The official website of the State Tobacco Monopoly Bureau issued an article on the 19th to continue to promote the legalization and standardization of the development of the e-cigarette industry in an orderly manner. Recently, the State Tobacco Monopoly Bureau has issued a number of e-cigarette related production enterprises tobacco monopoly production enterprise licenses and changed a number of e-cigarette wholesale enterprises tobacco monopoly wholesale enterprise licenses in accordance with the law; tobacco monopoly administrative departments at all levels have issued a number of tobacco monopoly retail licenses as the main body of the e-cigarette retail market in accordance with the law. A number of e-cigarette products that meet the national standards of "e-cigarette" have passed the technical evaluation one after another. Soochow Securities believes that carrying out strict and standardized testing activities will promote further market-oriented and standardized competition in the e-cigarette industry, and the medium-and long-term penetration rate of e-cigarettes is expected to continue to improve.

A person in charge of the State Tobacco Monopoly Bureau said that banning the sale of flavored e-cigarettes is one of the important measures to protect minors from e-cigarettes. The national standard of "E-cigarettes" clearly stipulates that e-cigarette products should not be induced to minors and that the characteristic flavor of the products should not present flavors other than tobacco. The national standard of "e-cigarette" will be formally implemented on October 1, 2022. During the transition period, e-cigarette manufacturers should strictly implement the national standards of "e-cigarettes", carry out product compliance design and complete product transformation as soon as possible. After the end of the transition period, products that have not passed the technical review shall not be listed and sold in China.

According to the 2022 Blue Book of E-cigarette Industry Export, China's total e-cigarette exports will reach 186.7 billion yuan in 2022, an increase of 35% over the same period last year. Overseas remains the main market for e-cigarettes, with a scale of more than US $100 billion. The size of the global e-cigarette market has maintained rapid growth and is expected to exceed US $108 billion by 35 per cent in 2022. In addition, e-cigarette patent applications have emerged in the past three years. The number of patent applications has exceeded 5000 in each of the past three years; since the fourth quarter of 2021, the number of patent applications has increased every month, and the total number of patent applications is expected to exceed 7000 in 2022.

Yao Jide, chairman of the E-cigarette Professional Committee of the China Electronic Chamber of Commerce, said: "China's e-cigarette industry is in a critical period of opportunity. With the gradual standardization of the market environment, the gradual clarification of industry standards and the continuous innovation of the underlying technology, its export sector will continue to maintain a good momentum of development in the past, and may usher in a new round of growth."

Soochow Securities believes that the policy encourages transparent market-oriented and fair competition in the industry, and the State Tobacco Monopoly Bureau emphasizes that e-cigarette inspection and testing institutions that undertake relevant tasks should have no related interests with e-cigarette production enterprises, and that the launch of strict and standardized testing activities will promote further market-oriented and standardized competition in the e-cigarette industry. Short-term market size may be disturbed by policy landing, but medium-and long-term penetration is expected to continue to improve. Recommend Smoore International Holdings Limited, whose valuation performance-to-price ratio is prominent after the pullback; suggest paying attention to RLX Technology Inc., whose brand and user advantage is expected to continue, and extract nicotine production company Rundu shares and Jincheng Pharmaceutical.

China Galaxy Securities said that China's e-cigarette policy is making steady progress, and license approval continues. Regulatory policies to raise the threshold of the industry, the head of enterprises are expected to benefit from the core. With the continuous increase in per capita consumption and penetration, China's atomized e-cigarette market will grow steadily. With the steady expansion of the global market, there is huge room for enterprises to go to sea. It is recommended to benefit from the broad growth space of the new tobacco, relying on advanced atomization technology to ride the dust-proof atomization leading enterprises.$Smoore International Holdings Limited (06969.HK) $。

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