 10, the stock price soared by 150% that day, closing at 31 Hong Kong dollars, and the market value reached 178 billion Hong Kong dollars.
According to the prospectus, Smol`s business mainly includes two aspects: to provide corporate customers with the design and manufacture of closed electronic atomization equipment and electronic atomization components through the OEM/ODM model, and to sell its own brand electronic fog to retail customers. Chemical equipment.
Among them, the revenue of OEM customers accounted for 86.3% of the total revenue in 2019, which is the main source of income of Simer. This is also the origin of the term "Foxconn among e-cigarettes" by SMALL.
"Foxconn" in e-cigarettes has annual profit of 2.1 billion yuan
Matching the degree of attention it has received in the capital market is the profitability of Simer.
According to its prospectus, from 2016 to 2018, Smol International's revenue was 707 million yuan, 1.565 billion yuan, and 3.434 billion yuan, and its profit for the year was 106 million yuan, 189 million yuan, and 734 million yuan, respectively. By 2019, revenue and net profit have doubled: revenue reached 7.611 billion yuan, and net profit reached 2.174 billion yuan.
How does Smoore do it so that it can make money?
First, the market continues to grow. According to Frost & Sullivan's data, the e-cigarette market has rapidly increased from US$9.4 billion in 2013 to US$36.7 billion in 2019, with a 6-year compound annual growth rate of up to 25.5%. The penetration rate of e-cigarettes has also increased from 1.4% in 2013 to 4.2% in 2019, and is expected to reach 9.3% in 2024, with a market space of US$111.5 billion. However, in this piece of cake that continues to grow, Simer has been assigned the largest piece of e-cigarette manufacturers.
According to Frost & Sullivan data quoted in the prospectus, there are more than 1,200 e-cigarette manufacturers in the world, and the top five participants account for 30.6% of the total market. As the world's largest manufacturer of electronic atomization equipment in 2019, Smol International accounted for 16.5%, which is the sum of the remaining four.
In the track of producing OEM products for corporate customers, Simer has a layout in almost every segment. According to the prospectus, the popular disposable cigarettes, reloadable electronic cigarettes, heat-not-burn electronic cigarettes and other categories currently on the market are covered by Smoore. Red Star Capital Bureau noted that more than half of the world's top ten tobacco brands have partnerships with Mcwell.
In addition, the Red Star Capital Bureau noted that behind the high revenue growth, the unit price of Simer's equipment has also been increasing in recent years. In 2017, 2018 and the first half of 2019, the average selling prices of electronic atomization equipment sold to corporate customers were 3.6 yuan, 5.7 yuan and 7.9 yuan, respectively, and the average selling prices of electronic atomization components were 4.5 yuan and 4.7 yuan. And 7.5 yuan.
Will the e-cigarette market reappear?
On July 14, the State Tobacco Monopoly Administration and the State Administration for Market Supervision and Administration disclosed the "Special Inspection Action Plan for the Electronic Cigarette Market", which will comprehensively clean up the sale of electronic cigarettes on the Internet with stricter regulatory measures and stricter governance measures.
Based on the judgment of the market size, most brokerages have expressed affirmation of the potential of the e-cigarette industry. Some brokerage firms estimate that after the law is clear and the harm reduction of e-cigarettes is widely recognized, my country's e-cigarette industry is expected to form a market scale of 300 billion. The current e-cigarette market in my country is only about 9 billion, and there is huge room for growth.
Industry regulation is tightening, Smolar started "special inspection action" on the same day of listing
The market supervision of the e-cigarette industry has also become more stringent.
On July 14, the State Tobacco Monopoly Administration and the State Administration for Market Supervision and Administration disclosed the "Special Inspection Action Plan for the Electronic Cigarette Market", which will comprehensively clean up the sale of electronic cigarettes on the Internet with stricter regulatory measures and stricter governance measures.
According to the notice, the special inspection will start on July 10, 2020 and end on September 10, 2020, for a period of two months. Comprehensively clean up electronic cigarette vending machines in areas where minors are concentrated around primary and secondary schools, and Children's Palace, and seriously investigate and deal with the sale of electronic cigarettes to minors.
The Red Star Capital Bureau noted that after the disclosure of the above-mentioned "Plan", as the leading domestic e-cigarette brand, RELX quickly held the "Ten Thousands of Store Owners Guarding Minors Remobilization Conference" in a specialty store in Beijing on July 17.
According to the official website, RELX called on offline stores to deepen the implementation of the "Notice on Further Protecting Minors from E-cigarettes" (hereinafter referred to as the "Notice"), expressing that it will cooperate with the "special inspection actions on the e-cigarette market" launched by various regions. .
In fact, the above-mentioned "Notice" was issued by the State Tobacco Monopoly Administration and the State Administration of Market Supervision and Administration in November 2019, requiring various market entities not to sell electronic cigarettes to minors.
