Chinese e-cigarette company RELX Technology on Jan. 22 was officially listed on the New York Stock Exchange (NYSE) under the symbol “RLX”, becoming the first Chinese e-cigarette brand to start public trading.
The opening stock price soared by 104%, which directly triggered the trading curb and resumed commencing after five minutes. The intra-day stock price rose by 158%, and the market value of the NYSE-debuted company reached $45.8 billion.
The skyrocketing debut of RELX has made Wang Ying, founder of RELX, a billionaire entrepreneur overnight. The founder and CEO holds 58.7% of the company’s shares, which translates into a market value of $26.9 billion.
According to its prospectus, the company’s revenues for 2018, 2019, and the first three quarters of 2020 were 133 million yuan, 1.549 billion yuan, and 2.201 billion yuan, respectively. And market estimates of its 2020 annual revenue will exceed 3 billion yuan.
RELX’s gross profit margin is maintained at about 40%, according to disclosed data.
Electronic cigarette products’ main components are cigarette sticks and cartridges. While sticks can be reused, the disposable cartridges are consumables. And the nicotine within leads to addiction so that consumers will make purchases repeatedly. Therefore, the repurchase rate of e-cigarette is high, causing the retention of e-cigarette users to be equally strong.
Additionally, China is the world’s largest tobacco market, with more than 280 million smokers, and the number of smokers steadily ranks first in the world. As the country with a low e-cigarette penetration rate, China owns the biggest potential market for vaping.
The Shenzhen-based company was founded in January 2018 but has achieved a market share of 62.6%, representing rapid growth.
With the investment of an array of high profile agencies, including IDG, Source Code Capital and Sequoia Capital, RELX was valued at $2.4 billion in July 2019. It took the company only 17 months to get to this milestone, even faster than Luckin Coffee, which spent about 22 months.
Even though the central government issued a notice in October 2019 prohibiting the online sales and advertising of e-cigarette, RELX has figured a way out.
In the quarter when the ban was introduced, RELX’s revenue declined for the first time from the previous quarters. Then in the first quarter of 2020, it fell again due to the pandemic. However, it started to rebound in the second quarter last year.
Before the online channel was barred in the fourth quarter of 2019, the sales revenue of RELX’s overall online channel accounted for 31.1%, and offline accounted for 68.7%. After the prohibition policy, RELX canceled all online channels, and offline sales increased to 98.2%.
The stock price was $29.51 per share, increasing $17.51, and shares rose 145.92% at the close on Jan. 22.