Boton Group surges 170%; core RELX supplier and owner of Huoqi vaping

According to the latest securities market news, China Boton (3318.HK), listed in Hong Kong, has continued its strong upward momentum, rising 62.5% on January 18, 53.7% on January 19, and 14.8% on January 20, for a cumulative gain of nearly 170% over three days.
 
1. “China Boton” — the only state-branded listed company in China’s flavors and fragrances industry

Boton Group, formerly known as Shenzhen Boton Flavors & Fragrances Co., Ltd., was founded in 1991. It is a nationally recognized high-tech enterprise with leading overall strength in the industry, and its R&D capabilities rank first domestically. In the 2018 “Shenzhen Top 500 Enterprises” selection, Boton ranked No. 315.
 
The group has more than 20 subsidiaries, including Shenzhen Boton Flavors & Fragrances, Dongguan Boton Flavors & Fragrances, Boton (Shanghai) Biotechnology, Jirui Technology, and Boton Property. Its business footprint covers major provinces and cities across China, including Guangdong, Jiangxi, Hubei, Fujian, Henan, Anhui, and Guizhou, and has expanded into overseas markets such as the United States, South Korea, Russia, Malaysia, and Indonesia.

Tobacco flavors are an important source of revenue for Boton Group. At present, all 18 major cigarette companies in China are Boton customers.

Boton Group was listed on the Hong Kong Main Board in 2005 under the official stock name “China Boton” (code: 3318.HK). It was the first listed company in China’s flavors and fragrances industry and remains the only listed company in the sector with the “China” state-brand designation.

Industry analysts believe that the global growth of e-cigarettes has been driven by two main factors behind Boton Group’s strong breakout: “major B2B tobacco and e-cigarette clients, and continued growth in open-system products on the consumer side.”

In addition to leading the industry in flavors and fragrances R&D, Boton is also the core supplier of e-liquid flavorings for RELX, the leading domestic e-cigarette brand and king of the closed-system segment.

At the same time, its e-cigarette brand Huoqi has also seen explosive growth in recent years, rising into the industry’s top tier.

2. Core supplier to RELX, the “king of closed-system e-cigarettes”

On January 1, 2021, RELX formally filed for a U.S. IPO, planning to raise US$1.085 billion. Within RELX’s operating chain, Boton is a core supplier of e-liquid flavors and fragrances and also assists with RELX e-liquid R&D. Jiang Xingtao, head of the RELX scientific laboratory, previously served as director of e-liquid R&D at Boton and had more than 13 years of experience there. RELX’s Shenzhen headquarters is also located within Boton’s e-cigarette industrial park.

According to RELX’s prospectus, as of September 2020, RELX held more than 60.2% of the closed-system e-cigarette market in China, making it the country’s largest closed-system e-cigarette brand.

Even before RELX was founded, Boton had already begun laying out the full e-cigarette industry chain in 2016. In January 2016, Boton invested RMB 750 million to fully acquire Jirui’s e-cigarette production lines. This not only created what was then the largest e-cigarette acquisition in China, but also laid the foundation for Boton Group to integrate e-liquid technology R&D, large-scale supply, and e-cigarette manufacturing across the entire value chain. Its incubated ICE open-system e-cigarette brand saw explosive growth in 2020 and captured the No. 1 position in the open-system category.

As a result, Boton became the only company in the e-cigarette industry to support the growth of leading brands in both the closed-system and open-system segments.

3. Subsidiary brand Huoqi ranks among the industry leaders

Huoqi is Boton Group’s vaping device brand. Its products cover finished vaping devices, e-liquids, pods, and vaping device accessories. Huoqi currently offers multiple product series including ammo 1st Gen, ammo Pro, Shafen, and NOS. Its market share and monthly e-liquid sales rank among the top in the industry, and it has launched more than 60 flavors, giving it one of the largest flavor lineups in the sector.