Is the first production license for electronic cigarettes coming?

This company was the first to announce... the concept of A-share e-cigarettes has risen

  Wang Jun

  On the evening of June 13, Jincheng Pharmaceutical announced that the company received a decision on the approval of the tobacco monopoly license issued by the State Tobacco Monopoly Administration.

This is the first company in China to announce that it has obtained a monopoly production license for electronic cigarettes, which is of great significance.

  It is worth noting that the main function of the national unified e-cigarette transaction management platform has been completed, and it will be officially launched on June 15.

With the launch of the e-cigarette trading platform, channel control and product traceability will become an important method for the supervision of the new generation of e-cigarettes, and the industry will usher in a new era of traceability supervision of "one cigarette and one identity".

  Caitong Securities believes that with the gradual implementation of the domestic e-cigarette regulatory rules, my country's e-cigarette industry has officially entered a new era of standardized development.

In the short term, the policy window period will help the smooth transition of all aspects of the industry; in the long term, unqualified products and production capacity will be cleared, which will promote the concentration of market shares and benefit leading companies in production and branding.

Jincheng Pharmaceutical obtained the electronic cigarette production license decision

  Jincheng Medicine announced on the evening of June 13 that the company's wholly-owned subsidiary, Jincheng Medicine, received a decision on the approval of the tobacco monopoly license issued by the State Tobacco Monopoly Administration.

  According to the decision, the application for a (new) tobacco monopoly production enterprise license proposed by Jincheng Medical Chemical was reviewed by the State Tobacco Monopoly Administration in accordance with the law, and it was deemed that it met the statutory conditions and decided to grant it (new).

The company has not yet received the tobacco monopoly production enterprise license issued by the State Tobacco Monopoly Administration.

Detailed information such as licensed production capacity, etc. The company will fulfill its obligation of information disclosure in a timely manner after receiving the license documents.

  Recently, the State Tobacco Monopoly Administration revealed that the administrative department will approve and issue a batch of tobacco monopoly production enterprise licenses for e-cigarette-related production enterprises that meet the administrative licensing conditions. .

  According to the requirements of the "Administrative Measures for Electronic Cigarettes" issued in March 2022, electronic cigarette production enterprises (including product production, OEM processing, brand holding enterprises, etc.), atomization production enterprises and nicotine production enterprises for electronic cigarettes, etc. shall be established. A tobacco monopoly production enterprise license must be obtained.

  According to the notice issued by the State Tobacco Monopoly Administration, the eligible subjects who can apply for the production license of electronic cigarettes can only be the existing subjects before the transition period, that is, before the issuance of the "Decision" on November 10, 2021, the qualified subjects have been registered with the market supervision department. Electronic cigarette product manufacturers (including product production, OEM, brand holding companies, etc.), atomizer manufacturers, and nicotine manufacturers for electronic cigarettes that have registered and truthfully completed the information declaration of electronic cigarette production and operation entities.

From May 5, all production enterprises can submit applications for production licenses.

  The business scope of e-cigarette production licenses is divided into three categories: e-cigarette products (factories and brands), atomizers (e-liquid), and nicotine (nicotine) for e-cigarettes.

  Factories and brands apply for production licenses for e-cigarette products, e-liquid companies apply for aerosol production licenses, and nicotine companies apply for nicotine production licenses for e-cigarettes.

  Within the business scope of these three types of production licenses, domestic sales and export can be selected at the same time, and product types can also be selected at the same time, such as pods, smoking sets and combinations.

  In addition to Jincheng Medicine, a wholly-owned subsidiary of Jincheng Pharmaceutical, there are also companies that have applied for the issuance of tobacco monopoly production licenses.

  Shunhao Co., Ltd. stated on the investor interactive platform that the company's related business companies have submitted an application for an electronic cigarette license, and are currently giving feedback in accordance with the requirements of the relevant state departments. For the specific approval progress, please refer to the official information of the relevant departments. prevail.

  Jinjia shares also revealed on the interactive platform recently that the company's brand FOOGO electronic cigarette has submitted an application for intent and received an online review notice issued by the relevant administrative department. The company is actively preparing relevant materials.

  Yingqu Technology also stated on the investor interactive platform recently that the company is actively planning the application for electronic cigarette production licenses, and the specific progress is subject to the review progress of the relevant competent authorities.

  Tianfeng Securities believes that the domestic market is expected to usher in the landing and issuance of several production licenses in succession from June to August after the competent authorities conduct preliminary verification and review procedures for relevant companies that have submitted applications.

