RLX Technology Inc (RLX) 2023 Q4 法說會逐字稿

Hello, ladies and gentlemen. Thank you for standing by for RLX Technology Inc.'s fourth quarter and full year 2023 earnings conference call. (Operator Instructions)

女士們、先生們，大家好。感謝您出席 RLX Technology Inc. 的第四季和 2023 年全年財報電話會議。（操作員說明）

I will now turn the call over to your host, Mr. Sam Tsang, Head of Capital Markets for the company. Please go ahead, Sam.

我現在將電話轉交給東道主，該公司資本市場主管曾森先生。請繼續，山姆。

Thank you very much. Hello, everyone, and welcome to the RLX Technology Incorporation's fourth quarter and full year 2023 earnings conference call. The company's financial and operational results were released through PR Newswire earlier today, and have been made available online. You can also view the earnings press release by visiting the IR section of our website at ir.relxtech.com. Participants on today's call will include our CFO, Mr. Chao Lu, and myself.

非常感謝。大家好，歡迎參加 RLX 科技公司 2023 年第四季及全年財報電話會議。該公司的財務和營運業績今天稍早透過美通社發布，並已在網路上發布。您也可以造訪我們網站 ir.relxtech.com 的 IR 部分，查看收益新聞稿。今天電話會議的參與者包括我們的財務長陸超先生和我自己。

Before we continue, please note that today's discussions will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. These statements typically contain words such as may, will, expect, targets, estimates, intent, belief, potential, continue, or other similar expressions. Forward-looking statements involve inherent risks and uncertainties. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, many of which factors are beyond our control. The company, its affiliates, advisors, and representatives do not undertake any obligation to update this forward information, except as required under the applicable law.

在我們繼續之前，請注意，今天的討論將包含根據 1995 年美國私人證券訴訟改革法案的安全港條款做出的前瞻性陳述。這些陳述通常包含「可能」、「將」、「期望」、「目標」、「估計」、「意圖」、「信念」、「潛力」、「繼續」等字眼或其他類似表達。前瞻性陳述涉及固有風險和不確定性。這些陳述的準確性可能會受到許多業務風險和不確定性的影響，這些風險和不確定性可能導致實際結果與預期或預期的結果有重大差異，其中許多因素超出了我們的控制範圍。本公司、其附屬公司、顧問和代表不承擔更新此前瞻性資訊的任何義務，除非適用法律要求。

Please note that, RLX Technology's earnings press release and this conference call include discussions of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. RLX press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited GAAP measures.

請注意，RLX Technology 的收益新聞稿和本次電話會議包括對未經審計的 GAAP 財務指標以及未經審計的非 GAAP 財務指標的討論。RLX 新聞稿包含未經審計的非 GAAP 措施與未經審計的 GAAP 措施的調整表。

I will now turn the call over to our CFO, Mr. Chao Lu. Please go ahead.

現在我將把電話轉給我們的財務長陸超先生。請繼續。

Thank you, Sam, and thanks, everyone, for making time to join our earnings conference call today. 2023 was a transformative year for RLX. Despite external challenges, our outstanding product portfolio and strong strategic execution propelled an impressive recovery throughout the year, setting the stage for new ventures. I will begin with an update on our domestic operations before devolving into our international endeavors, followed by a review of our financial performance.

謝謝山姆，也謝謝大家抽出時間參加我們今天的財報電話會議。 2023 年對 RLX 來說是變革的一年。儘管面臨外部挑戰，我們出色的產品組合和強大的策略執行力推動了全年令人印象深刻的復甦，為新企業奠定了基礎。我將首先介紹我們國內業務的最新情況，然後再介紹我們的國際業務，然後回顧我們的財務表現。

For our domestic business, 2023 was the first full year under the e-vapor industry's new regulatory framework in Mainland China. The regulations necessitate prior approvals for e-vapor products, restrict flavors to tobacco only, and impose a 36% excise tax on sales to distributors. As a compliant player, we have strictly adhered to the new rules since day one, continuously innovating to offer premium-compliant products amid competition from unauthorized flavored products.

對於我們的國內業務來說，2023年是中國大陸電子煙產業新監管架構下的第一個全年。該法規要求電子煙產品必須事先獲得批准，僅限於菸草口味，並對分銷商的銷售徵收 36% 的消費稅。作為合規參與者，我們從第一天起就嚴格遵守新規則，不斷創新，在來自未經授權的風味產品的競爭中提供優質合規產品。

Leveraging our strong R&D capabilities and deep industry insights, we more than doubled our selection of approved cartridges this year, from 15 in January to 32 by December. Additionally, we broadened our cartridge series to four compared with three one year ago, enhancing our offerings to meet the diverse needs of adult smokers with more value-driven options. With a growing product portfolio, we believe we are well-positioned to seize opportunities in China's legal e-vapor market, especially once enforcement against illicit products becomes more effective.

