Core view
Review of weekly performance of the sector: the new tobacco sector rose 0.56% this week, underperforming the CSI 300 index and CSI 500 index by 0.52pct and 0.77pct respectively. In terms of individual stocks, Shenzhen Jinjia Group Co.Ltd(002191) , Anhui Genuine New Materials Co.Ltd(603429) fell 6.30% / 3.54% respectively this week; China Bolton and Shandong Jincheng Pharmaceutical Group Co.Ltd(300233) rose 9.07% and 7.08% respectively, performing well this week.
Zhou’s focus: Recently, the four well-known international tobacco groups have released their financial reports for 2021. British American Tobacco led the four companies with a revenue of US $34.9 billion, followed by Philip Morris International, with a revenue of US $314 in 21 years, and Altria and Japan Tobacco achieved a revenue of more than US $20 billion. The four major tobacco groups all highlighted the new tobacco business in their financial reports.
1) British American Tobacco: in 2021, the adjusted sales volume of the company’s new tobacco (including electronic cigarette, heated tobacco and oral nicotine) was £ 2.05 billion, an increase of 51% year-on-year. Meanwhile, the number of consumers of non combustible products such as VUSE e-cigarette, glo heated tobacco and velo oral nicotine increased by 4.8 million, and the number of new tobacco users reached 18.3 million, setting a record for the company’s annual new users. VUSE’s market share in the United States increased from 23.4% at the beginning of 20 to 35.9% at the end of 21, while its competitor Juul’s market share decreased from 50.7% to 36%.
2) Philip Morris International: in 2021, the market share of iqos heating tobacco devices was 6.8%, with a year-on-year increase of 1.2pct.
3) Altria: in 2021, the company’s after tax revenue from smoking 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 smoking brand is 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.
4) JT: looking forward to the future, the company’s primary task is to expand its influence in the category of risk reduction products (RRP), focusing on heating non combustion products.
Investment suggestion: China’s e-cigarette policy of 21q4 was accelerated. The short-term market experienced a period of policy running in. In the long run, with the normalization of supervision, the industry entered a healthy and orderly development. The upstream head OEM enterprises will benefit from the industry integration promoted by the policy, and are optimistic about the leading enterprises in the industrial chain with technology and customer accumulation to further improve the market share and profitability. At the same time, enterprises in all links of the industrial chain focusing on export business are relatively weak affected by China’s policies, and the market development space is broad. The global demand for new-type tobacco continues to grow. We are concerned about the development of policies related to new-type tobacco at home and abroad. It is suggested to pay attention to smore International (6969. HK), Shenzhen Jinjia Group Co.Ltd(002191) (002191. SZ).
Risk warning: industry regulatory policies exceed expectations; The market demand is less than expected; Intensified market competition; Technical iteration and update; Price fluctuation of raw materials; Repeated outbreaks outside China have impacted channel sales; Macroeconomic pressure.
