The supervision process of 2021Q4 at home and abroad brings disturbance to the short-term demand, and there is some pressure on the company's operation. Looking forward to 2022, it is expected that the domestic market will still be in the transition period for a long time, and the industry growth will still be under pressure, but the market share is expected to be concentrated to the head brand; overseas markets focus on the progress of PMTA and the thickening performance of disposable cigarette & FEELM Air, and there is a certain possibility of business exceeding expectations. In the medium and long term, it is optimistic that the company will share the new tobacco penetration dividend under the strong competitive barriers. Maintain a "buy" rating.
The performance forecast is in line with our expectations. The company announces a forecast of full-year profit, with an estimated adjusted net profit of 5.18 billion-5.71 billion yuan in 2021, a year-on-year increase of + 33.0% net profit of 46.6%, of which Q4 adjusted net profit of 950 million-1.48 billion yuan, year-on-year-33% net profit of 4%, month-on-month comparison of-24% compared with 19%, in line with our expectations.
Q4 domestic business is not as expected, overseas orders are not buoyant in the peak season. Since the draft of the new national standard-e-cigarette management measures was released at the end of November 2021, the trend of industry repair has been interrupted month by month under the pressure of regulatory policies. according to our research, tracking and model estimates, RLX Technology Inc. 's Q4 income is expected to be about 1.8 billion yuan. it is only about 10% higher than the Q3 low, which is lower than we had expected. Affected by the slow progress of PMTA approval than industry expectations, the US market growth slowed quarter by quarter, superimposed industry inventory changes led to a sluggish peak season, a drag on Q4 performance.
Domestic business: the growth of the industry is expected to be under pressure during the transition period, and the pattern is further concentrated. In view of the prohibition of new production capacity, brands, sales outlets and new products during the transition period, the growth of the domestic market is expected to be under pressure in 2022. License application, product registration and so on significantly increase the industry entry threshold and compliance costs, forcing small and medium-sized brands to leave, and the industry share is expected to be further concentrated to the head brands with strong anti-risk ability. We maintain RLX Technology Inc. 's contribution to Si Moore's income growth forecast for 2021-23 + 100%, 5%, 20%.
Overseas business: the strength of VUSE is expected to continue, and it is expected that the progress of PMTA will lead the industry to repair. Overseas customers are divided: the global market of VUSE is growing by leaps and bounds. 21Q1-3 VUSE has a market share of 34.1% in the global TOP5 atomization market, compared with the same period last year, and is expected to maintain a rapid growth rate for the whole of 2022. The share of LOGIC and NJOY continues to shrink, and is expected to hit bottom and recover to some extent in 2022. To sum up, we cautiously expect the company's overseas revenue in 2022 to be + 20% and 30% compared with the same period last year, which may exceed expectations. Follow-up focus: 1) disposable cigarette products and new FEELM Air technologies are expected to increase performance in 2022; 2) PMTA progress is expected to boost overseas business expectations and valuations in the short term.
Risk factors: menthol taste cannot be replaced by PMTA; subversive atomization technology path; the industry is more regulated than expected; new tobacco products are in the tax channel.
Investment advice: the company's full-year profit forecast is in line with our previous expectations, maintaining the 2021-23 adjusted net profit forecast of 53.4 pound 64.3 billion yuan, and maintaining the adjusted EPS forecast of 0.89max 1.07cm 1.31 yuan. In view of the company's deep competition barriers and broad long-term operating space, with reference to the performance growth forecast for the next three years and a moderate valuation premium, the company maintains its target price of HK $56, corresponding to about 43x PE in 2022, and maintains a "buy" rating.