Review of weekly performance of the sector: the new tobacco sector retreated this week, with a cumulative weekly decline of – 4.01%, weaker than the Shanghai and Shenzhen 300 index and the China Securities 500 index. In terms of individual stocks, China Bolton, SIMORE international and Shenzhen Stock Exchange retreated significantly this week, falling 15.06% and 14.68% respectively, while Eve Energy Co.Ltd(300014) , Byd Company Limited(002594) electronics and fogcore technology fell 12.53%, 12.56% and 12.62% respectively; This week Shanghai Shunho New Materials Technology Co.Ltd(002565) rose by 3.99%, leading the increase. Zhuhai Rundu Pharmaceutical Co.Ltd(002923) , Shandong Jincheng Pharmaceutical Group Co.Ltd(300233) recorded an increase of 3.20% and 1.37% respectively.
Week’s focus: Skyworth health, a holding subsidiary of Skyworth Group, entered the e-cigarette industry. SKYWORTH health was founded on December 16, 2021, with a registered capital of 10 million yuan. The legal representative is Tian Ruobing. The licensed projects include the import and export of e-cigarettes and nicotine for e-cigarettes, e-cigarette retail, e-cigarette wholesale, etc.
Many industry giants have joined the game. There is a huge market space for e-cigarettes. The gross profit margin of the manufacturer smore International’s enterprise oriented products can reach more than 40%, and its revenue has a compound annual growth rate of 94% from 2016 to 2020. Although e-cigarette is a strong regulatory industry, under the high gross profit margin, in addition to the inherent players, a large number of newcomers have entered the market. From the manufacturing end to the channel end, there are many other industry giants, including Byd Company Limited(002594) electronics, Luxshare Precision Industry Co.Ltd(002475) , Telling Telecommunication Holding Co.Ltd(000829) , Eternal Asia Supply Chain Management Ltd(002183) , etc.
Investment suggestion: under the expectation of accelerating the implementation of China’s e-cigarette policy, the short-term sector is affected by sentiment. In the long run, with the normalization of supervision, the industry has 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 pay attention to the development of policies related to new-type tobacco at home and abroad. It is suggested to pay attention to smore International (6969. HK), the global leader in atomization OEM with leading technical strength, and Shenzhen Jinjia Group Co.Ltd(002191) ( Shenzhen Jinjia Group Co.Ltd(002191) . SZ), which arranges the whole industrial chain and cooperates closely with China tobacco.
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.
