RLX Technology Inc (RLX) 2024 Q3 法說會逐字稿

Hello, ladies and gentlemen. Thank you for standing by for RLX Technology Inc.'s third-quarter 2024 earnings conference call. (Operator Instructions) Today's conference call is being recorded and is expected to last for about 40 minutes.

女士們、先生們，大家好。感謝您出席 RLX Technology Inc. 的 2024 年第三季財報電話會議。（操作員說明）今天的電話會議正在錄音，預計持續約 40 分鐘。

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，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 RLX Technology's third-quarter 2024 earnings conference call.

非常感謝。大家好，歡迎參加RLX科技2024年第三季財報電話會議。

The company's financial and operational results were released through PR Newswire services 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.

該公司的財務和營運業績今天稍早透過美通社服務發布，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。

Participants on today's call will include our Chief Executive Officer, Ms. Kate Wang; our Chief Financial Officer, Mr. Chao Lu; and myself, Sam Tsang, Head of Capital Markets.

今天電話會議的參與者包括我們的執行長王凱特女士；我們的財務長陸超先生；還有我本人，資本市場主管 Sam Tsang。

Before we continue, please note that today's discussions will contain forward-looking information 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, expects, targets, estimates, intends, believes, potential, continue, or other similar expressions.

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制定的前瞻性資訊。這些陳述通常包含「可能」、「將」、「期望」、「目標」、「估計」、「打算」、「相信」、「潛力」、「繼續」等字眼或其他類似表達。

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-looking information, except as required under the act of the law.

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這些前瞻性資訊的任何義務，法律要求的除外。

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's 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 的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 Ms. Kate Wang. Please go ahead.

我現在將電話轉給王女士。請繼續。

Thank you, Sam, and thank you to everyone for joining our earnings conference call today. I would like to begin with an overview of our strategy for thriving in markets outside of China, followed by an update on our current and recent developments in the China market and a review of our intellectual property achievements. Finally, I will hand over to our CFO for a detailed financial review.

謝謝你，山姆，也謝謝大家今天參加我們的財報電話會議。我想先概述我們在中國以外市場蓬勃發展的策略，然後介紹我們在中國市場當前和最近的發展情況，並回顧我們的智慧財產權成就。最後，我將交給我們的財務長進行詳細的財務審查。

We delivered a robust performance in the third quarter of 2024, demonstrating our ability to consistently excel in diverse markets despite rapidly evolving demands and regulatory landscapes. This positions us as a leading brand beyond China.

我們在 2024 年第三季取得了強勁的業績，證明了儘管需求和監管環境快速變化，我們仍然有能力在多元化市場中持續表現出色。這使我們成為中國以外的領導品牌。

Following the termination of our non-competition agreement last year, we have successfully expanded into multiple international markets. During this period, two key trends have merged within the overseas e-vapor industry. First, we have observed an increase in regulatory activity across various markets. Governments are implementing new regulations, including bans on disposable products, new tax policies, and stricter enforcement against illegal goods.

繼去年終止非競爭協議後，我們已成功擴展到多個國際市場。在此期間，海外電子煙產業出現了兩大趨勢的融合。首先，我們觀察到各市場的監管活動增加。各國政府正在實施新的法規，包括禁止一次性產品、新的稅收政策以及更嚴格打擊非法商品。

While these developments can foster sustainable growth within this industry, they also complicated operations for compliant brands like RLX. This makes it essential for us to develop dedicated local strategies, create multi-category product lines to facilitate user transitions, enhance inventory management across the value chain, and optimize costs to align with and adapt to regulatory change.

雖然這些發展可以促進該行業的可持續成長，但它們也使 RLX 等合規品牌的營運變得複雜。這使得我們必須制定專門的本地策略，創建多類別產品線以促進用戶轉換，加強整個價值鏈的庫存管理，並優化成本以適應監管變化。

The second trend is a growing demand from consumers for enhanced product functionality and cost-effective daily e-vapor products. Certain segments for adult smokers are seeking more advanced features in e-vapor products, akin to the rising expectations in the consumer electronics sector, where personalization and technological innovation are paramount.

第二個趨勢是消費者對增強產品功能和具有成本效益的日常電子煙產品的需求不斷增長。成年吸菸者的某些群體正在尋求電子煙產品更先進的功能，類似於消費性電子產品產業日益增長的期望，其中個人化和技術創新至關重要。

Simultaneously, as inflation persists in several countries, some other user groups are demanding daily e-vapor products that offer good value for money. To meet these diverse needs, brand manufacturers must possess strong user insights, capabilities, and in-house product development expertise to create tailored solutions for different local markets and different user segments.

