The e-cigarette sector has experienced several surges since 2019, but has fallen sharply since it was cracked down by regulation in the middle of last year due to regulatory policy uncertainty, but has recently soared to record highs.

Ma Yuanyuan, chief analyst of Huaan Securities Light Industry Manufacturing Industry, combs the recent e-cigarette industry policy and believes that e-cigarette is developing towards high quality.

On November 22nd, the state of the national standard for e-cigarettes is being drafted. On November 25, the Tobacco Monopoly Bureau issued to deepen the reform of "license separation". On November 26, the Chinese government website announced that the regulations on the implementation of the Tobacco Monopoly Law have officially come into effect.

Policy interpretation

Huaan Securities is optimistic about the three incidents of the e-cigarette policy, and believes that the impact of the recent policy on the industry is as follows:

1.Under the background of regulatory norms, the industry is expected to accelerate infiltration to meet high-quality development.E-cigarettes and other new types of tobacco to make it clear that the main body of regulation is China Tobacco, the legal business identity of the industry has been officially confirmed, the follow-up details are expected to accelerate the landing, waiting for the industry to enter a standardized, high-quality development, industry penetration is expected to accelerate. According to CIC data, by the end of 2019, the penetration rate of e-cigarettes in China was only 1.2%. With reference to the UK / US penetration rate of 32.4% and 50.4% in the same period, there is more room for the growth of new tobacco in the Chinese market.

2.Manufacturing side impact:The legitimacy of private enterprise participation has been confirmed, and the share of normative Longtou city is expected to increase. The legitimacy of private new tobacco manufacturing enterprises to participate in the new tobacco industry chain is officially confirmed, there is no risk of being across the board, and the share of normative Longtou city is expected to increase.

3.Brand & Channel side influence:The white card is clear, and the market concentration is improved. E-cigarettes officially refer to cigarette regulation, or have a negative impact on the channel advantages of brands. The specific impact of waiting for the introduction of industry regulatory rules, optimistic about the e-cigarette white card clear, the improvement of market concentration. At the same time, the disorder in the industry, such as uneven product quality and chaotic price system, is expected to be solved, and the product quality as a whole will be improved.

Ma Yuanfang, chief analyst of the light industry manufacturing industry of Huaan Securities, believes that the follow-up policy concerns mainly include the detailed rules of the Tobacco Monopoly Law and the policy of the national standard for e-cigarettes. From the perspective of administrative regulation process, the process of referring to policies and regulations is generally a few months, not more than half a year, but there is a slight difference between specific policies.

Combined with October 13, the United States FDA for the first time issued PMTA sales license to British American Tobacco PLC's Vuse Solo three atomized products, and after the official FDA damage reduction, domestic and foreign policies accelerated landing, so Huaan Securities speculated that the follow-up specific policies are expected to land within half a year.

Prosperity judgment

End market:It is expected that after Q4 e-cigarette is formally incorporated into the reference cigarette regulatory policy, regulatory standardization will help to reduce industry chaos such as uneven product quality and chaotic price system, the overall purchase of high-quality growth in the industry, terminal store management is expected to improve.

HNB Market:The timing of the accelerated launch of the domestic market needs to wait for the follow-up policy to land. Continue the previous logic, if the follow-up policy is expected to be launched within half a year, and under the premise that the "double response" of Yunyan HNB products is good, the judgment of domestic HNB manufacturers is expected to follow steadily.

Manufacturer:The level of automation has improved + economies of scale, profitability has increased significantly, and the new type of tobacco has driven the growth of overseas tobacco leaders.

Original author: Hua'an Securities Ma Yuanyuan, the original title: "E-cigarettes: long slope thick snow, the industry to meet high-quality development after regulatory norms"