RLX Technology ( RLX ) is focusing on expanding its international exposure through strategic investments and a franchise model. This should help the company navigate the pressures from Mainland China, where sales of illegal productsWe primarily focus on GARP (Growth at reasonable Price) opportunities in industrial, consumer, and technology sectors. Please click the "Follow" button to receive our latest research. If you have any questions, feel free to reach out to us through the comments section of our arti ...

RLX Technology ( RLX ) is focusing on expanding its international exposure through strategic investments and a franchise model. This should help the company navigate the pressures from Mainland China, where sales of illegal productsWe primarily focus on GARP (Growth at reasonable Price) opportunities in industrial, consumer, and technology sectors. Please click the "Follow" button to receive our latest research. If you have any questions, feel free to reach out to us through the comments section of our arti ...

Group 1 - Gao Yi Asset held stocks of 13 companies in the US stock market with a total market value exceeding $600 million as of the end of 2025 [2] - The top ten holdings of Gao Yi Asset prominently feature Chinese concept stocks, with significant increases in positions for Pinduoduo and Beike, and a new investment in Yixian E-commerce [2] - The top ten holdings include Huazhu Group, Pinduoduo, Google, Yum China, Beike, Wuxi AppTec, NetEase, iQIYI, TSMC, and ISHARES TR, indicating a dominant presence of Chinese concept stocks [2] Group 2 - As of the end of last year, Gao Yi Asset held 1.333 million shares of Pinduoduo, having increased its position by 629,000 shares compared to the end of the third quarter [3]

Core Insights - Gao Yi Asset disclosed its US stock holdings as of the end of 2025, indicating a total market value exceeding 600 million USD across 13 companies [2] - The firm increased its positions in Chinese concept stocks such as Pinduoduo and Beike in the fourth quarter of the previous year, and initiated a new investment in Yixian E-commerce [2] - The top ten holdings of Gao Yi Asset in the US stock market include Huazhu Group, Pinduoduo, Google, Yum China, Beike, Wuxi AppTec, NetEase, iQIYI, TSMC, and ISHARES TR, with Chinese concept stocks dominating the portfolio [2]

Company Developments - RLX Technology has completed the sample preparation for its self-developed oral nicotine product in 2024, with plans to launch it in the European and American markets by 2026, aiming to expand the smokeless tobacco product market through more convenient usage [2] - The company has initiated the "Seeing Love: Guide Dog Partner Program," which will run from 2025 to 2026, planning to donate 4 million yuan for the training, medical care, and education of 20 guide dogs, with the first batch of 10 guide dogs delivered in 2025 [3] Business Progress - According to the Q3 2025 financial report, RLX Technology's international business revenue has reached 72%, with ongoing expansion in the Asia-Pacific and European markets through mergers and acquisitions, such as the completion of a European acquisition in May 2025, indicating a potential for further localization efforts [4] Product Development - In addition to the oral nicotine product, the company has launched nicotine oral films in the U.S. market and continues to develop heat-not-burn (HNB) and other new tobacco products to expand its global product matrix [5]

Core Viewpoint - RLX Technology plans to launch its self-developed oral nicotine product in the European and American markets in 2026, receiving positive feedback from global distributors [2]. Recent Events - The company is implementing the "Seeing Love: Guide Dog Partner Program," which will run from 2025 to 2026, with a donation of 4 million yuan for the training, medical care, and support of 20 guide dogs. The first batch of guide dogs has already been delivered and is currently in the adaptation training phase [2]. Performance and Business Situation - According to the Q3 2025 financial report, international business revenue accounts for 72% of the company's total revenue. The company aims to strengthen its position in the Asia-Pacific and European markets through localized products and retail networks [3]. Stock Performance - Over the past 7 days (as of February 12, 2026), RLX Technology's stock price has shown volatility, closing at $2.35, with a single-day decline of 3.69%. From February 9 to February 12, the stock price dropped by a cumulative 2.49%, with a price range of 4.56%. The highest price during this period was $2.46 on February 12, while the lowest was $2.35 on the same day. On February 12, the trading volume was approximately 1.906 million shares, with a trading value of about $4.588 million. The stock's performance over the past 5 days showed a decline of 0.84%, while the tobacco sector increased by 0.95%, and the Nasdaq index saw a slight increase of 0.25% [4].

Core Viewpoint - RLX Technology plans to launch its self-developed oral nicotine product in the European and American markets by 2026, receiving positive feedback from global distributors [1] Group 1: Product Development and Market Strategy - The oral nicotine product has garnered positive responses from global distributors, indicating strong market interest [1] - The company aims to strengthen its position in the Asia-Pacific and European markets through localized products and retail networks [1] Group 2: Corporate Social Responsibility - The "Seeing Love: Guide Dog Partner Program" will be implemented from 2025 to 2026, with a plan to donate 4 million yuan for the training, medical care, and education of 20 guide dogs [1] - The first batch of guide dogs has been delivered and is currently undergoing adaptation training [1] Group 3: Financial Performance - As of the third quarter of 2025, international business revenue accounted for 72% of the company's total revenue [1]