同時，由於一些國家的通貨膨脹持續存在，其他一些使用者群體需要物有所值的日常電子煙產品。為了滿足這些多樣化的需求，品牌製造商必須擁有強大的用戶洞察力、能力和內部產品開發專業知識，為不同的本地市場和不同的用戶群打造量身定制的解決方案。

To address these trends comprehensively, we have developed an integrated business model supported by our talented workforce, which empowers our success in various local markets and product categories. This model includes targeted due-to-market strategies, a comprehensive product portfolio, refined supply chain management, and focused user engagement strategies. We have refined this model in China and are now successfully replicating it in international markets, making necessary adjustments based on local conditions.

為了全面應對這些趨勢，我們開發了一個由才華橫溢的員工隊伍支持的綜合業務模式，這使我們能夠在各個當地市場和產品類別中取得成功。該模型包括有針對性的市場策略、全面的產品組合、精細化的供應鏈管理和聚焦的用戶參與策略。我們在中國完善了這個模式，現在正在成功複製到國際市場，並因地制宜進行必要的調整。

Looking ahead, we anticipate that the international e-vapor industry will experience an annual growth rate in the 10s over the next few years, as more adult smokers transition from cigarettes to e-vapor products. Additionally, we expect a growing number of e-vapor users to shift from due users of cigarettes and e-vapor products to exclusive e-vapor use.

展望未來，我們預計，隨著越來越多的成年吸菸者從捲菸轉向電子煙產品，國際電子煙產業在未來幾年將經歷數十年的年增長率。此外，我們預計越來越多的電子煙使用者將從香菸和電子煙產品的正常使用者轉向專門使用電子煙。

Given the increased regulatory activities and rising user demand, we believe that only leading players with an integrated model will succeed. We are confident in our ability to capture incremental market share in international e-vapor markets over the coming years.

鑑於監管活動的增加和用戶需求的不斷增長，我們相信只有擁有整合模式的領先企業才能取得成功。我們對未來幾年在國際電子煙市場佔據增量市場份額的能力充滿信心。

Turning to the latest developments in China, we note that illegal e-vapor products continue to dominate the market. Our internal estimates indicate that these products account for 80% to 90% of the total e-vapor market in China. Generally, illegal products are of subpar quality and fail to meet national product standards, often being non-tobacco flavored. Furthermore, they do not contribute to consumption tax revenues.

談到中國的最新發展，我們注意到非法電子煙產品繼續主導市場。我們的內部估計表明，這些產品佔中國電子煙市場總量的80%至90%。一般來說，非法產品品質較差，不符合國家產品標準，而且通常是非菸草味的。此外，它們不貢獻消費稅收入。

As a compliant and responsible brand, we are actively combating these illicit sales through various initiatives, including targeting illegal sales on social media, delisting illegal zero-nicotine products from e-commerce platforms, and collaborating with authorities to shut down counterfeit production facilities. We remain committed to cooperating with regulators in this effort and appreciate their support.

作為一個合規和負責任的品牌，我們正在透過各種措施積極打擊這些非法銷售，包括打擊社群媒體上的非法銷售、從電子商務平台下架非法零尼古丁產品以及與當局合作關閉假生產設施。我們仍然致力於與監管機構合作，並感謝他們的支持。

While addressing illicit sales, we have also launched a new product series to enhance our competitiveness. This quarter, we introduced the [Feidiao] series, our first compliant disposable product line since the implementation of national standards. We offer two disposable products with e-liquid volumes of 6 mL and 10 mL, designed for adult smokers seeking convenience at a lower entry cost compared to cartridge-based products. Feedback from retailers and users have been overwhelmingly positive, and we plan to extend this launch nationwide.

在解決非法銷售的同時，我們也推出了新產品系列，以增強我們的競爭力。本季度，我們推出了【飛雕】系列，這是國家標準實施以來首個合規的一次性產品線。我們提供兩種煙液容量分別為 6 mL 和 10 mL 的一次性產品，專為尋求便利的成年吸菸者而設計，與煙彈產品相比，入門成本更低。零售商和用戶的回饋非常積極，我們計劃在全國範圍內推廣這項產品。

Finally, I am pleased to announce that our team has successfully passed the certification exam for the Enterprise Intellectual Property Compliance Management System requirements. This certification, which encompasses research and development, production and sales of e-vapor and electronic components, signifies that RLX has established a comprehensive intellectual property management system. This includes trademarks, patents, original designs, and software copyrights, forming a robust framework for technology and brand protection on a global scale.

