Current investment tips:
The latest regulatory trends of new tobacco at home and abroad: the European Parliament recognizes e-cigarettes as a smoking cessation tool, which can help smokers gradually quit smoking. At the same time, it believes that e-cigarettes should not attract minors and non-smokers, and proposes to prohibit the addition of condiments. According to the annual reports released by the four major overseas tobacco giants, the transformation trend of new-type tobacco is obvious: the proportion of new-type tobacco revenue is increasing rapidly; The giants have increased their technological research and development and market layout of new tobacco, and have put forward deterministic transformation goals one after another; However, there are differences in transformation rhythm and specific layout. Specifically:
Philip Morris International: the transformation progress of new tobacco is the world’s leading, and follow-up attention will be paid to the innovation and landing rhythm of HNB products. In 2021, the net operating income reached US $31.405 billion, a year-on-year increase of 9.5%; The net profit attributable to the parent company was US $9.109 billion, a year-on-year increase of 13.1%.
The proportion of new tobacco revenue continued to rise, rising rapidly from 0.2% in 2015 to 29% in 2021. Since August 2021, iqos iluma cigarette sets and terea cigarette bombs have achieved great success in the Japanese and Swedish markets, significantly improving the user conversion rate. As of 2021q4, the number of iqos users has increased by 3.9% year-on-year to 21.2 million. Iqos continues to maintain its leading position in the global HNB market. In 2021, the market share of HNB in Japan, Italy, Russia, South Korea and Poland reached 22.9%, 11.5%, 7.4%, 6.5% and 6.3% respectively. The company puts forward the strategic goal of increasing the proportion of new tobacco revenue to 40% and 50% in 2023 and 2025 respectively.
British American Tobacco: the layout of new tobacco blossoms at multiple points, and follow-up attention will be paid to the PMTA review progress of other series of products of the company. In 2021, the operating revenue reached £ 25.684 billion, a slight decrease of 0.4% year-on-year; The net profit attributable to the parent company was £ 6.801 billion, a year-on-year increase of 6.3%. The proportion of new tobacco revenue rose rapidly from 1.9% in 2017 to 8.0% in 2021; The number of users increased by 35.6% year-on-year to 18.3 million. The revenue growth of electronic atomization took the lead. In October 2021, the company’s three VUSE products first passed the PMTA application of FDA, and VUSE Alto products are still waiting for FDA review. VUSE’s market share in the global electronic atomization market will reach 33.5% in 2021; Glo has a market share of 18.1% in the global HNB market; Accelerate the U.S. market by acquiring nicotine bag manufacturers. It is proposed that the revenue of new-type tobacco will exceed £ 5 billion in 2025 and the number of new-type tobacco users will reach 50 million in 2030.
Japan Tobacco: HNB market cultivation is earlier than brand cultivation, and follow-up attention will be paid to the rhythm of increasing the market share of independent brands. In 2021, the operating revenue was 2324.8 billion yen, an increase of 11.1% year-on-year; The net profit attributable to the parent company was 338.5 billion yen, a year-on-year increase of 9.1%. Revenue and profits reversed the downward trend since 2019, mainly because the overseas tobacco business revenue stopped falling and rebounded. In 2021, the overseas tobacco business increased significantly by 17.6% year-on-year, of which the sales growth contributed about 6%, and the tax rate adjustment contributed mainly to the increase of product price increase (Japan’s national tobacco tax and local tobacco tax increased by 10 yen / piece in 2021, an increase of about 8%). Japan is the world’s largest HNB consumer market, and China’s HNB market accounts for 30%; In 2021, the company ploom accounted for about 10.3% of the market in Japan and China, and the revenue of HNB Japan and China accounted for 10.7% of the total revenue of the company’s tobacco business in China. Ploomx products will be launched in 2021 to quickly seize the minds of consumers, which is expected to support the company to achieve the goal of increasing the revenue share of HNB products to 15% – 20% and 10% in key global markets in 2027.
Altria: spin off the wine business and focus on the main tobacco industry. The large-scale performance of new tobacco still needs to be catalyzed by the policy. New tobacco products are distributed by means of exclusive consignment and investment and M & A, and the vision of “smoke free” in 2030 is put forward: specifically, including smoking Copenhagen and on! Etc., iqos, exclusive distribution right of Marlboro heating rod in the United States, and 35% equity investment of juul35%. In 2020, the company’s new tobacco revenue accounted for about 10.0%. The United States still prohibits the import and sale of iqos, and the uncertainty of the subsequent exclusive consignment right is high; Juul’s PMTA application has not been approved, and its market share in the United States has significantly decreased from 76% in 2018 to 37.6% in December 2021.
China is in a policy window period because of the long slope and thick snow of the new tobacco track. Companies with significant advantages in the layout of the whole industrial chain of new tobacco are recommended, such as Shenzhen Jinjia Group Co.Ltd(002191) . As of January 29, 2022, the national standard for electronic cigarette (Draft for comments) is in the regulatory transition period. In the future, with reference to tobacco management, a more perfect regulatory system will be introduced to monitor the whole process from raw materials, production to brands and standardize operation. Shenzhen Jinjia Group Co.Ltd(002191) cigarette labels are basically stable, and enter the field of high-quality cigarette boxes, wine bags, 3C and other high-quality packaging around the idea of improving product added value and diversified expansion of customers; New tobacco layout opens up imagination space: 1) electronic atomization: brands and materials work at the same time. The subsidiary Jinjia technology carries out OEM; The joint venture launched its own brand Fugou due to flavor technology; Through Yun Shuo technology and Changyi technology, tobacco flavor and atomized smoke oil are arranged. 2) HNB: tobacco products are positioned as supporting core suppliers, and non tobacco products are distributed as HNB herbal brand. Low temperature flavors are distributed through cloud technology and Changyi technology. Through the joint venture with Yunnan Zhongyan, Jiayu technology produces and sells HNB cigarette sets; Layout the herbal tobacco brand through Jiaju electronics; 3) Sales side: Indonesia YUNPU Xinghe was established in 2021, and 40% equity of Hong Kong Hengtian business was acquired. The overseas supply chain system has been established. In the company’s incentive plan, the net profit attributable to the parent company from 2021 to 2023 CAGR is about 23%, reflecting growth confidence; We expect the net profit attributable to the parent company of the company from 2021 to 2023 to be RMB 1.015 billion, 1.241 billion and 1.529 billion, with a year-on-year increase of 23%, 22% and 23%. The PE corresponding to the current market value (2022 / 2 / 21: RMB 24.3 billion) is 24, 20 and 16 times respectively.
Risk tips: the pace of policy implementation is less than expected, the risk of patent disputes, the change of end consumer preferences, the risk of exchange rate fluctuations, etc.
