Photo/Shetuwang

July 30 (NBD) -- Shenzhen Smoore Technology (Smoore), one of the top e-cigarette suppliers in China, is planning to get listed in Hong Kong to raise 300-400 million U.S. dollars, media reports said on Tuesday. Smoore claimed a week ago that the specific plan concerning the capital market was still under evaluation.

Founded in 2006, Smoore engages in the development, manufacturing, marketing and sales of atomization products.

National Business Daily (NBD) noticed that Smoore went public on China's National Equities Exchange and Quotations (NEEQ), also known as the "new third board", with the issuing price of 11.8 yuan (1.7 U.S. dollars). The NEEQ is a Chinese over-the-counter system for trading the shares of a company that is not listed on either the Shenzhen or Shanghai stock exchanges.

The share price climbed to its peak at 130 yuan in 2018, making the company first tenbagger on NEEQ. But the e-cigarette manufacturer retreated from the new third board on July 5 this year as it plans to land on other stock exchanges.

According to Smoore's financial report for 2018, the revenue totaled 3.43 billion yuan, increasing by 119.33 percent from the previous year, and the net income attributable to shareholders mounted to 785 million yuan, a year-on-year rise of 257.24 percent.

The e-cigarette sector is undoubtedly showing a strong momentum. A report released by Forward Industry Research Institute this March showcased China is the world's largest e-cigarette producer, accounting for more than 90 percent of the global output.

According to consulting services provider Euromonitor International, China's e-cigarette market reached 5.152 billion yuan in 2018, up 28.5 percent year over year, and the compound annual growth rate from 2012 to 2018 stood at about 35 percent.

The "blue sea" has been full of competitors including old behemoth ZIPPO as well as newly-born brands such as RELX, Laan, and YOOZ. According to Qichacha, a Chinese company information website, there are more than 150,000 companies that are related to e-cigarette business, including some crossover players.

NBD found that Meituan Dianping, a Chinese online food delivery platform, incorporated tobacco retail (including e-cigarettes) into its business on Sunday (July 28).

Influx of players also brings about inflow of capital. This year as of June, the e-cigarette sector has seen 14 financing rounds worth 574 million yuan, larger than the total funding for last year. 

But surging with the market are also concerns about physical health and regulatory issues, which might pose challenges to the e-cigarette industry.

At the annual 315 evening gala this year, a TV show that celebrates consumer rights day, the e-cigarette was exposed to contain both glycerin and nicotine, and long-term use of e-cigarettes will induce strong dependence and addiction of nicotine.

The World Health Organization also called for stricter regulations over electronic cigarettes on July 26, saying there was no proof they helped smokers quit smoking and could even be a gateway to tobacco addiction for young people.

China's authorities were reported to release a set of national standards for e-cigarettes this October which, if enacted, will impact the sector.

Email: gaohan@nbd.com.cn