Zhang Hangying, reporter from the world’s internet business,

The”first share of Chinese e-cigarette brand” was officially born.

On the evening of January 22, RELX, an e-cigarette company, was listed on the New York Stock Exchange in the United States, and the opening stock price soared 104%, triggered a circuit breaker, and continued to rise after the resumption of trading. The increase was as high as 158%at one time, and it closed up by 145.9%. The market value was 45.8 billion US dollars, nearly 300 billion yuan.

The prospectus shows that even though RELX has only been established for three years, it has become the number one e-cigarette brand in China. In the first three quarters of 2020, its market share reached 62.6%.

With the listing of RELX, the founder Wang Ying also came into the spotlight.

According to public information, Wang Ying is 39 years old this year. She has a bachelor’s degree in finance from Xi’an Jiaotong University and an MBA degree from Columbia University Business School. She was previously Uber the head of China, DidiUber joined Didi after the merger, and also once Worked at P&G and other fast-moving companies. According to Forbes calculations, Wang Ying is worth about US$9.1 billion (58.9 billion yuan).

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In the past few years, e-cigarettes have experienced great ups and downs, and supervision has gradually deepened , The industry’s trend is confusing. But now, RELX has demonstrated to the market a strong”gold-absorbing ability”, and the stock price performance on the first day of listing may also show the confidence of the capital market in this industry to a certain extent.

The business of RELX:The net profit is over 100 million, and the cartridges make money

The e-cigarette industry has always been mysterious, and RELX’s prospectus has revealed the inside of the industry for us.

Located in Shenzhen, RELX was established in January 2018 when the e-cigarette outlet was in full swing.

The prospectus shows that in the first three quarters of 2018, 2019, and 2020, RELX’s revenue was 132 million yuan, 1.549 billion yuan and 2.201 billion yuan, respectively. In other words, RELX achieved revenue of over 100 million in the year of its establishment, and soon exceeded the 1 billion level.

Look at the profit margin again. In 2018, RELX’s gross profit margin reached 44.7%. In the first three quarters of 2019, the gross profit margin was 40.3%. In 2020, affected by the ban on online sales of e-cigarettes, RELX will shift its channels from online to offline, and its gross profit margin will also be affected. But in the first three quarters of 2020, there is still 37.9%.

The net profit for 2018-2019 was -287,000 yuan, 47.748 million yuan and 109 million yuan respectively. In other words, the following year RELX was established, it achieved profitability.

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An electronic cigarette consists of a cigarette stick and a cartridge composition. Anyone who has smoked electronic cigarettes knows that the cartridge contains nicotine, which is addictive. Therefore, after purchasing cigarette sticks, if you want to continue using e-cigarettes, you need to keep repurchasing cigarette cartridges. Cigarette sticks are purchased less frequently, but cartridges are high-frequency consumer goods. In other words, it is not the cigarette stick that makes money, but the cartridge.

The prospectus disclosed that RELX sold 500,000 cigarette rods in 2018, 4.3 million cigarette rods in 2019, and 5.6 million cigarette rods in the first nine months of 2020.

In contrast, the shipment volume of RELX cartridges is amazing-from 5.6 million cartridges in 2018 to more than 70 million in 2019, and in the first three quarters of 2020, the quantity It has exceeded 100 million.

It is reported that the price of a set of RELX Electronic Cigarettes (pipe + cartridge) is between 299 yuan and 450 yuan, and the official price of the cartridge (3 pieces) is 99 yuan.

Every time RELX sells a cigarette stick, it can continue to do business in cigarette cartridges. This is not only the case of RELX, but also the electronic cigarette industry. This is when competition is fierce, and many e-cigarette brands use the gimmick of no money for cigarette sticks to attract new users to try. Because they know that those who make money are behind.

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Use the Internet to make electronic cigarettes

The threshold of e-cigarettes is not high. The brands are mostly foundry, which gave birth to”China’s first stock of e-cigarettes”-Simer.

As an e-cigarette manufacturer, Simer provides OEM production for many e-cigarette brands such as RELX, YOOZ, etc., which can be called the”invisible giant” in the e-cigarette industry.

As early as July 2020, Smolar was listed on the Hong Kong stock market. This is also the reason why RELX is called the”first share of electronic cigarette brand” instead of”the first share of electronic cigarettes”.

They are all foundry, why can RELX be able to jump out?

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This has to mention its founding team. The prospectus shows that before IPO, founder and CEO Wang Ying, holding 58.7%of the shares, and co-founders Jiang Long and Wen Yilong respectively Holds 9.9%and 6.5%. Most of the team members come from consumer products and Internet companies, so when RELX was established, it used the Internet to make electronic cigarettes.