憑藉我們強大的研發能力和深厚的行業洞察力，今年我們批准的墨盒選擇數量增加了一倍多，從 1 月的 15 個增加到 12 月的 32 個。此外，我們將煙彈系列從一年前的三個擴大到四個，增強了我們的產品，透過更多價值驅動的選擇來滿足成年吸菸者的多樣化需求。隨著產品組合的不斷增長，我們相信我們有能力抓住中國合法電子煙市場的機遇，特別是一旦對非法產品的執法變得更加有效。

While we have made meaningful progress in 2023, the adverse impact of illegal products is still lingering. Given the broad availability of popular flavors through unauthorized products, their sales still account for a significant portion of domestic sales volumes, weighing heavily on compliant product sales. Unauthorized products are also often cheaper than compliant products, as their manufacturers typically do not pay excise tax and duties. More importantly, they are manufactured without oversight and marketed irresponsibly, resulting in quality control issues that could potentially harm users. This damages the reputation of the entire e-vapor industry.

儘管我們在 2023 年取得了有意義的進展，但非法產品的不利影響仍然揮之不去。鑑於透過未經授權的產品廣泛提供流行口味，其銷量仍佔國內銷量的很大一部分，嚴重影響了合規產品的銷售。未經授權的產品通常也比合規產品便宜，因為它們的製造商通常不繳納消費稅和關稅。更重要的是，它們的製造沒有監督，銷售也不負責任，導致品質控制問題，可能會傷害使用者。這損害了整個電子煙行業的聲譽。

E-vapor products are meant to reduce harm, not cause or increase it. As our industry offers one of the few smoking harm reduction options available, effective regulation enforcement is critical in ensuring users' safety and essential to the e-vapor industry's development. We will continue actively working with regulatory authorities, advocating for a responsible and well-regulated e-vapor industry. Meanwhile, we will remain focused on what we can control, that is meeting users' harm reduction needs with a diverse and growing portfolio of high-quality compliant products.

電子蒸氣產品旨在減少傷害，而不是造成或增加傷害。由於我們的行業提供了為數不多的減少吸煙危害的選擇之一，因此有效的監管執法對於確保用戶的安全至關重要，並且對電子煙行業的發展至關重要。我們將繼續積極與監管機構合作，倡導負責任且監管良好的電子煙產業。同時，我們將繼續專注於我們可以控制的事情，即透過多樣化且不斷增長的高品質合規產品組合來滿足用戶減少傷害的需求。

That leads me to our overseas business. We believe that adult smokers seeking smokeless alternatives is a global trend. As such, we terminated our non-compete agreement with RELX Inc., in November 2023, enabling our company to explore prospects outside China, where the demand for e-vapor as a convenient and healthier smoking alternative is growing. With mounting evidence from reputable source like the UK's National Health Service highlighting vapors lower health risks compared to traditional smoking, more countries are recognizing e-vapor's role in tobacco harm reduction.

這讓我想到了我們的海外業務。我們相信，成年吸菸者尋求無菸替代品是全球趨勢。因此，我們在2023 年11 月終止了與RELX Inc. 的競業禁止協議，使我們公司能夠探索中國以外的前景，因為中國對電子煙作為一種方便、健康的吸煙替代品的需求正在不斷增長。英國國家衛生服務中心等信譽良好的來源提供的越來越多的證據強調，與傳統吸煙相比，電子煙的健康風險較低，越來越多的國家正在認識到電子煙在減少煙草危害方面的作用。

According to NHS, burning cigarettes releases thousands of different chemicals of which many are poisonous and carcinogenic. Most harmful chemicals, including tar and carbon monoxide, are not contained in vape aerosol. Switching completely from smoking to vaping significantly reduces exposure to toxins associated with risking of cancer, lung disease, heart disease, and stroke. RLX, with our track record of regulatory compliance and product excellence, is ideally positioned to leverage these global shifts. That's another reason we believe it's the right time for us to expand outside China.

