[summary of the research report]
Relx is the leading e-cigarette brand in China: in 2019 and the nine months ending September 30, 2020, the company's market share in closed electronic atomization products was 48.0% and 62.6%, respectively. According to a survey conducted by CIC in September 2020, Relx ranked first in terms of brand awareness.
The company has been established for a short time but has developed rapidly: Relx established Shenzhen in Shenzhen on January 2, 2018.RLX Technology Inc.Limited company, mainly provides electronic atomization products, namely e-cigarettes. Since its inception, the company has launched five series of closed rechargeable e-cigarette products. As of September 30, 2020, the company has cooperated with 110 authorized distributors, and the Yueke store has successfully opened more than 4500 stores in China, covering 32 provinces and 310 cities.
Operating performance is growing rapidly: the company's operating income in 2018 and 2019 was 1.30 yuan and 1.55 billion yuan respectively. As of September 30, 2020, the company's income was 2.2 billion yuan, an increase of 93.3% over the same period last year. The company mainly sells e-cigarette equipment and cigarette cartridges. As of September 30, 2020, the shipments of e-cigarette equipment and cigarette cartridges reached 5.6 million and 125 million respectively, an increase of 81% and 162% respectively over the same period last year.
Deep cooperation with Smoore International Holdings Limited: as one of Smoore International Holdings Limited's most important customers, the company purchased 72% of the total purchases from Seymour in 2019, and the related accounts payable accounted for 69% of the total accounts payable and bills. In the first nine months of 2020, the company purchased 79% of the total purchases from Seymour, and related accounts payable accounted for 83% of the total accounts payable and notes.
The market for harm-reduction tobacco products is expanding year by year: according to the CIC report, the global market for retail tobacco products and harm-reduction alternatives is expected to reach US $1.0172 trillion by 2023, of which retail sales of harm-reduction alternatives account for about 7.4 per cent. Among the harm reduction alternatives, e-cigarettes account for 55.8% of the global market for harm reduction alternatives. According to the CIC report, retail sales in the global e-cigarette market were $35.2 billion in 2019, with a projected compound annual growth rate of 23.5% and $82 billion by 2023.
China has a low penetration rate of e-cigarettes and a huge potential market: according to the CIC report, the penetration rate of e-cigarette users in China has increased from 0.4 per cent in 2016 to 1.2 per cent in 2019. China has about 287 million tobacco consumers in 2019, but only 3.4 million e-cigarette users. The penetration rate is still low and there is a huge potential market for e-cigarettes.
Relx listing detonates the e-cigarette industry chain: Relx has achieved a leading position in a fast-growing market, and its talent reserve, product research and development, and channel construction all have first-mover advantages. With the expansion of the company's offline stores, the performance will maintain rapid growth and lead the industry to develop healthily under more stringent supervision. At the same time, it is suggested to pay attention to Smoore International Holdings Limited, who has the core atomization technology in the e-cigarette industry chain.
Risk hints: the risk of change in policy regulation, the risk of failure in new product research and development, the intensification of market competition, and sales below expectations.
