Vaping companies hit by another sharp first-quarter earnings drop: is the industry's outlook still p

In the first two years,e-cigarettesIt continues to be hot and has entered a period of barbaric growth, and companies in the industrial chain have also been blown to the sky. However, facts have also proved that the performance of most of these concept stocks has performed well.

In 2022, domestice-cigarette marketAfter several ups and downs, together with Simmore International (06969.3HK),fog core technology(RLX.US), ChinaBoltonListed companies in the e-cigarette field such as (03318.HK) have also generally experienced a sharp decline in performance.

It is worth mentioning that well-knowne-cigarette brandsShangwoxin Technology disclosed its latest first-quarter results on May 17. After entering 2023, what will be the performance of this leading brand?e-cigarette industryAre the future prospects worth looking forward to?

Fog core technology: head electronic cigarette brand business, why the performance suffered a sharp decline?

Founded in January 2018, Wuxin Technology has grown into the world's leading electronic atomization company after more than 4 years of development. Its main businesses include electronicsatomizerproducts RELX yueshiR & D, design, manufacturing and sales.

The latest results show that in the first quarter,the company achieved revenue of1.89billion Yuan(Unless otherwise specified, the following yuan refers to RMB), the same period last year was17.15100 million yuan, down 88.98% year-on-year；Under U.S. Generally Accepted Accounting Standards, the net loss for the period was 56.3 million yuan, compared with 687 million yuan for the same period last year; under non-U.S. Generally Accepted Accounting Standards (non-GAAP), the net profit for the period was 184 million yuan, compared with 362 million yuan for the same period last year.

It is not difficult to find thatThe first-quarter report card handed over by Wogxin Technology did not perform well, continuing2022Annual revenue and net profit are declining.

Fog Core Technology said that the main reason for the decline in revenue in the first quarter of 2023 was the suspension of production of the company's old products and the negative impact of illegally flavored products on the market, which led toUsers are adopting our new products that meet national standards at a slower pace than expected.

Also,The company's gross profit margin is calculated from202238.3% in the first quarter of 2009Falling to 24.2% in the first quarter of this year，This has obviously had a negative impact on the profitability of Fog Core Technology. It is reported thatThe sharp drop in gross profit margin is due to the imposition of36%Consumption tax,The tax will take effect on November 1, 2022.

In the first quarter,Wuxin Technology's operating expenses have reached4.19100 million yuan, only 3,360 yuan in the same period last yearTen thousand yuan,It also had an impact on the decline in net profit. The main reason for the increase in operating expenses is the change of 240 million yuan in equity compensation expenses in the first quarter of 2023.

The company's quarterly report also disclosed that as of March 31, 2023, Fogxin Technology's cash and cash equivalents, restricted cash, short-term bank deposits, net, short-term investments, long-term bank deposits, net and long-term investment Securities,#p#pagination title #e#net153.69100 million yuan.

Although its performance has experienced continuous declines in 2022 and the first quarter of 2023, Fog Core Technology does not seem to be short of money, and its blood slot is quite thick.

The regulatory framework is formed. Will e-cigarettes cool down or take off again?

It should be pointed out that not only Fog Core Technology, in fact, Simmore International and other companies with e-cigarettes as their main business generally experienced a decline in performance in 2022, and most e-cigarette concept stocks that disclosed their results in the first quarter of 2023 also performed Not very well.

For example, Simmore International achieved revenue of 2.527 billion yuan in the first quarter of 2023, a year-on-year increase of 11.9%;Adjusted net profit attributable to the parent company is realized3.06 100 million yuan, down 44.8%。Among them,Overseas and domestic sales revenue are respectively25.12100 million yuan, 0.16100 million yuan, a year-on-year change of 58.2% respectively、-97.7%。

Judging from the reasons,The most important one is the impact of the shrinking domestic market.