據英國國家醫療服務體系 (NHS) 稱，燃燒香菸會釋放出數千種不同的化學物質，其中許多是有毒和致癌的。電子煙氣溶膠不含大多數有害化學物質，包括焦油和一氧化碳。完全戒菸改用電子煙可以顯著減少接觸與癌症、肺病、心臟病和中風風險相關的毒素。RLX 憑藉我們在監管合規性和卓越產品方面的良好記錄，處於充分利用這些全球變化的有利位置。這是我們認為現在是我們向中國以外擴張的最佳時機的另一個原因。

Strategically, our first step is to increase our product accessibility in international markets. We are working with partners around the globe to bring our harm-reduction products to more users worldwide responsibly. Increased access to our quality products will build brand recognition among global adult smokers, driving progress in our expansion efforts. Second, leveraging our extensive industry resources and expertise, we will target key markets and product categories with high growth potential. This in turn will boost profitability as margins will expand with scale.

從策略上講，我們的第一步是提高產品在國際市場上的可近性。我們正在與全球合作夥伴合作，以負責任的方式將我們的減害產品帶給全球更多用戶。增加我們優質產品的使用機會將在全球成年吸菸者中建立品牌認知度，推動我們的擴張工作取得進展。其次，利用豐富的產業資源和專業知識，瞄準具有高成長潛力的重點市場和產品類別。隨著利潤率隨著規模的擴大而擴大，這反過來又會提高獲利能力。

Our recent expansion into Southeast and North Asia has shown promising progress, validating our approach of combining our industry expertise with local insights to refine our market strategies. As we do for our domestic business, we will respond quickly to changing consumer preferences, tailor our product portfolio to fit local needs, and help local teams improve operating efficiency. Going forward, we will continue to expand our business across new markets based on careful evaluation, while developing innovative premium products to meet global users' evolving needs.

我們最近向東南亞和北亞的擴張取得了可喜的進展，驗證了我們將行業專業知識與當地見解相結合以完善市場策略的方法。正如我們在國內業務所做的那樣，我們將快速響應不斷變化的消費者偏好，客製化我們的產品組合以適應當地需求，並幫助當地團隊提高營運效率。展望未來，我們將在認真評估的基礎上繼續在新市場拓展業務，同時開發創新的優質產品，以滿足全球用戶不斷變化的需求。

Before I move on to our financial performance, I'm pleased to share that our ESG efforts continue to win recognition from leading global ESG rating agencies. We received an A rating from MSCI for the second consecutive year for our outstanding performance in responsible marketing, commercial ethics, and product security. In addition, our company's score in the 2023 S&P Global Corporate Sustainability Assessment improved by 13%. Our commitment to integrating ESG best practices remains unwavering, reflecting our dedication to social responsibility and value creation for all stakeholders.

在介紹我們的財務表現之前，我很高興地告訴大家，我們的 ESG 努力繼續贏得全球領先 ESG 評級機構的認可。由於我們在負責任的營銷、商業道德和產品安全方面的出色表現，我們連續第二年獲得 MSCI 評級。此外，我們公司在2023年標準普爾全球企業永續發展評估中的得分提高了13%。我們對整合 ESG 最佳實踐的承諾始終堅定不移，體現了我們致力於社會責任和為所有利害關係人創造價值的奉獻精神。

Now, an overview of our operational and financial results for the fourth quarter and full year of 2023. Please note that unless otherwise stated, all the financials we'll present today are in RMB terms.

現在，我們概述 2023 年第四季和全年的營運和財務表現。請注意，除非另有說明，我們今天提供的所有財務數據均以人民幣計價。

In 2023, we strategically adjusted our business model to align with China's new regulatory requirements, focusing on efficiency and profitability. These adjustments have resulted in steady financial improvements throughout the year. First on top line. On a full year basis, our net revenues were RMB15.9 billion, a significant year-over-year decrease as 2023 was the first full year of the new regulatory era. Our domestic business' recovery pace was uneven. Illicit products resurged quickly after the regulators' special action ended in April 2023, impacting our sales. We quickly adjusted our strategy on operations in response to the change in market dynamics and further diversified our product portfolio to meet more adult smokers' needs. For example, we launched LEILI, a line of cost-effective products to target price sensitive users.

