Core view
Weekly concerns: 1) the detailed rules for the supervision of e-cigarettes are continuously released. This week, the state tobacco monopoly administration continued to intensively release the detailed rules for the supervision of e-cigarettes, including the detailed rules for the implementation of e-cigarette product packaging, the detailed rules for the implementation of product identification and testing, the instructions for product technical review, the instructions for production and business entities to apply for licenses and other documents, so as to further refine the supervision of e-cigarettes and help the industry move forward steadily. 2) The ceramic core products of njoy, a foundry customer of smore, have been approved by PMTA, becoming the third approved brand of PMTA electronic cigarette. On April 26, FDA announced that njoyace electronic cigarette equipment and three tobacco flavored electronic cigarette cartridges under njoy passed the PMTA audit, becoming the third electronic cigarette product approved by PMTA after British American Tobacco VUSE and Japanese tobacco logic. After comprehensive evaluation, FDA believes that the level of harmful and potentially harmful components (HPHC) in njoyace fog is lower than that of cigarettes, which is less harmful than traditional cigarettes. Njoyace is the first closed cartridge changing electronic cigarette with ceramic core approved by FDA, which is manufactured by SIMORE technology. This time njoyace passed the PMTA audit, indicating that FDA recognizes the harm reduction and safety of SIMORE ceramic core products.
Weekly review of the sector: the new tobacco sector fell 1.82% this week, underperforming the CSI 300 index by 1.9pct and outperforming the CSI 500 index by 0.15pct. In terms of individual stocks, Byd Company Limited(002594) electronics, fogcore technology and Eve Energy Co.Ltd(300014) rose 11.22%, 8.51% and 5.9% respectively this week Shanghai Shunho New Materials Technology Co.Ltd(002565) , Anhui Genuine New Materials Co.Ltd(603429) , Apple Flavor & Fragrance Group Co.Ltd(603020) decreased by 10.05%, 7.03% and 6.95% respectively.
Investment suggestion: China’s e-cigarette regulatory rules are gradually implemented, and the industrial policies are clear. China’s e-cigarette industry has officially entered a new era of standardized development with rules to follow. In the short term, the policy window period is conducive to the smooth transition of all links of the industry; In the long run, the clearing of unqualified products and production capacity will promote the concentration of market share and benefit the advantageous enterprises in production, brand and other links.
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.