In addition, e-cigarette production and sales companies and individuals are also urged to close e-cigarette Internet sales websites or clients in a timely manner, e-commerce platforms to close e-cigarette shops and e-cigarette products in a timely manner, and e-cigarette production and sales companies or individuals withdraw approval Electronic cigarette advertisements published on the Internet.
Under strong supervision in 2019, the e-cigarette market has become a "watershed"
Due to the advent of strong supervision, the market generally believes that 2019 is an important watershed in the e-cigarette market.
Before that, electronic cigarettes were the hottest investment outlet, and thousands of new brands and new projects were born to occupy the market. According to Frost & Sullivan's data, China produces 90% of the world's e-cigarettes.
Zhu Xiaomu, an employee of Hammer Technology 001, launched the brand "FLOW" in January 2019. A few months later, Luo Yonghao also joined the battlefield and launched the e-cigarette brand "Ono" as a partner; Internet celebrities "fellow uncles" Cai Yuedong and Di Diqian executive Wang Ying... all plunged into the battlefield of e-cigarettes.
However, after the "Notice" was issued, the domestic e-cigarette market quickly cooled. At that time, as the "Double Eleven" was approaching, Ali issued a statement that in order to comply with regulatory compliance requirements, e-cigarette-related products were removed from the shelves and the sales and advertising of e-cigarette-related products were prohibited. Subsequently, all major e-commerce platforms have no longer seen the presence of e-cigarettes.
Up to now, Red Star Capital Bureau found that not only the e-commerce platform, but also the search for keywords such as "e-cigarette" on apps such as Dianping and Baidu Maps, no content appeared.
On July 18, a FLOW user told the Red Star Capital Bureau that before that, they used WeChat to place orders to buy e-cigarettes at WeChat and store staff, but since mid-July, they can only be purchased in offline stores.
An e-cigarette "micro-business" told the Red Star Capital Bureau that they used to sell e-cigarettes in the Moments of Friends. In the second half of this year, they plan to spend 80,000-100,000 to open an offline e-cigarette store in Chongqing. "Before there were many customers, now Not much, but you have to be more at ease when you leave the store with the cable."
Favorable supervision coexist Is e-cigarette still an outlet?
The benefits of leading companies listed and their share prices soaring by 150% came out almost at the same time as the tightening of regulations. How will the future of the e-cigarette market go?
Regarding this issue, the capital market also directly expresses uncertainty about e-cigarettes.
Before July 10, the e-cigarette sector ushered in a big rise. Aipu shares (13.350, 0.40, 3.09%) (603020.SH), Yingqu Technology (61.990, -1.53, -2.41%) (002925.SZ), Tanaka Seiki (17.970, 0.04, 0.22%) (300461. SZ), Jiyu shares (35.400, -0.15, -0.42%) (603429), Huabao shares (60.470, 2.67, 4.62%) (300741) had a daily limit on July 7, and Shunhao shares (5.510, 0.08, 1.47%) (002565.SZ), Dongfeng (6.880, 0.14, 2.08%) (601515.SH) and other stocks also rose.
However, after July 10, the e-cigarette concept stocks began to differentiate significantly.
However, the Red Star Capital Bureau found that based on the judgment of the market size, most brokerages have affirmed the potential of the e-cigarette industry.
Shanxi Securities (8.410, 0.21, 2.56%) reported that the current bans are all prohibiting the sale to minors, which has a great impact on atomized electronic cigarettes. But in general, my country's tobacco industry is huge, and the current penetration rate of e-cigarettes is low, and the industry is expected to develop rapidly. "The sales of my country`s tobacco industry are about 1.45 trillion yuan. The penetration rate of e-cigarettes in China is low, less than 1%, and there is more room for development than the level of 20%+ in developed countries. The law is clear and the harm reduction of e-cigarettes has been widely After recognition, my country's e-cigarette industry is expected to form a market scale of 300 billion. The current scale of my country's e-cigarette market is only about 9 billion, and there is huge room for growth."
China Industrial Securities International Securities believes that the global electronic atomization equipment manufacturer's market size in 2019 was 6.7 billion U.S. dollars. With the increase in the penetration rate of e-cigarettes, it is expected that the compound growth rate in the next five years will be 27.7%, and the market size will reach 22.7 billion U.S. dollars by 2024.
Kaiyuan Securities also stated that China's smoking population is huge, with 320 million smokers, but the penetration rate is only 0.6%, and the e-cigarette market is still huge. "With the penetration of the culture of vaping and smokers' concerns about health, the Chinese e-cigarette market has more room for growth."
However, the above research report also mentioned the uncertainty of regulatory policies. [Due to the fact that the safety of e-cigarettes is still controversial in academia and the industry, it is difficult to supervise the use of young people, and the potential impact on traditional tobacco profits and taxes, there is still great uncertainty in the regulatory policies of e-cigarettes in various countries. And in recent years, a series of strict supervision policies have been introduced." Kaiyuan Securities Research reported.