2023年，我們對業務模式進行策略調整，以適應中國新的監管要求，並專注於效率和獲利能力。這些調整導致全年財務狀況穩定改善。首先是頂行。全年淨收入為人民幣159億元，由於2023年是新監管時代的第一個全年，年比大幅下降。我們國內業務的復甦步伐參差不齊。2023 年 4 月監管機構專案行動結束後，非法產品迅速捲土重來，影響了我們的銷售。我們根據市場動態變化迅速調整經營策略，進一步豐富產品組合，滿足更多成年菸民的需求。例如，我們針對價格敏感的使用者推出了雷力系列高性價比產品。

I'm pleased to report that these efforts paid off. The year-over-year decline in our quarterly net revenues narrowed from 89% for the first quarter to 83% in the second quarter to just 52% for the third quarter. For the fourth quarter of 2023, our net revenues were up 53.1% year-over-year to RMB520 million, marking our first quarter of positive year-over-year growth after seven consecutive quarters of decline. The increase was mainly driven by our international expansion, which began with Southeast and North Asia. Such encouraging results in a short time framework validate our decision to diversify our revenues geographically. As I mentioned earlier, we believe adult smokers seeking smokeless alternatives is a long-term global trend. With our deep industry know-how and outstanding leadership team, we are confident that RLX will quickly win the trust and loyalty of adult smokers worldwide.

我很高興地報告這些努力得到了回報。我們季淨收入年減幅從第一季的 89% 收窄至第二季的 83%，第三季僅 52%。2023年第四季，我們的淨收入年增53.1%，達到人民幣5.2億元，這是我們在連續七個季度下降後首次實現同比正增長。這一增長主要是由我們從東南亞和北亞開始的國際擴張所推動的。在短時間內取得的如此令人鼓舞的成果證實了我們在地域上實現收入多元化的決定。正如我之前提到的，我們相信成年吸菸者尋求無菸替代品是一個長期的全球趨勢。憑藉我們深厚的行業知識和傑出的領導團隊，我們相信RLX將迅速贏得全球成年煙民的信任和忠誠。

Next, our gross profit margin. Our full-year gross margin fell 18.8% points to 24.4%, primarily due to the 36% excise tax implemented in Mainland China in November 2022. However, thanks to our efforts to optimize supply chain efficiency, improve product design, and increase utilization of our exclusive manufacturing plant, gross profit margins for our core domestic business improved quarter-over-quarter throughout the year. Our fourth quarter gross margin remained stable quarter-over-quarter at 23.7% as an unfavorable change in the revenue mix offset the margin improvements we achieved for our domestic business.

接下來是我們的毛利率。我們的全年毛利率下降 18.8 個百分點至 24.4%，主要由於中國大陸於 2022 年 11 月實施 36% 的消費稅。然而，由於我們努力優化供應鏈效率、改進產品設計以及提高獨家製造工廠的利用率，我們國內核心業務的毛利率全年環比改善。我們第四季的毛利率環比保持穩定，為 23.7%，因為收入結構的不利變化抵消了我們國內業務實現的利潤率改善。

In 2023, we recorded an operating loss of RMB497 million. Excluding the impact of stock-based compensation, our non-GAAP operating loss was RMB134 million. Since the introduction of the new regulatory framework, we have been actively adjusting and streamlining our business for greater agility. These efforts are bearing fruits with stringent cost control driving a 49% decrease in full-year total salaries and welfare benefits, and a 48% decrease in non-salaries and welfare benefits year-over-year.

2023年，我們錄得經營虧損人民幣4.97億元。剔除股權激勵的影響，我們的非公認會計原則營業虧損為人民幣1.34億元。自從引入新的監管框架以來，我們一直在積極調整和精簡我們的業務，以提高靈活性。這些努力正在取得成效，嚴格的成本控制導致全年薪資和福利總額較去年同期下降49%，非薪資和福利較去年同期下降48%。

For the fourth quarter, we recorded our first positive non-GAAP operating profit of RMB76 million after three consecutive quarters of operating loss, thanks to our cost reduction initiatives and positive profit contribution from outside China. This significant turnaround from an operating loss of RMB133 million in the third quarter to an operating profit of RMB76 million in this quarter reflects our robust rebound and growth trajectory. Moving forward, we will remain focused on optimizing operating efficiency and profitability as we pursue high-quality growth domestically and abroad.

第四季度，由於我們的成本削減措施和來自中國以外地區的積極利潤貢獻，我們在連續三個季度營運虧損後首次實現非美國通用會計準則營運利潤人民幣 7,600 萬元。從第三季營業虧損 1.33 億元到本季營業利潤 7,600 萬元人民幣的重大轉變反映了我們強勁的反彈和成長軌跡。展望未來，我們將持續聚焦優化營運效率和獲利能力，追求國內外高品質發展。

Our balance sheet remains solid. As of December 31, 2023, the company had cash and cash equivalents, restricted cash, short-term bank deposits net, short-term investments, long-term bank deposits net, and long-term investment securities net of RMB15 billion. Also, we recorded an operating cash inflow of RMB305 million in the fourth quarter of 2023, primarily due to improved working capital and inventory management.

