Focus this week: Philip Morris International released the quarterly report of 2022q1: the shipment volume of heating non combustible products in 2022q1 reached 24.8 billion, accounting for 31.2% of revenue.
The company’s 2022q1iqos cigarette pop-up cargo totaled 24.819 billion, a year-on-year increase of 14.2%; In terms of sales proportion, iqos cigarette cartridges have accounted for 14.34% of the company’s total shipments (including traditional cigarettes) (a year-on-year increase of 1.35pct); From the revenue side, the harm reduction products sector 2022q1 contributed US $2.35 billion to the company’s revenue, accounting for 31.2% (a year-on-year increase of 3.22 PCT), continuing to hit a record high; In addition, the company expects strong performance growth this year, and is confident to achieve the goal of more than 50% of the revenue contribution of harm reduction products in 2025. Among them, the total sales revenue of iqos equipment in 2022q1 is about US $126 million, accounting for about 6% of the revenue of harm reduction products, which is mainly driven by the easing of supply restrictions and the strong performance of iluma.
By 2022q1, the number of iqos users (except Russia and Ukraine) had reached 17.9 million, an increase of more than 1 million over the end of 2021, of which the number of users completely converted to iqos consumption (i.e. stopping the use of traditional cigarettes) had reached 12.7 million (71% retention rate); In 2022q1, the comprehensive market share of iqos cigarette bombs in the global promoted markets (except the United States and foreign countries) reached 7.5%, with a year-on-year increase of 1.1pct. By the end of 2021, iqos had been listed and sold in 71 countries and regions around the world. Specific to different regions:
EU: in 2022q1, the pop-up volume of heating non combustion smoke reached 8.566 billion, a year-on-year increase of + 33.3%; The average market share of 2022q1 heated incombustible smoke bombs in the EU region was 7.6%, with a year-on-year increase of + 2pct. In addition, the retail sales volume of Q1 increased strongly month on month.
Japan: in 2022q1, the pop-up volume of heating non combustion smoke was 8.1 billion, a year-on-year increase of 2.3%; Benefiting from the rich product line of cigarette bombs, the market share of 2022q1iqos cigarette bombs in Japan reached 22.9%, with a year-on-year increase of + 1.4pct. The company expects that the market share of 2022q2 is expected to reach about 24%.
South Korea: in 2022q1, the pop-up volume of heating non combustion smoke was 1.1 billion, a year-on-year decrease of 5.4%; Iqos cigarette bombs accounted for 6.5% in South Korea, a year-on-year increase of -0.3pct.
Iqosiluma’s sales performance and consumer feedback exceeded expectations. In the Japanese market, since the launch of the product in August 2021, more than 30% of the user group has realized product switching, and more than 20% of the sales target is new users. The advantages of high-quality user experience, stronger reliability and no cleaning have significantly improved the user conversion rate, retention rate and promotion score. Terea cigarette bomb has also become the fastest-growing product in Japan’s smoke-free category. Within six months after its listing in Japan, its market share has reached 12%, surpassing the sum of Marlboro cigarette bomb and heets, becoming the No. 1 smoke-free brand. At the same time, the company introduced a new brand of heating non combustion smoke bomb suitable for iluma, sentia, whose price is equivalent to that of heets; In the Swiss market, terea cigarette bombs accounted for nearly two-thirds of the company’s cigarette bomb sales only five months after its launch, driving the company’s market share in Switzerland from less than 6% in 21q3 to 9% in this quarter.
Investment suggestions: 1) atomization industry chain: key recommendation – smore International (leading global atomization equipment manufacturer); Suggestion: fog core technology. 2) Tobacco supply chain: it is suggested to pay attention to: China Tobacco Hong Kong, Shenzhen Jinjia Group Co.Ltd(002191) , Huabao international, Anhui Genuine New Materials Co.Ltd(603429) , Shanghai Shunho New Materials Technology Co.Ltd(002565) , Shantou Dongfeng Printing Co.Ltd(601515) , China Bolton.
Risk tip: the risk of new tobacco policy changes, the risk of sales / enterprise development falling short of expectations and intensified market competition.
