Kendal: Regulation Raises Entry Barriers, E-cigarette Industry Still Holds Great Potential

On May 28th, Kendal Corporation (stock code: 831627) issued a statement announcing that Open Source Securities conducted a research on the company on May 24th and answered questions related to e-cigarettes.

Kendal Co., Ltd. stated that the company's main products are currently divided into environmentally friendly alkaline zinc manganese batteries, environmentally friendly carbon zinc manganese batteries, and lithium-ion batteries. In the 2023 fiscal year, the sales revenue of these three types of products accounted for 59.35%, 18.41%, and 19.07% of total operating revenue, respectively, with other batteries and other income accounting for 3.17%. The products are mainly used in various fields such as electric toys, smart home products, medical equipment, outdoor electronic devices, wireless communication equipment, digital products, e-cigarettes, and more.

Kendal Co., Ltd. stated that the lithium-ion battery products currently produced by the company are mainly used in consumer electronics such as e-cigarettes, electric toys, and 3C digital products. With the implementation of the "Regulations on the Management of E-cigarettes" and mandatory standards, the domestic market has achieved a smooth transition to comprehensive and orderly regulation. Policy oversight has raised the barriers to entry for the e-cigarette industry, which will have a certain impact on e-cigarette manufacturers.

Some e-cigarette customers of the company may face challenges if they are unable to obtain licenses such as tobacco monopoly manufacturing enterprise license and tobacco wholesale enterprise license, or if their approved production capacity decreases. This could impact the company's e-cigarette production and sales, resulting in risks to the sustainability of customer sales in the e-cigarette industry for the company. The company's e-cigarette customers are mainly in foreign markets, and in recent years, countries and regions have been continuously improving their regulatory policies for e-cigarettes. This may cause fluctuations in the e-cigarette market, posing certain risks to the company's operations. However, as policies are implemented, it can be seen as a positive development for the entire industry in the long term, as there is still significant room for growth in the e-cigarette market.