我們的資產負債表依然穩健。截至2023年12月31日，公司現金及現金等價物、限制性現金、短期銀行存款淨額、短期投資、長期銀行存款淨額、長期投資證券淨額為人民幣150億元。此外，我們在 2023 年第四季錄得營運現金流入人民幣 3.05 億元，主要由於營運資金和庫存管理的改善。

Supported by our financial strength and solid balance sheet, we extended our commitment to enhancing shareholder return. In 2023, we returned value to our shareholders through a total of approximately $112 million in share repurchases and cash dividends comprising USD98.5 million from our share repurchase program and USD13 million from cash dividend payout. As of December 31, 2023, the company had repurchased about USD195.5 million of its ordinary shares represented by ADSs. Our Board of Directors have authorized the extension of this existing share repurchase program established in December 2021 for an additional 24-month period through December 31, 2025. The extended program demonstrates our confidence in the company's long-term prospects.

在我們的財務實力和穩健的資產負債表的支持下，我們履行了提高股東回報的承諾。2023年，我們透過總計約1.12億美元的股票回購和現金股利向股東回報價值，其中9,850萬美元來自我們的股票回購計劃，1,300萬美元來自現金股利支付。截至2023年12月31日，該公司已回購約1.955億美元的ADS代表的普通股。我們的董事會已授權將 2021 年 12 月設立的現有股票回購計畫再延長 24 個月，直至 2025 年 12 月 31 日。延長計劃顯示了我們對公司長期前景的信心。

In conclusion, we are proud of our pivotal progress during the past year's challenges. Thanks to our excellent execution and effective strategies, as well as our team's dedication and our partners' deep trust and support, our business remains resilient and strong. Our commitment to meeting adult smokers' needs with premium harm-reduction products and advocating for a responsible and well-regulated e-vapor industry will never waver. Heading into 2024, we will continue to propel recovery in our domestic business through product innovation while tapping into new markets abroad to unleash growth potential. We believe our strong financial foundation and solid balance sheet will empower us to seize development opportunities that create value for all of our stakeholders.

總之，我們對在過去一年的挑戰中取得的關鍵進展感到自豪。由於我們卓越的執行力和有效的策略，以及我們團隊的奉獻精神和合作夥伴的深厚信任和支持，我們的業務保持彈性和強勁。我們致力於透過優質的減害產品滿足成年吸菸者的需求，並倡導負責任且監管良好的電子煙產業，這項承諾永遠不會動搖。進入2024年，我們將持續透過產品創新推動國內業務復甦，同時開拓海外新市場，釋放成長潛力。我們相信，強大的財務基礎和穩健的資產負債表將使我們能夠抓住發展機遇，為所有利害關係人創造價值。

This concludes our prepared remarks today. We will now open the call to questions. Operator, please go ahead.

我們今天準備好的演講到此結束。我們現在開始提問。接線員，請繼續。

(Operator Instructions) Peihang Lyu, CICC.

（操作員指示） 呂培航，CICC。

Thank you, management. This is Peihang from CICC. I have two questions here. The first one is regarding your overseas disposable products, WAKA, which have sold very well. And how do you view the growth trend of disposable products overseas given the intensifying competition and changing regulations in some countries? And my second question is that in the domestic market, has there been an enhancement in the enforcement and has the approval process for new products accelerated compared to the past? Those are my questions. Thank you.

謝謝你，管理階層。我是中金公司的北航。我在這裡有兩個問題。第一個是你們海外的一次性產品WAKA，賣得很好。鑑於一些國家競爭的加劇和法規的變化，您如何看待海外一次性用品的成長趨勢？我的第二個問題是，在國內市場上，與過去相比，執法力道是否有所加強，新產品的審批速度是否加快了？這些都是我的問題。謝謝。

Thank you very much, Peihang. So in the last 10 years, the subcategory of e-vapor has evolved from time to time, from open system to closed system, from pod system to disposables. One thing that hasn't changed is the overall penetration of e-vapor has been growing among adult smokers. The evolving regulatory landscape and intensified competition presents challenges and opportunities in specific markets, such as proposed ban on disposable vaping products in countries like the UK and France.

