Attention this week: British American Tobacco released its annual performance forecast for 2021, benefiting from the strong growth of new tobacco business. It is expected that the revenue will increase by more than 5% year-on-year at constant exchange rate this year; At the same time, the number of consumers of new tobacco products increased by 3.6 million from January to September this year to 17.1 million, an increase over the whole year of last year, driving the rapid growth of sales and income of the three new tobacco categories.
VUSE continues to strengthen its leadership in the global atomized e-cigarette market
As of September this year, VUSE has accounted for 34.1% of the top five atomized e-cigarette markets, an increase of 6.9pct over 2020, and is the leader in the global atomized e-cigarette market. In the United States, VUSE is currently in a leading position in the atomization market in 26 states and is approaching the national leading position. As of September this year, its market share in the atomization market in the United States increased by 650bps to 31.4% compared with fiscal year 2020. At the same time, vusesolo, its subsidiary, obtained the first sales authorization of atomized electronic cigarette products issued by FDA in October this year, confirming that the sales of solo products are suitable for protecting public health. The PMTA application of vusealto products was submitted nearly a year later than vusesolo. Because it has the same underlying scientific principles, the company has increased its confidence in its PMTA application. In the other top five markets, VUSE continues to expand its market leadership with the successful completion of VUSE’s global brand migration from vype. We believe that under the background of stricter supervision of the U.S. e-cigarette market, the company, as a leading brand, can cope with the rising access threshold and supervision cost, and its market share is expected to continue to increase. As a core supplier of VUSE, smore international is expected to continue to earn profits by virtue of its technical advantages.
The successful launch of glo hyper continues to increase the market share of the company’s heating non combustion category
As of September this year, thanks to the successful launch of glohyper, the market share of the company’s heating non combustion cigarette sales in the top nine markets increased by 4.5pct to 17.7% compared with fiscal year 2020. In Japan, glohyper performed strongly. As of September this year, its market share in Japan’s total tobacco market increased by 120bps to 6.6% compared with fiscal year 2020; In Japan, the market share of heating non combustion category increased by 170bps to 21.1% compared with fy2020; The European and North African markets currently account for 50% of the company’s sales of heating non combustion products. In 2021, the sales volume and revenue in this market will continue to accelerate growth, and the market share in key markets will achieve continuous quarter on quarter growth; In Russia and Ukraine, the market share of the company’s heating non combustion products has almost doubled, both at about 20%. In terms of sales, glohyper was launched in 4 new markets this year. At present, it is sold in 22 of the 24 glo markets around the world. It is planned to enter more markets in 2022.
Focus on the development of new tobacco field and accelerate business transformation
In 2021, the company’s new tobacco business revenue continued to grow strongly, making an important contribution to the group’s revenue growth. The company will continue to focus on the development of new tobacco business and achieve the goal of new tobacco business revenue of £ 5 billion by 2025. At the same time, the company is using its multi category consumer centered approach to provide consumers with a wide range of scientifically proven risk reduction alternatives. The rapid digital transformation of the company’s business and the effective management of the revenue and marketing expenses of the new tobacco business will continuously improve the return on investment of the business and further improve its profitability; The company’s increasing investment in this field will also promote the continuous growth of the performance of this sector.
Investment recommendation 1) HNB industry chain: key recommendation – Warburg international / shares (China tobacco flavor faucet, new private license of thin sheet) [joint coverage with food and beverage team], Shenzhen Jinjia Group Co.Ltd(002191) (China Tobacco standard faucet, sole strategic cooperation private enterprise with Yunnan tobacco) [joint coverage with light industry team]; suggestions: 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, Bolton, China. 2) Atomization industry chain: key recommendation – smore International (leading global atomization equipment manufacturer), followed by fog core technology (leading Chinese atomization brand) and Shenzhen Aisidi Co.Ltd(002416) (leading Chinese atomization channel). Risk tips: the risk of changes in new tobacco policies, the risk of sales / enterprise development falling short of expectations and intensified market competition.
