Focus this week: bat released its 2021 annual report: in 2021, it achieved adjusted revenue of £ 27.561 billion, a year-on-year increase of 6.9%, of which the new tobacco business achieved revenue of £ 2.178 billion, a year-on-year increase of 50.9%; The net profit was £ 8.12 billion, a year-on-year increase of 6.7%.
The number of new tobacco consumers has achieved the highest growth rate in history, and the proportion of income has continued to increase
According to the fixed exchange rate, in 2021, the company’s new tobacco business achieved a revenue of £ 2.178 billion, an increase of 50.9% year-on-year, accounting for 8% of the revenue, an increase of 2.3 PCT year-on-year; Among them, the revenue of atomized electronic cigarette was 973 million pounds, a year-on-year increase of 59.3%; The revenue of heating non combustion products was 927 million pounds, a year-on-year increase of 46.1%; The revenue from the new type of cigarette was 278 million pounds, an increase of 40.6% year-on-year. In terms of the number of consumers, in 2021, the number of new tobacco consumers of the company increased by 4.8 million to 18.3 million, the highest increase in history, of which the number of atomized electronic cigarette consumers was 8.4 million, a year-on-year increase of 25.4%; The number of heating non combustion consumers was 6.7 million, a year-on-year increase of 67.5%; There were 2.1 million consumers of new type of oral cigarette, with a year-on-year increase of 40%. Driven by the multi category product portfolio, the company has accelerated the transformation, achieved rapid growth in the revenue of all new categories, and is committed to achieving the goal of realizing £ 5 billion in the revenue of new tobacco business in 2025 and 50 million users of non combustible products by 2030.
Atomized e-cigarette: VUSE’s market share has increased significantly and has become the global brand leader of atomized e-cigarette
In 2021, the company achieved a revenue of 973 million pounds of atomized electronic cigarettes, a year-on-year increase of 59.3%, and the sales of 535 million cigarette bombs, a year-on-year increase of 55.5%; VUSE, its brand, has a market share of 33.5% in the top five markets (the United States, Canada, the United Kingdom, France and Germany), an increase of 8pct year-on-year, and is in or close to the leading position of value share in all five markets. In the United States, the sales volume of VUSE cigarette bombs increased by 67%, far exceeding the sales growth of the total atomization industry by 21.2%, driving the revenue growth of 57% (calculated at constant exchange rate); Meanwhile, VUSE’s market share in the U.S. atomization market increased by 760bps to 32.5% over fiscal year 2020, mainly affected by the successful launch of vusealto. The company has achieved value share leadership in 27 states in the United States. We believe that in the future, the company’s atomized e-cigarette brand is expected to continue to maintain a high growth trend. As a core supplier of VUSE, smore international is expected to continue to make profits with its technical advantages.
Heating does not burn: the market share of the company continues to grow and accelerate market expansion
In 2021, the company’s revenue from heating non combustion products was 927 million pounds, a year-on-year increase of 46.1%; Cigarette sales reached 19.1 billion, a year-on-year increase of 78.7%, more than three times the industry sales growth of 26%, mainly benefiting from the successful launch of glohyper. The market share of its brand glo in the top nine markets (Japan, South Korea, Russia, Italy, Germany, Romania, Ukraine, Poland and the Czech Republic) reached 18.1%, with a year-on-year increase of 4.8pct. In terms of regions, in Japan, hypermarket has promoted the rapid growth of equipment and cigarette sales, and the consumer conversion rate has increased to 41%. Glo’s sales share of heating non combustion products in Japan reached 21.2%, an increase of 180bps compared with fy2020; In Europe and North Africa, glo’s sales volume increased by 195% year-on-year, about five times the 41% growth rate of the heating non combustion industry in the region. At the same time, it achieved continuous quarterly growth in key markets, driving the company’s revenue (calculated at constant exchange rate) to increase by 167% year-on-year in the region. In the future, glohyper will be launched in more markets.
Investment proposal 1) HNB industry chain: the key recommendation – Shenzhen Jinjia Group Co.Ltd(002191) (China Tobacco standard leader, the only strategic cooperative private enterprise with Yunnan tobacco) [joint coverage with light industry team], Warburg International (tobacco flavor spice, overseas business steady expansion) [with food and beverage 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.