非常感謝你，北航。所以在過去的10年裡，電子煙的子類別不斷演變，從開放式系統到封閉系統，從煙彈系統到一次性產品。沒有改變的一件事是，電子煙在成年吸菸者中的整體滲透率一直在增加。不斷變化的監管環境和加劇的競爭給特定市場帶來了挑戰和機遇，例如英國和法國等國家擬議禁止一次性電子煙產品。

For markets that may have banned disposable products, this won't affect the overall demand of e-vapor category over a longer time frame. Users can move from one product subcategory to another and we are a global leader in the pod system and have a significant presence in disposable products. Suppose the ban on disposable products is effective in some markets, in that case, we will encourage users using disposables to use our pod products as we can provide a similar or even better user experience.

對於可能禁止一次性產品的市場來說，這不會在較長時間內影響電子煙類別的整體需求。使用者可以從一個產品子類別轉移到另一個產品子類別，我們是 Pod 系統的全球領導者，並且在一次性產品領域佔有重要地位。假設一次性產品的禁令在某些市場有效，那麼我們會鼓勵使用一次性產品的使用者使用我們的小煙產品，因為我們可以提供類似甚至更好的使用者體驗。

For countries that have yet to announce regulatory changes, we will continue to offer and launch various products in various forms, including disposables, pod systems, and e-vapor solutions that may fit different user groups to capture the growth of the overall category.

對於尚未宣布監管變化的國家，我們將繼續提供和推出各種形式的各種產品，包括一次性產品、小煙系統和電子煙解決方案，這些產品可能適合不同的用戶群體，以抓住整體類別的增長。

And regarding your second question about the domestic market, enforcement as well as the product approval, regulators have been continuously cracking down on illegal sales of flavored e-vapor products, and we have long assisted and supported their enforcement. Multiple enforcement actions have been recently carried out nationwide among manufacturers and distributors. One example is Zhejiang province, where regulators have been working with the police force. They have arrested 23 suspects, closed seven warehouses, and one production facility, and seized illegal e-vapor products valued at RMB15 million. We continue to assist regulators in cracking down on illicit sales of e-vapor products.

關於你提到的第二個問題，關於國內市場、執法以及產品審批等問題，監管部門一直在不斷嚴厲打擊調味電子煙產品的非法銷售行為，我們也長期協助和支持他們的執法。近期，全國針對製造商和經銷商進行了多起執法行動。浙江省就是一個例子，該省的監管機構一直在與警方合作。逮捕犯罪嫌疑人23名，關閉7個倉庫、1個生產設施，查獲非法電子煙產品價值1500萬元人民幣。我們繼續協助監管機構打擊電子煙產品的非法銷售。

We have continuously applied for new approvals for cartridges and devices as new products must undergo several rounds of reviews to ensure they meet the national standard requirements, including the packaging inspection and technical review of quality and ingredients. Obtaining approvals take time, especially since the Chinese New Year holiday just passed a few weeks ago. We can bring you more exciting new products soon once approved. Thank you for your question.

我們不斷申請新的墨盒和設備批准，因為新產品必須經過多輪審查以確保其符合國家標準要求，包括包裝檢驗以及品質和成分的技術審查。獲得批准需要時間，特別是幾週前剛過去的農曆新年假期。一旦獲得批准，我們可以盡快為您帶來更多令人興奮的新產品。謝謝你的問題。

That's very comprehensive. Thank you.

這非常全面。謝謝。

(Operator Instructions) Lydia Ling, CITI.

（操作員指令）Lydia Ling，CITI。

Hi management, thanks for all the presentation. So here I have two questions related to the overseas expansion. And the first one is, right, the overseas expansion, like kicked off in the first quarter last year. And so looking into this year and also beyond, so can you actually detail like the more of your like overseas expansion plan? And also such as which countries and also regions that you plan to expand for this year? And also any other acquisition plan looking forward?

嗨，管理層，感謝您的所有介紹。那我這裡有兩個關於海外擴張的問題。第一個是海外擴張，就像去年第一季開始的那樣。展望今年以及以後，您能詳細介紹一下您的海外擴張計畫嗎？還有例如今年你計劃拓展哪些國家和地區？還有其他收購計畫嗎？

And the second question is on the profitability of your overseas business. And so, could you share like a little bit more color on like how is the profitability of your existing overseas business you entered? And also how to further drive the profitability looking forward? And so what kind of the normalized margins that you would target looking forward for overseas business versus like the domestic business? Thank you.

第二個問題是關於您海外業務的獲利能力。那麼，您能否分享一下您所進入的現有海外業務的獲利能力如何？未來獲利能力如何進一步提升？那麼，與國內業務相比，您預期海外業務的標準化利潤率目標是多少呢？謝謝。

Thank you very much, Lydia. So regarding the international expansion, our two strategic priorities is to increase our product accessibility and enhance our profitability in international markets. So we periodically examine different markets and decide whether to expand to that market.

