2021q4 favorable policies are issued repeatedly, and the development of atomized e-cigarette industry may be accelerated.
On November 30, 2021, the State Tobacco Monopoly Administration issued the national standard for electronic cigarettes (Draft for comments), which provides various guidance for electronic cigarettes: for example, the concentration of nicotine shall not be higher than 20mg / g and the total amount of nicotine shall not be higher than 200mg; The purity of salt and alkali extracted from tobacco used in nicotine sources shall not be less than 99%; The temporary permitted substances in atomized additives are limited to 122 kinds, and inductive characteristic flavors are not allowed. On December 2, the state tobacco monopoly administration studied and drafted the measures for the administration of electronic cigarettes (Draft for comments). The document clearly points out that the supervision of atomized e-cigarettes will be consistent with that of cigarettes, the production, circulation and sales links need permission and approval, and the opening conditions of retail terminals are consistent with those of traditional tobacco monopoly stores.
With the advent of the era of licensing monopoly, the "Matthew effect" of the industry may become more and more significant.
With the continuous implementation of regulatory policies, the competition pattern of existing e-cigarettes will change, and manufacturers with high technical strength, R & D capacity and financial strength will directly benefit. Under the latest regulations, the wholesale and retail of e-cigarettes need to be licensed. At present, there are a large number of e-cigarette brands in the Chinese market and the laying of channels is messy. In the future, with the implementation of the new regulations, the e-cigarette terminal stores will be effectively straightened out, and the unqualified stores will be gradually cleared. The leading enterprises that have laid a certain offline sales network still occupy the first mover advantage and are expected to develop again after obtaining the retail license.
Looking forward to China, e-cigarettes may grow into a 100 billion market in the long term, and the industrial chain occupies an important position in the world.
China's e-cigarette industry is still in the early stage of development. According to the data of fog core technology announcement, the penetration rate of China's e-cigarette in 2019 was only 1.2%, and the market scale was only about 10 billion yuan. Assuming that China's total smokers remain at the level of 287 million in the long term, and the average single customer contribution is raised to $600, when the penetration rate continues to rise to 10% / 20% / 30%, the scale of China's e-cigarette market is about 1118 / 2236 / 335.4 billion. According to the data of the 2021 e-cigarette industry blue book, there were more than 1500 e-cigarette manufacturing and brand enterprises in China in 2021, creating nearly 1.5 million direct jobs, and the total export output value may have reached 138.3 billion yuan. HNB's current policy has not been updated, but the potential market space is also huge.
Overseas, after the UK promotes the development of e-cigarettes, the impact of tobacco tax is limited, and the market is still booming after the US government's strict supervision in 2020
In 2019, the penetration rate of e-cigarettes in Britain and the United States has reached 50.4% and 32.4%, and the globalization trend of e-cigarettes has been formed. In order to achieve the goal of smoke-free, the UK vigorously promoted e-cigarette medicine and collected low taxes on e-cigarettes, but the impact on the tax revenue of the UK central government was limited. From 2012 to 2019, under the background of strong tobacco control in the UK, the tobacco tax revenue of the UK central government fell from £ 9.897 billion to £ 9.038 billion, and rebounded to £ 9.79 billion in 2020 under the influence of the increase of tobacco tax rate. At present, atomized e-cigarette has become the focus of new tobacco development in the UK. The United States strictly controlled the taste of e-cigarette in 2020. Under this background, the atomized e-cigarette market in North America dominated by the United States has not been significantly adjusted. In 2020, the market scale of North America will drop to 67.3 billion yuan, with a decline rate of only 1.32%. At the same time, with the end of the transition period in 2020, the market scale is expected to recover to 75.1 billion yuan in 2021 and return to the track of rapid development. The data from the United States means that the strict management of the taste of atomized e-cigarettes will not lead consumers to give up e-cigarettes, and the penetration rate of e-cigarettes can still grow rapidly under the condition of limited taste.
E-cigarette China's tax path may follow two steps to help the smooth transition of the tax base
Compared with overseas e-cigarette tax policies, we believe that it is the general trend to levy consumption tax on new tobacco products. Referring to Japan and South Korea, in the future, China's new tobacco tax rate may be cut in with a lower tax rate and gradually increase to close to the level of traditional cigarette tax rate. At present, China only collects value-added tax on e-cigarettes, and the tax rate is significantly lower than that of traditional cigarettes. For China's tax impact, the scale of e-cigarette market and tax rate increase simultaneously, which may offset each other and maintain a stable overall tax base.
The industrial chain structure of atomized electronic cigarette is clear, the division of labor of each company is clear, and excellent "players" rise rapidly
Focusing on manufacturers, smore international surpasses the popular ceramic atomization core brand of cotton core in terms of tobacco oil treatment, atomization efficiency and stability, uniform heating and nicotine transmission efficiency. Fleem sets off technological changes in the atomization electronic equipment industry. The company continues to cooperate with large customers and suppliers to drive the performance growth of the company with new profit points; Focusing on brands, fog core technology complies with the policy trend, deeply cultivates the integrated retail model, quickly seizes the market, realizes high-quality product experience through cooperation with SIMORE international and high standards and strict requirements for cigarette bomb taste, and promotes the continuous optimization of enterprises with the "double cycle" self enhancement model.
Investment suggestions: we suggest to pay attention to the following directions: 1. The upstream and midstream supply chain leader with technical and R & D barriers and benefiting from the "Matthew effect" in the future: SIMORE international. 2. E-cigarette brand with certain brand strength, channel sinking ability and consumer data accumulation: fog core technology. 3. Companies with technical advantages in subdivided product areas: Shenzhen Wote Advanced Materials Co.Ltd(002886) . 4. China Tobacco suppliers whose production turnover meets the requirements of the competent department: Shenzhen Jinjia Group Co.Ltd(002191) , Anhui Genuine New Materials Co.Ltd(603429) . The implementation of regulatory policies for the e-cigarette industry is accelerated, and the industry as a whole is expected to enter the track of rapid development. The "recommended" rating is given for the first time.
Risk tip: policy risk and epidemic situation repeatedly affect terminal demand