When it was first established, RELX was like Xiaomi in JD crowdfunding, accumulated the first wave of seed users. In the early days, RELX committed to online customer acquisition, and the founder took turns to serve as customer service to communicate with users. Even its slogan”Every bite is the passage of anxiety” also reveals a strong Internet atmosphere.

Before the fourth quarter of 2019, RELX’s online channel sales accounted for 31.1%, making it one of the best online e-cigarette brands.

Early entry, quick layout and accurate play, won the help of capital. At the beginning of its establishment, RELX received investment from IDG, Source Code Capital, and Sequoia Capital. The prospectus disclosed that before the IPO, Source Code Capital held 10.7%and Sequoia Capital held 4.9%.

100,000 offline stores, the largest market share

When it comes to e-cigarettes, policy supervision cannot be bypassed.

At the end of October 2019, the domestic e-cigarette online sales ban was introduced, and the e-cigarette industry suddenly cooled down. As far as RELX is concerned, after closing all online stores, revenue in the fourth quarter of 2019 fell for the first time from the previous quarter, with a net loss of 50 million.

After that, RELX responded quickly and went to the offline store to expand its distribution network system. Soon, operations resumed, and offline revenue made up for the reduction in online revenue.

The electronic cigarette industry has a very obvious Matthew effect. After the e-cigarette industry reshuffled, many brands collapsed, and the vacated market allowed RELX to accelerate the expansion of a large-scale leading brand.

An e-cigarette agent revealed to a reporter from”Tianxia.com” that after e-cigarettes were banned from online sales, RELX was crazy to”close stores” offline, and even spent 200,000 to 500,000 to sell more. A collection of e-cigarette brand stores directly received them, all of which were sold by RELX. If there are merchants who are unwilling to be”closed”, RELX will shop some of the goods first, and the billing period will last for several months, so that it will cultivate its influence step by step.

Another e-cigarette agent said that the e-cigarette supply chain is mature, and the decisive factor for the success of the brand is whether it can expand rapidly. The reason why RELX came out was that its early publicity and promotion were better, and now it has stepped up to open stores and is sinking to third- and fourth-tier cities, and its penetration rate is getting higher and higher.

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As of September 30, 2020, RELX has established 110 authorized distributors cooperate to provide e-cigarette products to more than 5,000 specialty stores and more than 100,000 other stores covering more than 250 cities across the country.

Currently, RELX has the largest market share of electronic cigarettes in the industry, and it is still expanding. According to the prospectus, RELX’s market share in 2019 was 48%, and its market share has grown to 62.6%in the first three quarters of 2020, and the “bigger is bigger” situation is still intensifying.

Today, RELX has built its own factory in Shenzhen with an area of ​​over 20,000 square meters and more than 4,000 workers. At its peak production capacity, it can produce 50 million cartridges per month.

The track has high growth, but there is still uncertainty

The reason why RELX is so popular in the capital market is that e-cigarettes themselves are a high-potential track:penetration The rate is low and the ceiling is high.

According to the CIC report, the Chinese e-cigarette market is expected to reach USD 11.3 billion in 2023, with a compound growth rate of 65.9%since 2019. China is the largest potential market for e-cigarette products, with 286.7 million traditional smokers in 2019.

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However, the overhanging supervision of the electronic cigarette industry””The curse” has always been a weakness that it cannot avoid.

After the online ban in 2019, in December 2020, the Beijing Tobacco Monopoly Bureau issued another notice , Reiterate that it is not allowed to conduct online sales and advertising in any form or channel such as online drainage, lottery, etc., and immediately close relevant WeChat accounts or mini programs. This is Beijing’s fifth unified action against e-cigarettes.

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Behind the tightening of the smoking ban is the electronic cigarette” original sin”. Although it claims to be less harmful than traditional tobacco, it is still inevitably harmful.

The e-cigarette pods also contain nicotine in propylene glycol, glycerin or polyethylene glycol, which is not”healthy” and also addictive. Many people hope to use e-cigarettes to”quit smoking”, but they fall into another addiction.

However, RELX still spares no effort to popularize electronic cigarettes to the public. On its official website, there are expressions such as”e-cigarettes are far less harmful than cigarettes” and”it is not nicotine that causes cancer, but cigarette smoke.”

In August 2020, RELX launched the RELX Biological Science Laboratory in Shenzhen, which is said to be the first biological science laboratory in the e-cigarette industry to study how to reduce the health risks associated with e-cigarettes . Currently, RELX has two laboratories in Shenzhen conducting related research.

Although RELX has become the number one on the track, under the dual considerations of”policy” and”safety”, the e-cigarette industry still has strong uncertainty, which can support the expectations of the capital market ?

Edit Xu Yiting