非常感謝你，莉迪亞。因此，在國際擴張方面，我們的兩個策略重點是提高產品的可及性和提高我們在國際市場的獲利能力。因此，我們定期考察不同的市場並決定是否擴展到該市場。

We expanded to North and Southeast Asia in late 2023 and plan to expand to more Asian markets in 2024. We are confident in many Asian markets and have built a strong presence. We have been and will expand to more markets and we hope Asian markets can contribute significantly to our company in 2024. For European markets, we are still evaluating the regulatory changes in certain markets and it will take some time for us to expand and decide.

我們於 2023 年底擴展到北亞和東南亞，並計劃在 2024 年擴展到更多亞洲市場。我們對許多亞洲市場充滿信心，並建立了強大的影響力。我們已經並將擴展到更多市場，我們希望亞洲市場能夠在 2024 年為我們公司做出重大貢獻。對於歐洲市場，我們仍在評估某些市場的監管變化，我們需要一些時間來擴展和決定。

Regarding acquisition plans, we do have discussions with potential partners occasionally. We will share more details once we have any meaningful progress.

關於收購計劃，我們偶爾也會與潛在的合作夥伴進行討論。一旦取得任何有意義的進展，我們將分享更多細節。

And regarding the profitability of our overseas business, it is still in the early stages of development and we have been expanding to certain markets. And the profitability of each market depends on the volume, the competitive landscape, taxation, and pricing across the value chain. Expanding to a new market could change our overall profitability. Even as we are in the process of expanding, the profitability varies across different time periods.

而就我們海外業務的獲利能力而言，目前還處於發展的早期階段，我們一直在向某些市場拓展。每個市場的獲利能力取決於整個價值鏈的數量、競爭格局、稅收和定價。擴展到新市場可能會改變我們的整體獲利能力。即使我們處於擴張過程中，不同時期的獲利能力也會有所不同。

Our strategic focus is to optimize product portfolios and expand international sales channels, which could contribute to our top and bottom lines. Looking at our non-GAAP operating profit this quarter, our efforts to optimize domestic operations' operating efficiency and generate additional earnings from our international franchise have benefited us. As we are still expanding to many international markets, it is premature to share specific margin targets. However, our directional-wise sales volume, which could have economies of scale, is the most crucial factor for profitability. Thank you for your question.

我們的策略重點是優化產品組合併擴大國際銷售管道，這可能有助於提高我們的收入和利潤。看看我們本季的非公認會計原則營業利潤，我們優化國內業務營運效率並從國際特許經營中產生額外收入的努力使我們受益。由於我們仍在向許多國際市場擴張，因此現在分享具體的利潤目標還為時過早。然而，我們定向銷售量可以產生規模經濟，這是獲利能力最關鍵的因素。謝謝你的問題。

Thank you.

謝謝。

Eileen Lin, China Renaissance.

林愛玲，中國文藝復興。

Thanks, management, for taking my questions. I have two questions. The first one is on domestic market. Can management share some comments on the momentum of domestic sales by month? Are there any changes in the trend? In particular, I also want to get the sense of where are non-JV products now and what's the latest trends onto this product from the regulator's perspective.

謝謝管理層回答我的問題。我有兩個問題。第一個是國內市場。管理層能否按月分享一些對國內銷售動能的評論？趨勢有變化嗎？特別是，我還想從監管機構的角度了解非合資產品現在在哪裡，以及該產品的最新趨勢是什麼。

My second question is on the overseas market. UK government recently made some changes in the policies on the e-cigarettes, including restrictions on some disposable and flavored products. And there's a new potential tax on e-cigarettes starting on 2026. Have you seen any changes in the market after this announcement? And how do you think it might impact RELX? Thank you.

我的第二個問題是關於海外市場的。英國政府最近對電子煙政策做出了一些改變，包括對一些一次性和調味產品的限制。從 2026 年開始，可能會對電子煙徵收新的稅。此消息發布後，您看到市場有什麼變化嗎？您認為這會對 RELX 產生怎樣的影響？謝謝。

Thank you very much, Eileen. So regarding our domestic business, the sales trend in the domestic market are influenced by seasonality, with stable monthly averages observed over longer periods. For instance, in February this year, the Chinese New Year holiday lasted for eight days with minimal sales a few days before and after the holiday. We also had relatively strong sales in January before the CNY. We remain vigilant in monitoring the illicit markets and assist regulators in combating these challenges. Our commitment to compliance and market integrity supports regulatory efforts to secure consumption tax and can position us as leaders in promoting responsible market practices. Our proactive stance on compliance and collaboration with authorities will foster a healthier market environment and support sustainable growth.