Core Insights - The report maintains a positive investment rating for the light industry sector, indicating a favorable outlook for potential investments [2][5] - The electronic cigarette industry in China is experiencing significant growth, with the leading brand, RELX, showing a revenue increase of 45.60% year-on-year for the first three quarters of 2025, alongside improvements in gross margin to 29.30% and net margin to 23.00% [5][27] - The industry is undergoing a transformation due to stringent regulations, leading to increased market concentration and providing opportunities for compliant and technologically advanced companies [5][27] Company Overview - The company, RELX Technology, focuses on the research, design, and sales of consumer-grade electronic vapor products, primarily through a comprehensive offline distribution and "brand store+" retail model [8][12] - The management team consists of experienced professionals with backgrounds in fast-moving consumer goods and technology, enhancing the company's strategic direction and operational management [11] Financial Performance - The company's financial data indicates a robust recovery, with a significant increase in net profit for the first three quarters of 2025, reflecting a strong operational performance [16][18] - The sales expense ratio has decreased significantly, contributing to improved profitability metrics [21] Industry Situation - The domestic electronic cigarette market is undergoing consolidation due to strong regulatory measures, with a comprehensive control system established for production, sales, and taxation [27] - Internationally, the market shows regional differentiation, with emerging markets becoming key growth areas while facing high entry barriers in developed regions [28] Competitive Advantages - The company has established a competitive edge through early compliance with regulations, a strong R&D framework supported by multiple laboratories and patents, and a robust supply chain management strategy [29][30] - The dual strategy of deepening domestic compliance while expanding into international markets positions the company favorably against competitors [29]

Summary of the Conference Call Transcript Industry Overview - **Industry**: China Consumer Sector - **Outlook**: The sector is believed to be in the early stage of a multi-year recovery cycle that began in Q3 2024, with expectations for gradual improvement in consumer sentiment and spending through 2026E [2][11][12] Key Insights - **Valuation**: MSCI China Consumer Discretionary and Staples are trading at 17x and 15x 12-month forward PE, approximately one standard deviation below the 10-year averages, indicating that current valuations do not reflect a potential consumption recovery [2][9] - **Consumer Confidence**: The China Consumer Confidence Index has been trending upwards since September 2024, suggesting a gradual restoration of consumer confidence despite ongoing challenges in the property market [12][19] - **K-shaped Recovery**: The recovery is characterized by a K-shaped trend, where mid- to high-income consumers in tier-1 cities are expected to lead spending, while lower-tier city consumers remain focused on value for money [3][48] Consumer Behavior Trends - **Shifting Preferences**: A UBS Evidence Lab survey indicates a divergence in consumer behavior, with over 50% of mid- to high-income consumers reporting investment gains and showing strong spending intentions, particularly in premium and experiential categories [3][37] - **Spending Intentions**: The strongest spending intentions are noted in beauty and skincare (41%) and tourism (37%), reflecting a shift towards experiential and premium spending [51] - **Investment Gains**: 64-74% of mid- to high-income consumers reported increased investment returns, with many planning to reinvest or spend on travel, health services, and consumer electronics [40][41] Stock Implications - **Company Ratings**: - Upgrades to Neutral for Fenjiu due to expected benefits from non-business baijiu consumption - Buy ratings maintained for companies like MIXUE, Guming, China Foods, CR Beer, and YUM China, among others [4] - **Dividend Payouts**: Premium baijiu companies are noted for their >75% dividend payout, which is expected to protect share prices from downside risks [4] Structural Growth Opportunities - **Emerging Themes**: Key investment themes for 2026E include changing consumer preferences, corporate restructuring, and industry consolidation, particularly in sectors like home appliances and mass-market consumption [14][50] - **Corporate Restructuring**: Companies are expected to adapt their business models to align with changing consumer behaviors, which may lead to sustainable long-term earnings growth [4][50] Risks and Challenges - **Property Market Downturn**: The ongoing downturn in the property market is anticipated to weigh on household balance sheets, potentially impacting consumer spending [13][48] - **Policy Support**: The pace of recovery is contingent on stabilizing the property market and effective policy implementation to boost consumption [13][48] Conclusion - The China consumer sector is poised for a recovery, driven by improving consumer confidence and shifting spending patterns. However, the recovery will be uneven across different income groups and city tiers, necessitating a nuanced investment approach to capture emerging opportunities while being mindful of potential risks associated with the property market downturn.

Group 1 - The core point of the article is that RLX Technology (RLX.US) has extended its existing stock repurchase plan by 24 months until December 31, 2027, allowing for the repurchase of up to $500 million of its American Depositary Shares (ADS) [1] - The initial stock repurchase plan was established in December 2021 and was previously extended in December 2023 [1] - As of December 31, 2025, the company has repurchased approximately 170 million ADS, totaling around $330 million, leaving a remaining unused quota of approximately $170 million [1] Group 2 - The National Tobacco Monopoly Administration has recently solicited opinions on a draft notice regarding the implementation of electronic cigarette industry policies to further promote supply-demand balance [2] - The draft notice proposes to strengthen the regulation of electronic cigarette production capacity, emphasizing a market demand-oriented approach for supply-side structural reform in the electronic cigarette industry [2] - It outlines that production enterprises must operate within their approved production capacity and prohibits production beyond this limit, with provisions for capacity adjustment requiring re-approval and compliance with licensing procedures [2]