Recently, Jia Yao Holdings, a growing representative company of new types of tobacco listed on the Hong Kong stock market, issued an announcement announcing the launch of a research project on the new tobacco sector.
Earlier, Shenzhen Jiayao Science and Technology Innovation Research Co., Ltd. (hereinafter referred to as the “Research Institute”), a subsidiary of the company, was formally established on October 20. Wander Wang, the company's vice president of innovation and development, served as the head of the research institute, focusing on innovative technologies in new tobacco categories, as well as important directions such as green environmental protection and harm reduction advocated by the industry.
This move will further complement Jiayao's important part of the layout of the entire industry chain, and also rapidly improve the company's ability to develop and research innovative technologies at the bottom of the industry.
The announcement said that the research institute will rely on the advantages of Jiayao's new tobacco sector industry chain and work with leading research institutes in the industry to help the company develop the underlying technology and new materials needed for the new tobacco business. In the future, the research institute will continue to target cutting-edge technology in the industry chain and establish patented technology barriers, thus continuously enhancing Jiayao's overall competitiveness in the international market.
The establishment of the research institute is undoubtedly conducive to speeding up research and development of new Jiayao products and promoting their integrated development with the industrial chain.
It is more conducive to promoting the rapid rise of the company's new tobacco business. It may be seen from the following data performance that this business has brought hope to the company's development. Since announcing investment into the e-cigarette sector in 2021, the company has contributed 217 million yuan in revenue to the company in 2022 (that is, the first year of development of the e-cigarette business); in the first half of this year, the e-cigarette business has become an important driving force for Jiayao's overall performance. The revenue achieved in the first half of this year has surpassed last year's full revenue, showing a rapid growth trend, showing a rapid growth trend of 377.5% over the previous year, accounting for about 52.2% of total revenue.
At present, the research institute has set up joint laboratories with various institutions and set up a number of new technology joint research groups, including but not limited to important topics such as the construction of a new tobacco research system and the development of new atomized ceramic technology products.
It is worth noting that in terms of the transformation of research results, Jia Yao and its research institutes have had successful experiences in industrializing and commercializing scientific research results. For example, the research institute's first phase result “Application Project for Environmentally Friendly Degradable Materials in E-cigarettes” jointly developed with the Institute of Narcotics of the Chinese Academy of Agricultural Sciences. This technology is expected to be applied to the products produced by the company and launched on the market in the first half of next year.
In recent years, there has been a rise in new types of tobacco around the world. Compared with traditional tobacco products, new types of tobacco have a price comparison advantage, product elements favored by young people, and benefit from harm reduction drivers. In the long run, there is still plenty of room for improvement in its penetration rate.
According to the “World Tobacco Development Report 2022”, the total consumption ratio of new tobacco products other than non-traditional cigarettes and cigars exceeds 10%. However, the long-term growth in consumption of traditional cigarettes and cigars has been relatively stable, and future structural changes may continue, providing more opportunities for the growth of consumption of new types of tobacco. Among the new categories of tobacco, disposable e-cigarettes, tobacco in the mouth, and heating without combustion (HNB) have been particularly prominent in recent years. In the midst of this new growth, there are still plenty of opportunities to explore in the future.
Furthermore, there is another obvious trend to follow — that is, leading Chinese e-cigarette companies are going overseas, and I believe they will see more one after another in the next few years.
Since 2023, China's e-cigarette export data is still very impressive, but some enterprises have begun to gradually shift from manufacturing+export trade to overseas market layout, quickly entering emerging markets in Southeast Asia with a “localized operating model+strong supply chain+integrated brand marketing” approach. Mature markets in Britain and the US, as well as developed markets in Western Europe, Russia, and the Middle East, compete face-to-face with various brands under the four major multinational tobacco companies.
Combining these actions with the announcement of the establishment of the research institute and the substantial progress made by Jia Yao in the new tobacco business in the first half of this year may paint a new three-dimensional picture with huge room for imagination — covering the entire industry chain vertically, expanding new technologies and new product categories horizontally, the market offensive outside of Shanghai gradually shifts from fragmentation to concentration, and the time aspect continues to be compressed with the push for implementation and the support of strong internal and external drivers. Meanwhile, the long-term direction of the company's sustainable development will be greatly extended, and these favorable long-term development directions will be reflected in the capital market. Continuously promoting the company's valuation increase and restructuring, I believe a brand new Jiayao Holdings is rapidly coming to us.