Two Leading Vaping Companies Release Half-Year Results: Is There Still Profit Potential in Overseas

Recently, leading domestic e-cigarette companies have released their half-year results, attracting industry attention.  

The good news is that the performance of two companies has finally rebounded in the first half of the year. Manufacturing companies still find profitability in overseas markets! Brands focused on overseas business are expanding their market share and competitiveness.  

This article summarizes the half-year reports of Fog Core Technology and Smoore International, providing a macro perspective on the current space in the e-cigarette market.

#1  Fog Core Technology

Second quarter growth  Total remains stable

Recently, Fog Core Technology released its financial report, announcing relevant operational data for the second quarter and the first half of the year.

(Fog Core Technology revenue comparison over the past two years | Source: Tonghuashun)

——In the first half of 2023, revenue was 567 million yuan; net profit for the first half was 148 million yuan!

——In the second quarter of 2023, net revenue was 380 million yuan, a 100.2% increase from the first quarter's 189 million yuan;

——Net profit for the second quarter was 205 million yuan; under non-GAAP, the adjusted net profit for the second quarter of 2023 was 86.23 million yuan (11.89 million USD).

As of June 30, 2023, Fog Core Technology had cash and cash equivalents, restricted cash, short-term bank deposits, short-term investments, long-term bank deposits, and long-term investment securities totaling 15.79 billion yuan (2.18 billion USD), up from 15.369 billion yuan at the end of the first quarter.

#2  Smoore International

Pattern shift  Overseas market maintains growth

On August 21, Smoore International released its 2023 half-year performance report.

The financial report shows that in the first half of 2023, operating revenue was 5.123 billion yuan; gross profit was 1.855 billion yuan; adjusted net profit was 758 million yuan, a year-on-year increase of 47.2%.

(Smoore International revenue trend in recent years | Source: Baidu)

——From the data, overseas market revenue was 5.061 billion yuan, a year-on-year increase of 28%;

——Revenue from the US market was 2.21 billion yuan, a 26.9% increase compared to the same period last year, accounting for 43.2% of total revenue, which includes income from corporate clients and retail clients after Hong Kong transit;

——Revenue from the European and other regions was 2.85 billion yuan, a year-on-year increase of 28.8%, accounting for 55.6% of total revenue, which also includes income from corporate clients and retail clients.

In terms of products, Smoore International mainly has four major series: electronic vaporization, heated tobacco, special vaporization, and vaporization for medical use. Among them, electronic vaporization is its core business, with revenue of 4.474 billion yuan, accounting for 87.3% of total revenue.

In the first half of the year, Smoore International launched a new disposable e-vapor product, officially claiming a 30% increase in puffs, reaching 800 puffs. With large-scale shipments in overseas markets, disposable products have become a new growth point for Smoore International.

Additionally, the retail client business has also performed well, benefiting from product upgrades and channel penetration, with revenue reaching 649 million yuan in the first half of 2023, a year-on-year increase of 15.8%.

The overseas market still holds significant potential

The emerging and open Southeast Asian market deserves more attention

As time goes by, Southeast Asia is gradually realizing the harm reduction potential of electronic vapor products compared to traditional cigarettes. Consequently, countries in Southeast Asia are beginning to relax regulations on electronic vapor products. Countries like Malaysia, Indonesia, Thailand, and Vietnam are exploring policies for the legalization and commercialization of consumption in the electronic vapor market.

On the other hand, Southeast Asia comprises 11 countries, covering over 4.6 million square kilometers, with a population of 700 million, a significant proportion of whom are Chinese, representing a huge market potential!

According to incomplete statistics: there are about 1.6 million Chinese in Myanmar, accounting for 3% of the total population; about 10 million Chinese in Thailand, accounting for 14% of the total population; about 900,000 Chinese in Cambodia, accounting for 5% of the total population; about 300,000 Chinese in Laos, accounting for 4% of the total population; about 800,000 Chinese in Vietnam, accounting for 1% of the total population; about 2 million Chinese in the Philippines, accounting for 2% of the total population; about 7 million Chinese in Malaysia, accounting for 22% of the total population; about 40,000 Chinese in Brunei, accounting for 10% of the total population; about 4 million Chinese in Singapore, accounting for 76% of the total population; about 10 million Chinese in Indonesia, accounting for 4% of the total population; and about 30,000 Chinese in East Timor, accounting for 2%!

In the Southeast Asian electronic vapor industry, Chinese and young people are the most active consumer groups. They have a strong sense of trust and belonging towards domestic products, and they are also highly receptive to new things and possess purchasing power.

In summary, the future of the Southeast Asian electronic vapor industry is promising!