It is understood that my country's e-cigarette policies will be intensively introduced in April 2022, and the core contents include: 1) taste restrictions. It is prohibited to sell flavors that are inducing to minors, and the main theme of product flavor is limited to tobacco flavor. 2) Full license management. Production, wholesale and retail companies must obtain licenses to carry out relevant commercial activities. 3) Unified platform transactions and traceability of all links. Relevant business activities are incorporated into the national unified e-cigarette trading platform, and information traceability is implemented in the production, circulation and service links. 4) The total amount of retail outlets is controlled, independent of cigarettes, and non-exclusive. Retail outlets dynamically adjust according to changes in market demand and market conditions, and are independent of cigarette retail outlets.

Overall, after the supervision and implementation of taste restrictions, license access, and tax collection restrictions in various links,Domestic sales of e-cigarettes are under pressure in the short term.

In October 2022, the Ministry of Finance, the General Administration of Customs, and the State Administration of Taxation jointly issued the "Announcement on Levying Consumption Tax on E-Cigarettes", which included e-cigarettes in the scope of consumption tax collection.from2022years and 11from 1Japan officially imposes a consumption tax on e-cigarettes.

The implementation of the e-cigarette consumption tax has directly had a certain impact on all aspects of industry brands, wholesale companies, and terminal retail.

For a time, many investors believed that the e-cigarette industry should sing a cool song.

But in fact, from a long-term perspective, regulatory policies have been implemented and China's e-cigarette regulatory framework has been formed.Only then can the industry enter a period of orderly development,In addition, strengthening supervision will help clear out small businesses in the industry that are substandard and illegal as soon as possible.It is a big plus for the subsequent healthy growth of the entire market.

According to Euromonitor data,2021In 2000, the domestic sales of atomized e-cigarettes in China reached 196100 million yuan, with a penetration rate of 4.2% based on smoking population, penetration by scale is 1.2%。In the mature market of the United States, the penetration rate of atomized e-cigarettes by population reaches 46%, and the penetration rate by scale reaches 8%.# p#pagination title #e#

Compared with mature markets,China's e-cigarette industry is still in the early stages of increasing penetration, and the potential market is still very broad.

It is worth noting that China's e-cigarette industry chain supplies 95% of the world's totale-cigarette products, China's e-cigarette industry chain has strong advantages from technology research and development to product design and manufacturing.

And the policy also encouragese-cigarette enterprisesExport foreign exchange earnings, e-cigarette OEM manufacturing enterprises export foreign exchange earnings, coupled with the higher market maturity of some countries and regions, mainly in Europe and the United States, combined,Overseas markets are places where e-cigarette companies need to focus on development, and are a battleground at this stage.

According to the "2021 Blue Book of E-Cigarette Industry", China's e-cigarette exports in 2021 will reach 138.3 billion yuan.

The "Blue Book of E-Cigarette Industry Exports in 2022" report predicts that the overseas e-cigarette market will maintain a growth rate of 35% in 2022.Breakthrough in total scale1000Billion dollars, 2022The global e-cigarette market size will exceed 1,080 in 2010Hundreds of millions of dollars.

The Blue Book also predicts 2022In 2001, China's total e-cigarette exports will reach 1867Billion yuan,The growth rate is expected to reach 35%.

Overall, although the domestic e-cigarette market has experienced a short-term contraction, the follow-up prospects are still considerable. At the same time, the most core overseas markets still have bright prospects.

The decline in the performance of companies with the e-cigarette business as the main business in 2022 and the first quarter of 2023 is likely to be a squatting before taking off again. The subsequent prospects of e-cigarette companies may not be too optimistic, but should be paid attention to.

conclusion

The co-founder, chairman of the board of directors, and CEO of RLX Technology said in the quarterly report: While we strive to develop diversified, new, and approved products to meet the various needs of users, the prevalence of illegal products has brought short-term challenges to our sales and disrupted the recovery of the entire industry. The growing efforts by regulators to crack down on illegal products are encouraging, and we hope these efforts will effectively support the creation of fair and orderly market conditions that will enable law-abiding companies like RLX Technology to return to sustainable growth.If illegal products can be driven out of the market, we believe that adult users will gradually adapt to products that meet national standards.As a trustworthy e-cigarette brand for adult smokers, we remain committed to providing compliant, high-quality products to meet user needs, while continuing to explore growth opportunities in the evolving industry. quot;

It can be seen that industry professionals still have confidence in the development of the e-cigarette industry.