The electronic cigarette industry ushered in a new era of traceability supervision

  On June 2, the State Tobacco Monopoly Administration released three documents on its official website, "Answer to Questions Related to Electronic Cigarette Administrative Licensing and Product Technical Review", "Detailed Rules for Electronic Cigarette Logistics Management", and "Detailed Rules for Electronic Cigarette Transaction Management (Trial)". .

  Among them, Article 6 of "Answer to Questions Related to Electronic Cigarette Administrative Licensing and Product Technology Review" pointed out that the main function of the national unified electronic cigarette transaction management platform has been completed, and the verification has been completed in some regions and enterprises through pilot methods.

On June 15, 2022, the platform will officially operate as scheduled. At that time, various e-cigarette market players should gradually enter the platform for trading and settlement.

  According to the relevant provisions of the "Measures for the Administration of Electronic Cigarettes", electronic cigarette manufacturers without production licenses are not allowed to trade through electronic cigarette trading platforms.

After the transition period, e-cigarette manufacturers who sell e-cigarette products, atomizers, and nicotine for e-cigarettes outside the e-cigarette transaction management platform will be investigated and punished according to law.

  It is understood that on the production side, e-cigarettes implement "one item, one code", and the traceability code appears in the three links of e-cigarette product delivery, warehousing wholesale enterprises, and export from wholesale enterprises, realizing the entire industry chain information traceability chain.

  The retail side implements "one certificate for one store". When a chain enterprise applies for an e-cigarette retail license, each branch should apply to the administrative department of tobacco monopoly where the business site is located. Therefore, the store-in-shop sales online store may not be able to obtain a sales license.

Those whose main business has nothing to do with the retail business of electronic cigarettes cannot apply for a retail license.

  Analysts pointed out that channel control and product traceability are important ways to supervise the new generation of electronic cigarettes. With the establishment of the electronic cigarette trading platform, the industry will usher in a new era of traceability supervision of "one cigarette and one identity".

Leading companies will benefit

  After the release of e-cigarette-related news, today's A-share e-cigarette concept stocks collectively rose, Shunhao shares rose by the daily limit, Dongfeng shares, Jincheng Pharmaceutical, Yinghe Technology, etc. rose by more than 5%.

The Hong Kong-listed vape electronic cigarette OEM leader Smol International rose nearly 5%, and the US stock fog core technology once rose more than 6% before the market, but turned green shortly after the opening.

  The State Tobacco Monopoly Administration, in accordance with the principles of compliance with laws and regulations, stable and orderly, overall consideration, and classified guidance, is responsible for situations such as backward technology and equipment, substandard product quality, substandard management of hazardous chemicals and environmental protection, safety production risks, and violations of laws and regulations. companies are not permitted.

Tianfeng Securities believes that this move will be conducive to the healthy and sustainable development of domestic supply chain enterprises with regular brands, production compliance, process and environmental protection standards.

  Compared with traditional tobacco products, new types of tobacco (atomized electronic cigarettes and HNB) have the characteristics of not burning, providing nicotine, and basically free of tar, and their harm reduction is obvious.

It is estimated that by 2023, the global scale of new tobacco will reach 86.7 billion US dollars, including 46.82 billion US dollars of atomized electronic cigarettes and 39.88 billion US dollars of HNB.

According to Frost & Sullivan, the global e-cigarette penetration rate will reach 9.3% in 2024.

  It is understood that the electronic cigarette industry chain mainly includes upstream raw materials and accessories, midstream manufacturing and branding, and downstream channel sales.

The upstream raw materials mainly include pods and pods. The flavors in the pods are represented by companies such as China Bolton, Huabao International, and Aipu. The batteries in the pods are represented by companies such as Yiwei Lithium Energy and BYD Electronics. The main electronic cigarette chip manufacturers are EVOLV, Yihai Electronics, etc.

  The midstream manufacturing enterprises are represented by Smol International, Heyuan Group, and Zhuolineng. Domestic brand enterprises include RELX, Magic Flute, Grapefruit, etc., and foreign brands include Vuse, Juul, Njoy, etc.

  Downstream channel sales include brand stores represented by RELX, Ono, and other retail channels represented by Aiside.

  Caitong Securities believes that, on the policy side, the United States conducts access management through PMTA, and the leading brands and core supply chain companies that pass the audit are expected to fully enjoy the dividends of industry development; the intensive introduction of domestic policies will help the industry to achieve stability and long-term development, and long-term substandard products, After the production capacity is cleared, it will promote the concentration of market shares, and enterprises with advantages in production and branding will benefit significantly.