非常感謝你，艾琳。因此，就我們的國內業務而言，國內市場的銷售趨勢受季節性影響，月均值在較長時期內保持穩定。例如，今年2月份，農曆新年假期持續了8天，節前和節後幾天的銷售量都很少。我們在一月份農曆新年之前的銷售也相對強勁。我們在監控非法市場方面保持警惕，並協助監管機構應對這些挑戰。我們對合規性和市場誠信的承諾支持確保消費稅的監管工作，並使我們成為促進負責任的市場實踐的領導者。我們在合規和與當局合作方面的積極立場將創造更健康的市場環境並支持永續成長。

So regarding your second question about the recent proposed policy in the UK, I think the UK regulatory changes could present a nuanced landscape, opportunities to adapt and capture new consumer segments. We can share our view on these three topics that you mentioned.

因此，關於你關於英國最近提出的政策的第二個問題，我認為英國的監管變化可能會呈現出微妙的格局，以及適應和捕捉新消費群體的機會。我們可以就您提到的這三個主題分享我們的看法。

First is the proposed disposable ban. As we have mentioned earlier, the prohibition of disposables will not change the overall demand in the long run as most users who migrates from disposables to other forms back to the pod system. There have been early signs that some distributors and retailers have started encouraging users to convert from disposables to pod system, which allow us to expand to the market and acquire new users in the medium term. The ban may create short-term chaos in the market, just like what happened in the US and China, but we are well prepared for the changes.

首先是擬議的一次性禁令。正如我們之前提到的，從長遠來看，禁止使用一次性設備不會改變整體需求，因為大多數從一次性設備遷移到其他形式的用戶又回到了 Pod 系統。早期跡象表明，一些分銷商和零售商已開始鼓勵用戶從一次性產品轉向小型煙彈系統，這使我們能夠在中期擴展到市場並獲得新用戶。這項禁令可能會造成市場短期混亂，就像美國和中國發生的情況一樣，但我們已經做好了應對變化的準備。

Second, regarding proposed vapor restrictions. British regulators have been encouraging adult smokers to switch from cigarettes to reduced-risk products like e-vapors. Regulators are concerned about appealing packaging, use of appealing flavor, and advertising, but at the same time, they also understand flavor's role in adult smokers' transition. In other words, products with plain flavors and packaging that are not marketed and appealing to minors shall not be restricted. We are confident that such restrictions should be reasonable and might have minimal impact on adult smokers.

其次，關於擬議的蒸汽限制。英國監管機構一直鼓勵成年吸菸者從香菸轉向電子煙等風險較低的產品。監管機構關注有吸引力的包裝、有吸引力的香料的使用和廣告，但同時，他們也了解香料在成年吸煙者過渡中的作用。也就是說，口味、包裝簡單、不進行行銷、對未成年人有吸引力的產品不受限制。我們相信，此類限制應該是合理的，並且對成年吸煙者的影響可能很小。

Finally, excise tax could level the playing field. We have seen this introduced in many countries and regions, including the countries where we are currently operating. The current suggested tax rate is moderate compared to other countries globally. This would foster a healthier industry ecosystem and provide incremental incentives for regulators to combat illegal products. Thank you for your question.

最後，消費稅可以創造公平的競爭環境。我們已經在許多國家和地區看到了這一點，包括我們目前開展業務的國家。與全球其他國家相比，目前的建議稅率適中。這將培育一個更健康的產業生態系統，並為監管機構打擊非法產品提供增量誘因。謝謝你的問題。

Very clear. Thank you.

非常清楚。謝謝。

At this time, there are no further questions. I would like to turn the call back over to the company for closing remarks.

目前，沒有其他問題了。我想將電話轉回公司進行結束語。

Thank you once again for joining us today. If you have further questions, please feel free to contact RLX Technology Investor Relations team through the contact information provided on our website or Piacente Financial Communications. Thank you.

再次感謝您今天加入我們。如果您還有其他疑問，請隨時透過我們網站或 Piacente Financial Communications 上提供的聯絡資訊聯絡 RLX Technology 投資者關係團隊。謝謝。

This concludes the conference call. You may now disconnect your line. Thank you.

電話會議到此結束。現在您可以斷開線路。謝謝。