Review of 10 Listed E-Cigarette Companies’ H1 Financial Reports: Only 40% Posted Revenue Growth

A review of the first-half 2023 financial reports of 10 listed companies primarily engaged in e-cigarettes or related vaping businesses.

[Original by Lianggezhishang] Recently, listed companies with vaping-related businesses have successively disclosed their first-half results. The H1 2023 financial data from these companies have drawn widespread attention in the vaping industry, especially as the reports show substantial differences in growth rates among various vaping companies.

According to incomplete statistics from Lianggezhishang, among 10 listed companies mainly engaged in e-cigarettes or vaping-related businesses—including Smoore, RLX Technology (RELX), Wulun Technology, Yinghe Technology (parent company of Skoll), and Yingqu Technology—only four companies, namely Yinghe Technology, Xiaosong Co., Jinjia Co., and Shunhao Co., recorded revenue growth, while the other six posted revenue declines. 

Specifically, in terms of revenue growth, four companies posted year-on-year increases in the first half of this year. The highest growth came from Skoll under Yinghe Technology, surging 1477.33% year on year, with H1 operating revenue reaching RMB 1.433 billion. Notably, Skoll’s full-year revenue for 2022 was only RMB 540 million. 

The companies reporting revenue declines were Smoore, RLX Technology (RELX), Wulun Technology, China Boton, Yingqu Technology, and Tianchang Group, with RLX Technology posting the steepest decline, down 85.64% year on year.

As for the reasons for the decline, RLX Technology and Wulun Technology, both mainly focused on self-owned brands, stated in their interim reports that one reason for lower revenue was the proliferation of the illicit market. RLX Technology also mentioned the impact of the implementation of domestic regulatory policies. Wulun Technology further pointed out that market competition was exceptionally intense in the first half of 2023. Some vaping companies adopted a fast-moving consumer goods-style sales model, supplying stores directly and then carrying out local promotions, using shipment-first, payment-later arrangements and paying commissions. This supply model has posed a considerable challenge to traditional distributor-based sales models.

Manufacturing companies such as Smoore, Tianchang Group, Yingqu Technology, and Shunhao Co. also saw revenue decline. Smoore said its revenue and profit decline was mainly due to short-term impacts from rapid market changes and the external environment. Tianchang Group said the sharp drop in revenue from its vaping business was due to a major customer canceling its exclusivity rights, leading to fewer e-cigarette orders.

It is worth noting that in the second quarter of this year, the performance of listed vaping companies was generally better than in the first quarter. This trend was also confirmed by e-cigarette export data released by China’s General Administration of Customs. Specifically, China’s e-cigarette exports totaled USD 2.497 billion in the first quarter, rising to USD 2.986 billion in the second quarter, a quarter-on-quarter increase of 19%. In terms of volume, e-cigarette exports reached 44.58 million kilograms in Q1 and 59.53 million kilograms in Q2, up 33.5% quarter on quarter.

As for the e-cigarette market in the second half of this year, Lianggezhishang learned through discussions with several veteran industry participants that, affected by regulatory policy, the international situation, market demand, and other factors, the outlook for the vaping market in the second half remains far from optimistic.