What’s Going On with E-Cigarettes? One News Report Sent a High-Flying Stock Down, and the Company Re

On September 12, the lithium battery and electronic product stock Yiwei Lithium Energy (300014) opened with a sharp drop, hitting the daily limit. By the close, it was at 39.2 yuan, with a daily trading volume of 1.177 billion yuan, and a market value of nearly 4.2 billion yuan.

According to media reports, on the 11th, the U.S. Department of Health and Human Services announced that its Food and Drug Administration (FDA) would release regulations in the coming weeks to ban the sale of non-tobacco flavored e-cigarette products to control the trend of young people using e-cigarettes.

The U.S. President stated at the White House that the country is experiencing serious lung diseases related to e-cigarettes, which have already led to 6 deaths and hundreds of illnesses. As a parent of a teenage son, he is very concerned about Melania.

During the dialogue, Trump also mentioned the acting director of the FDA, Sharpless, and U.S. Secretary of Health and Human Services, Azar, who were asked about the timeline for the ban and stated that it would be announced in the coming weeks.

Azar said that after the new guidelines are released, "the effective date may be delayed by about 30 days." He stated, "At this stage, all flavored e-cigarette products except tobacco flavor must be removed from the market."

Immediately clarifying the turmoil on the interactive platform that afternoon, the U.S. government's ban on flavored e-cigarette products had little impact on Macwell. Macwell, as a joint venture of Yiwei Lithium Energy, is a global leader in electronic vaporizers. In the first half of the year, Macwell's net profit reached 970 million yuan, leading to a significant increase in Yiwei Lithium's performance in the third quarter.

The U.S. Department of Health and Human Services announced on the 11th that its FDA would release regulations in the coming weeks to ban the sale of non-tobacco flavored e-cigarette products to control the trend of young people using e-cigarettes.

E-cigarettes mainly consist of a battery, a heating vaporization unit, and a vape pen containing e-liquid. They can vaporize nicotine-containing e-liquid for inhalation through atomization.

Yiwei Lithium can flash. After the game, data showed that hot money institutions collectively sold out, with Citic Securities selling 79.22 million yuan at Changsha Furong Middle Road, while two institutions sold 65 million yuan. However, the Shenzhen Stock Exchange sold 25.73 million yuan and bought 43.90 million yuan.

On September 12, the e-cigarette sector plummeted. Wind data showed that the A-share market's e-cigarette sub-sector includes 7 concept stocks. By the close, the e-cigarette concept index fell by 1.21%. Yiwei Lithium's stock price fell, while Jinjia's stock price dropped by 2.95%.

Concerns about the U.S. government's plan to ban flavored e-cigarette products led Yiwei Lithium Energy to promptly contact Macwell to understand the market impact.

Macwell's response was: "From the current information: 1. The FDA has not banned the use of e-cigarettes, only considering temporarily banning the sale of non-tobacco flavored e-cigarettes, which can be resold after FDA approval. 2. In the short term, there may be some impact on the small pod products sold in the U.S., but in the long run, the impact is minimal. U.S. customers are actively preparing for FDA applications."

The U.S. health department has repeatedly pointed out the potential health risks associated with e-cigarettes. On September 6, the Indiana State Health Department announced that a resident died from severe lung injury related to e-cigarette use, marking the third death in the U.S. associated with e-cigarette use. Reports indicate that Indiana has also confirmed 8 cases of severe lung injury related to e-cigarette use and is investigating another 20 suspected cases. According to U.S. health officials, they have found 450 similar suspected illnesses across 33 states.

The CDC has stated that preliminary investigations into severe lung diseases associated with e-cigarette products in the U.S. show clinical similarities among affected populations. The investigation is ongoing, and the CDC advises people not to use e-cigarette products.

Wind data shows that the e-cigarette index has risen by 17.83% this year. Stocks with industry concepts, such as Shunhao, have seen astonishing increases, reaching 227.92%. Yiwei Lithium has grown by 149.36% this year, while Heheta has increased by 137.35%.

In 2014, Macwell was able to acquire a 50.1% stake in Yiwei Lithium for 439 million yuan. Afterward, Yiwei Lithium was able to maintain its independence and gradually reduce its stake to 37.55%, becoming a company contributing investment returns. Macwell's downstream industry has developed rapidly, with new tobacco penetration rates continuously increasing, leading to rapid global growth; the legalization of industrial CBD has significantly increased the demand for vaporizers.

At the beginning of this month, Yiwei Lithium released a "super combustion" third-quarter report, estimating that the net profit for the third quarter will be between 385 million and 451 million yuan, a year-on-year increase of 75%, and a year-on-year increase of 105%. It is expected that the profit for the first three quarters will be between 885 million and 950 million yuan, a year-on-year increase of 133.79%-151.21%.

Yiwei Lithium's performance is rapidly growing, significantly related to its partnership with Macwell. Macwell's net profit reached 970 million yuan in the first half of the year. Yiwei Lithium Energy announced that one of the reasons for the growth in third-quarter performance is that the performance of its subsidiary Shenzhen Macwell Technology Co., Ltd. exceeded expectations, leading to a year-on-year increase in investment income. Additionally, the improvement in performance is due to the large-scale delivery of batteries used in ETC, resulting in considerable profit growth. The capacity of the power battery business is being released in an orderly manner, achieving positive growth in performance.

Reliance on Macwell has also made Yiwei Lithium the "most painful" company in the e-cigarette sector as of September 12.

Since 2018, more than 10 e-cigarette brands and startups have emerged in China, with even some well-known entrepreneurs joining this enthusiasm.

In the A-share market, last year, the new tobacco sector was closely linked to domestic tobacco standards, with Jinjia shares closely associated with Yunnan Tobacco. Jinjia shares have years of technical reserves in the fields of e-cigarettes, heated non-combustion devices, and actively promote products and technologies to the China Tobacco Company, which has begun cooperation in Yunnan, Shanghai, Henan, Shandong, Guangxi, and Chongqing. In July, the company's research summary indicated that foogo Electronics' tobacco products were officially shipped on July 1.

Shunhao shares announced on February 19 that its holding subsidiary Shanghai Luxin intends to jointly invest in a new company with Yunnan to expand the company's synergy in the development of e-cigarettes and related industries.

Yingqu Technology focuses on exporting precision plastic parts for e-cigarettes and provides precision plastic parts for e-cigarettes that require high manufacturing process complexity. Since 2014, the company has been a secondary supplier for Philip Morris International's e-cigarette products.

Institutions believe that the new tobacco industry is still in a rapid growth phase, with the current situation being mixed, controversial, and the policy level still in a discussion stage. However, globally, the growth trend of heated non-combustion products remains unabated. More importantly, due to the very complete industrial chain, the entry threshold for the e-cigarette industry is very low. Data shows that the largest production base for e-cigarettes globally is in Shenzhen, with over 500 companies, of which 80% are small enterprises with fewer than 50 employees.