E-cigarette "Happy enclosure"
Portable electronic cigarette is a battery driven product, which is composed of atomizing rod and atomizing bomb (smoke bomb). The working principle is similar to a humidifier. The atomizer is used to heat the atomized liquid in the cigarette bomb. The nicotine salt in the atomized liquid turns into steam for smokers to smoke.
In short, e-cigarettes are alternatives to combustible tobacco.
E-cigarettes have become a good business because they are also addictive. If it is not measured according to American accounting standards, Yueke will make a profit in its first year.
According to the prospectus, in the first nine months of 2018, 2019 and 2020, the company realized net income of 132 million yuan, 1.549 billion yuan and 2.201 billion yuan respectively, and the net profit under GAAP was - 2.87 million yuan, 47.75 million yuan and 109 million yuan respectively, but the adjusted net profit was 6.52 million yuan, 100 million yuan and 382 million yuan respectively.
The adjusted net profit margin of Yueke in 2018 and 2019 is only 4.9% and 6.5%. After e-cigarettes are banned from online sales at the end of 2019, sales expenses will be reduced, and Yueke's net profit margin will increase to 17.3% in 2020, but its gross profit margin will only be 37.9%.
In addition to the upstream manufacturers (the gross profit rate of SIMORE international reaches 48.98%), the reason for the low gross profit rate is also related to the distributors and service organizations at all levels in the distribution chain. After all, without enough funds and ammunition, agents will not have the motivation to spread their distribution network to 310 cities in a short time. Offline channels need to give dealers a lot of profits.
In addition, large-scale distribution network needs the support of large inventory. With the expansion of stores, inventory increased significantly. According to the prospectus, the net inventory of Yueke in 2018 and 2019 was 14.15 million yuan and 219 million yuan respectively, with a year-on-year increase of 1450%.
Similarly, as a capital intensive industry, investment institutions are also "Crazy" to add weight.
Before the disclosure of the prospectus, except for the first round of angel financing, Yueke never confirmed and denied the financing rumors. However, Jiang long once said publicly that Yueke's financing amount is 10 times of the total financing amount of the second to tenth e-cigarette brands in the industry.
Baobian sorted out the information in the prospectus and found that Yueke had more than eight rounds of financing in three years. However, for financing information, Yueke is still vague. Only source capital and Sequoia Capital are mentioned in the prospectus, which hold 10.7% and 4.9% shares respectively.
Whether it's tobacco control policy, product standards, or taxes, they are the sword of Damocles hanging on the electronic cigarette end.