E-cigarette SMEs fear excessive capital intervention: don't want the industry to

The potential impact of e-cigarettes on health has always been the focus of social and regulatory authorities.

According to media reports, the US Food and Drug Administration (FDA) recently said that it is investigating 35 cases of epileptic seizures after smoking e-cigarettes. And this year's 3.15 Party pointed out that long-term e-cigarette smoking will also produce nicotine dependence.

However, this does not seem to hinder the market's "enthusiasm" for e-cigarettes. In the marketing process, e-cigarettes are positioned as healthier and more fashionable than cigarettes, and are sought after by a large number of people. Some organizations believe that in the future, the market scale of electronic atomizer is expected to exceed 300 billion yuan.

In this market opportunity, the e-cigarette industry chain stands at the top, "windfall" has also become a synonym for the industry. The accelerated involvement of capital in this industry is also changing the enterprises and the competitive situation in this industrial chain.

Only the enterprises that are really in the industry chain can feel the pulse of industry development. Recently, a reporter from Securities Daily interviewed Zhang Yang, the head of a small and medium-sized enterprise in the upstream of the e-cigarette industry chain. Different from the outside world, he reluctantly told reporters that tuyere is the tuyere of capital. The entity enterprises in the chain of e-cigarette industry have been divided. "The enterprises that can get the capital input have come to the tuyere, while the enterprises that don't get the capital are more and more difficult to do, and most of the small and medium-sized enterprises around are transforming."

E-cigarette: enter the capital Carnival

Zhang Yang told reporters that few people know that e-cigarettes originated in China. China's first e-cigarette is called "Ruyan", and its founder is Hanli. After its debut in 2003, Ruyan's sales soon exceeded 100 million yuan. Later, influenced by other factors, Ruyan had to move overseas and its performance shrank. Finally, it was acquired by Imperial Tobacco.

Zhang Yang said that for more than ten years, affected by multiple factors, the industry has been developing in a low-key way. The domestic market is not large, and its main business is export trade. It is not until the intervention of capital that the exposure of this industry has been continuously improved.

Flush data show that in the e-cigarette concept stock plate, there are already eight listed companies.

"The days of making money are over," Zhang Yang, the person in charge of the above-mentioned small and medium-sized enterprises, told reporters. More and more capital is involved in the industry, and they prefer the enterprises in the head. With the help of capital, these enterprises began to expand the industrial chain and seize the channels. "In the past, everyone had a profit, but now my friends are in the transformation."

Capital will choose the leading enterprises in the industry, and then develop the whole industry chain. "Three years ago, everyone made money in e-cigarette enterprises, but now resources and business are concentrated in the head enterprises." Zhang Yang explained to reporters, "there are thousands of manufacturers and brands in Shenzhen. My company is mainly development and production-oriented, mainly do hardware mold, before 90% of the company's business is to do e-cigarettes, now only 30%. "

In Zhang Yang's view, with the intervention of capital, their living space becomes narrow.

However, Shen Meng, executive director of Xiangsong capital, told reporters that the technical threshold of e-cigarettes is not high, so a large number of manufacturers will appear soon.

In the eyes of the outside world, e-cigarette is a profiteering industry. Shen Meng told reporters that the profit margin of e-cigarettes may be very large with reference to cigarettes.

Zhang Yang said that the "windfall profits" of e-cigarettes are relative. "When a manufacturer develops a product, the cost is 50 yuan, and the ex factory price is 60 yuan to the sales company. It can be sold as low as 299 yuan in the market." in this industrial chain, the profit of the manufacturer is certain, while the profit of the sales company is related to the marketing cost of the enterprise.

"If the sales company takes 200 yuan for marketing, its profit is not high. But if you only take 10 yuan to marketing, its profit margin is very considerable. " Zhang Yang introduced.

With the help of capital, the marketing means of some enterprises are constantly upgrading, and the channel has become a must for manufacturers. "Capital is to occupy the channel with money. Now there are too many marketing means for Internet enterprises, and the pressure of traditional production enterprises is too great," Zhang Yang said. "What I am most worried about now is that after decades of painstaking efforts in the industry, the scale will be 500 to 2000 people, and the capital will overtake in a year."

Zhang Yang said he didn't want the industry to be the next bike sharing industry.

Performance differentiation?

In Zhang Yang's opinion, when the development of small and medium-sized enterprises is facing difficulties, the performance of some leading enterprises has witnessed explosive growth.

Mcwell specializes in the R & D, production and sales of electronic atomizer and open electronic atomization equipment. It is a subsidiary of Yiwei lithium energy, a listed company in A-share market. On April 2, Yiwei lithium energy released the performance forecast for the first quarter of 2019, which shows that the company expects the net profit in the first quarter to increase by 120% to 150% year on year. Yiwei lithium energy said that a number of factors led to a year-on-year increase in the company's performance, including the performance of Shenzhen mcwell Co., Ltd., a joint-stock company, which exceeded expectations, resulting in a significant year-on-year increase in the company's investment income.

Mcwell belongs to the group of enterprises that get capital intervention. It is understood that on February 28, 2014, Yiwei lithium energy signed an equity transfer agreement with the original shareholders of mcwell. Yiwei lithium energy purchased 50.1% equity of mcwell held by Chen Zhiping and Xiong Shaoming for 439 million yuan in cash. From 2017 to 2018, Yiwei lithium energy transferred mcwell shares twice. According to Yiwei lithium energy, the company's investment income in mcwell under the equity method in the past two years totaled 361 million yuan. Among them, 63 million yuan in the second half of 2017, accounting for 13.07% of the company's total profit, and 298 million yuan in 2018, accounting for 49.26% of the company's total profit.

It is worth mentioning that on December 26, 2018, mcwell announced that based on the capital market development and the company's business development plan, it plans to list on other stock exchanges, and the company plans to apply for the termination of listing in the national small and medium-sized enterprise share transfer system.

Health risks to be solved

Since the emergence of e-cigarette, whether it will pose a threat to human health has become a hot spot in the market.

An expert told the Securities Daily that the current domestic research on e-cigarettes is limited, "all that can be said is the World Health Organization." According to media reports, the World Health Organization believes that e-cigarettes also contain nicotine, formaldehyde and other harmful compounds, which are harmful to public health and must be strengthened.

Recently, the FDA released a report that since June 2018, there has been a slight increase in the number of seizures reported. Between 2010 and 2019, it received 35 reports of seizures after e-cigarette use, especially among teenagers and young people. Severe nicotine poisoning can cause epilepsy.

However, the FDA also said it was not clear whether e-cigarettes caused these cases. Subsequent investigations are needed to determine whether there is a real link between the two.

As for the health issues concerned by the market, Zhang Yang believes that e-cigarettes are certainly healthier than ordinary cigarettes, but they also vary from person to person. In their view, "e-cigarettes do not produce tar, carbon monoxide and nitrogen compounds, which are the most harmful substances of cigarettes."

In an interview with reporters, Shen Meng said that e-cigarettes are not without all kinds of harmful substances of cigarettes. It may even cause consumers to ignore the health and safety problems because they are called e-cigarettes, so e-cigarettes still have hidden dangers. If it is verified that e-cigarettes may bring health hazards, then the possibility of being banned exists. However, if they are just as harmful as ordinary cigarettes, then the possibility of being banned is not great, but the revenue of enterprises will still be affected. "If the United States ban the sale of e-cigarettes, it will have a great impact on the concept valuation of e-cigarettes. However, if there is no relevant ban in China, it can still be listed, but the probability of passing the ban will be greatly reduced, and the regulatory authorities will also take into account the social feelings."