Core view
Weekly focus: 1) 26859 e-cigarette retail licenses have been issued nationwide. As of April 22, 2022, 18 provinces, municipalities directly under the central government, autonomous regions and separately listed cities have announced the number of e-cigarette retail licenses in their regions, with a total of 26859. The specific number of licenses has not been disclosed in 15 regions. Specifically, Jiangsu, Sichuan and Hebei provinces ranked among the top three in the number of e-cigarette retail licenses, with 5057, 3188 and 2213 respectively. 2) The “retreat one into one” policy is implemented, and various provinces and cities have stipulated the distance standard between e-cigarette retail outlets and schools. According to the layout planning of e-cigarette retail outlets in all provinces, if the e-cigarette retail license reaches the upper limit of the guiding number, no additional retail outlets will be added. According to the queuing order of applicants, it will be handled according to the principle of “one back and one in”. In addition, many provinces have stipulated the distance standards between e-cigarette retail outlets and primary and secondary schools and kindergartens to strengthen the protection of minors.
Weekly review of the sector: the new tobacco sector fell 4.93% this week, underperforming the CSI 300 index by 0.74pct and outperforming the CSI 500 index by 0.5pct. In terms of individual stocks, Anhui Genuine New Materials Co.Ltd(603429) , China Tobacco Hong Kong rose 23.82% and 1.07% respectively this week Shenzhen Jinjia Group Co.Ltd(002191) , Eve Energy Co.Ltd(300014) , Shandong Jincheng Pharmaceutical Group Co.Ltd(300233) decreased by 21.55%, 12.76% and 9.29% respectively.
Investment suggestion: Recently, e-cigarette policies have appeared frequently, and the regulatory rules have been gradually improved to promote the orderly and standardized development of the market. At the same time, the policy clearly gives a transition period of more than five months to ensure the smooth transition of the market, which shows the positive attitude of the regulatory authorities towards maintaining market order and promoting the benign and healthy development of the market. China’s e-cigarette industry has officially entered a new era of standardized development with rules to follow. The short-term policy window period will help the smooth transition of all links of the industry. The clearing of long-term unqualified products and production capacity will promote the concentration of market share and benefit the leading enterprises in all links such as production and brand.
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.
