Focus this week: Altria released its 2021 annual report: in 2021, the company achieved after tax revenue of US $21.111 billion, a year-on-year increase of 1.3%, of which 2021q4 achieved after tax revenue of US $5.086 billion, a year-on-year increase of 0.6%. It is expected that the adjusted EPS in 2022 will be US $4.79-us $4.93, an increase of 4% - 7% over 2021.
The market share of mouth smoke continues to grow, and PMTA and MRTP qualification applications are in progress
In 2021, the company's after tax revenue of oral tobacco products was $2.476 billion, a year-on-year increase of 3%, of which 2021q4 achieved after tax revenue of $629 million, a year-on-year increase of 4.8%. In terms of shipment volume, the shipment volume of oral tobacco products in 2021 was 820 million bags, with a year-on-year increase of 0.1%, which remained stable. Due to the growth of oral nicotine bag sales, the total volume of oral tobacco industry increased by about 2% in 2021h2. In terms of retail share, as of 2021q4, the company's cigarette brand on! In the United States, the retail share of oral tobacco market reached 3.9%, with a month on month increase of 0.9pct and a year-on-year increase of 2.8pct. By the end of 2021, the product had been sold in about 117000 retail stores in the United States. Qualification, on! PMTA application for series products was submitted in May 2020 and is currently awaiting FDA review; Helix, a subsidiary, is working on the application for MRTP of this product and is expected to submit it to FDA by the end of 2022. Copenhagen remains the largest cigarette brand in the United States, with a retail share of 29.4% in 2021.
The application of electronic cigarette juulpmta is still under review, and the heating non combustion products are trying to return to the U.S. market
In terms of atomized e-cigarette, the PMTA submitted by Juul for its Juul equipment and four juulpodskus in July 2020 is still waiting for FDA review. By the end of 2021, the estimated fair value of the company's investment in Juul has not changed, and the valuation of the investment is US $1.7 billion. In terms of heating non combustible products, Marlboro heating cigarette bombs accounted for 1.9% of the retail share of tobacco in Northern Virginia in October 2021. On November 29, 2021, the import ban imposed by the International Trade Commission (ITC) on iqos equipment, Marlboro heating smoke bombs and infringing parts came into effect. Iqos products are no longer sold in the United States, but pmusa said it is focusing on returning iqos to the U.S. market and is formulating a plan to re-enter the market, which will be re launched when the products are allowed to go on the market.
Traditional tobacco shipments showed a downward trend, and product prices rose slightly
In 2021, the company's traditional tobacco achieved after tax revenue of US $18.112 billion, a year-on-year increase of 1%, of which 2021q4 achieved after tax revenue of US $4.457 billion, a year-on-year increase of 2.3%; In terms of shipments, in 2021, the company shipped 93.793 billion cigarettes in the United States and China, a year-on-year decrease of 7.5%, mainly affected by factors such as the decline speed of the industry, changes in trade inventory and loss of retail share. After adjusting for changes in trade inventory and other factors, the total volume of the United States and China's cigarette industry is expected to decrease by 5.5%, including 82.97 billion Marlboro cigarettes in 2021, A year-on-year decrease of 6.6%. In terms of retail share, Marlboro cigarettes accounted for 43.1% of the overall cigarette category in 2021, with a year-on-year increase of 0.2pct. The company's overall retail share of the cigarette market was 48.8%, with a year-on-year decrease of 0.3pct. We believe that with the international tobacco giants turning their R & D and strategic focus to smokeless products, the global transformation trend of new tobacco has taken shape, and China's heated non combustion tobacco market is expected to breed a considerable market scale due to China's large base of smokers. It is suggested to pay attention to HNB related supply chain enterprises.
Investment suggestion 1) HNB industrial chain: key recommendation - Shenzhen Jinjia Group Co.Ltd(002191) (China's leading tobacco label, the only private enterprise in strategic cooperation with Yunnan tobacco) [joint coverage with the light industry team]; It is suggested to pay attention to: Anhui Genuine New Materials Co.Ltd(603429) , Shanghai Shunho New Materials Technology Co.Ltd(002565) , Shantou Dongfeng Printing Co.Ltd(601515) [light industry team coverage], China Tobacco Hong Kong and Bolton, China. 2) Atomization industry chain: key recommendation - smore International (leading global atomization equipment manufacturer), followed by fog core technology (leading Chinese atomization brand), Shenzhen Aisidi Co.Ltd(002416) (leading Chinese atomization channel). Risk tip: the risk of new tobacco policy changes, the risk of sales / enterprise development falling short of expectations and intensified market competition.
