Recent Developments and Insights in the E-cigarette Industry

Recently, the National Development and Reform Commission (NDRC) website released the "Guidance Catalog for Industrial Restructuring (Draft for Soliciting Opinions in 2023)" (hereinafter referred to as "Guidance Catalog 2023 (Draft for Soliciting Opinions)"). Compared to the current guidance catalog, which was issued in 2019, the "Guidance Catalog 2023 (Draft for Soliciting Opinions)" includes "e-cigarettes and other new tobacco products" in the restricted category.

On August 29th, Jinjia Corporation (002191) released an investor relations activity record. According to the record, the company achieved a total revenue of 2.033 billion yuan, a decrease of 23.09% compared to the same period last year. Among them, the revenue from e-cigarette packaging reached 58 million yuan. At the same time, thanks to the full deployment of Shenzhen GalaxyLink Technology Services Co., Ltd. production line and the consolidation of Hengtian Commercial, the revenue of the new tobacco segment increased by 81.77% compared to the previous year, continuing its rapid growth momentum.

On August 29th, KOTL released its 2023 interim report, revealing that the company achieved a revenue of 1.643 billion yuan in the first half of the year, representing a year-on-year increase of 4.32%. The net profit attributable to shareholders reached 22.9052 million yuan, showing a significant surge of 73.74% compared to the same period last year. The 2023 interim report also mentioned that KOTL and its subsidiary Xingke Electronics have signed contracts with Guangdong Fewo Intelligent Manufacturing Co., Ltd., with a total contract amount of 869 million yuan and 914 million yuan respectively. The recognized sales revenue for this period amounted to 54.08 million yuan and 113 million yuan respectively.

On September 1st, Evgeny Fedotov, the head of the Russian tobacco consultancy firm Fedotov Group, announced that the government has released a plan which, following a review by the Fedotov Group, will impose a minimum price policy on e-cigarettes starting from November 1st.

Jinjia Group announced its half-yearly financial results on August 26th, revealing a 23.09% decrease in operating income to approximately 2.03 billion yuan in the first half of 2023 compared to the same period last year. Meanwhile, the net profit attributed to the company's shareholders dropped by 44.02% to about 280 million yuan. The report highlights that Jinjia Group specializes in producing high-technology and high-value-added tobacco labels, packaging materials such as color boxes for well-known mid to high-end consumer brands, laser paper/film, tobacco film, as well as new tobacco products.

Innokin, a popular e-cigarette brand, has announced a strategic partnership with renowned Middle Eastern retailer Bahrain Duty-Free Shop. This collaboration will allow Innokin's e-cigarette product, INNOBAR, to enter the sales channels of Bahrain Duty-Free Shop.

The Indonesian Parliament (DPR) recently passed the "Health Act No. 17 of 2023." This legislation is seen as providing legal certainty for the e-cigarette industry, as it categorizes e-cigarettes as addictive substances.

Teerachai Attanawanich, Vice Minister of Finance and Chairman of the Tobacco Authority of Thailand, has announced that Thailand is currently contemplating implementing moderate taxation on e-cigarettes.

In August of this year, various listed e-cigarette companies and e-cigarette accessory companies released their performance reports for the first half of 2023. Based on the performance of eight companies involved in the e-cigarette business, it is evident that the net profits of four of these companies have significantly declined compared to the previous year. Furthermore, the overall export volume has witnessed a continuous decrease. As a result, 2FIRSTS conducted an investigation into the Chinese e-cigarette supply chain situation.

Over the past two decades from 2003 to the present, the e-cigarette market has experienced rapid growth, making "e-cigarette concept stocks" a hot topic for stock market investors. In light of this, 2FIRSTS has released a special report featuring interviews with Li Youqiang, the founder of Shenzhen Tuwu Enterprise Management Co., Ltd., and practitioners in the financial industry, including Xu Haoliang, the chief analyst for light industry manufacturing and small market value industries at Minsheng Securities, and Cai Fangheng, the chief analyst for light industry at Changjiang Securities.