最後，我很高興地宣布，我們的團隊已順利通過企業智慧財產權合規管理系統要求的認證考試。此認證涵蓋電子煙及電子元件的研發、生產和銷售，標誌著RLX已經建立了完善的智慧財產權管理系統。這包括商標、專利、原創設計和軟體版權，在全球範圍內形成了強大的技術和品牌保護框架。

In conclusion, RLX Technology is well positioned to lead both domestically and internationally in an evolving e-vapor landscape. As regulatory shifts reshape this industry, we are leveraging our integrated model to remain agile, proactive, and focused on developing value to adult smokers worldwide. Moving forward, we will continue to prioritize regulatory compliance, in-house product innovation, and strategic adaptability to navigate compliant environments while meeting rising user expectations and driving sustainable growth for the company.

總之，RLX Technology 在不斷發展的電子煙領域處於領先地位，在國內和國際上處於領先地位。隨著監管變化重塑這個行業，我們正在利用我們的整合模型保持敏捷、主動，並專注於為全球成年吸菸者創造價值。展望未來，我們將繼續優先考慮監管合規性、內部產品創新和策略適應性，以適應合規環境，同時滿足不斷增長的用戶期望並推動公司的可持續成長。

I will now turn the call over to our CFO, Chao Lu, for a detailed financial review.

我現在將把電話轉給我們的財務長呂超，以進行詳細的財務審查。

Thank you, Kate, and hello, everyone. Before I start the detailed discussion of our financials, please note, unless otherwise stated, all the financials I will present today are in RMB terms.

謝謝你，凱特，大家好。在開始詳細討論我們的財務數據之前，請注意，除非另有說明，否則我今天介紹的所有財務數據均以人民幣計價。

Since terminating our non-competition agreement with RELX Inc., in November 2023, we have substantially expanded our international presence, driving top-line growth. Our net revenues grew to RMB756 million in the third quarter of 2024, up 52% year over year from RMB499 million and 21% quarter over quarter from RMB627 million. Both our China and non-China businesses experienced sequential growth this quarter. We anticipate continued revenue growth as we expand into more international markets, capturing incremental market share and benefiting from anticipated category growth.

自 2023 年 11 月終止與 RELX Inc. 的非競爭協議以來，我們大幅擴大了我們的國際業務，推動了營收成長。2024年第三季度，我們的淨收入增至人民幣7.56億元，較去年同期的人民幣4.99億元增長52%，較上季度的人民幣6.27億元增長21%。本季我們的中國和非中國業務均實現環比成長。隨著我們擴展到更多的國際市場，佔領增量市場份額並受益於預期的類別成長，我們預期收入將持續成長。

Turning to profitability, our overall gross profit margin improved to 27.2% in the third quarter of 2024, marking a 3.2-percentage-point increase year over year. This improvement is primarily due to favorable changes in our revenue mix, including both channel and product diversification. On a like-for-like basis, gross profit margins across various revenue streams have also improved year over year.

獲利方面，2024年第三季我們的整體毛利率提高至27.2%，較去年同期成長3.2個百分點。這項改善主要歸功於我們收入結構的有利變化，包括通路和產品多元化。在同類基礎上，各種收入來源的毛利率也逐年提高。

We recorded a total operating loss of RMB11 million this quarter. However, excluding the impact of share-based compensation, we achieved our fourth-quarter sequential consecutive quarter of positive non-GAAP operating profit at RMB82 million, driven by incremental contributions from our international business and effective cost reduction strategies.

本季我們的營業虧損總額為 1,100 萬元。然而，排除股權激勵的影響，在國際業務的增量貢獻和有效的成本削減策略的推動下，我們實現了第四季度連續季度的非公認會計原則營業利潤為人民幣 8,200 萬元。

While our gross profit margin may fluctuate quarterly due to variations in revenue contributions and cost optimization efforts, we expect our overall non-GAAP operating profit margin to improve as we scale our business while maintaining consistent middle and back office support during our regional expansion. Consequently, operating expenses are expected to grow at a slower pace than our top-line growth.

雖然由於收入貢獻和成本優化工作的變化，我們的毛利率可能會出現季度波動，但我們預計，隨著我們擴大業務規模，同時在區域擴張期間保持一致的中後台支持，我們的整體非公認會計原則營業利潤率將會提高。因此，預計營運費用的成長速度將低於我們的收入成長速度。

As a result, our non-GAAP net income for the third quarter of 2024 increased by 30% year over year to RMB262 million. For the same period, our non-GAAP basic net income per ADS was RMB0.211 and non-GAAP diluted net income per ADS was RMB0.200.

因此，我們2024年第三季的非美國通用會計準則淨利潤年增30%至人民幣2.62億元。同期，我們的非 GAAP 基本每股美國存託股淨利為人民幣 0.211 元，非美國通用會計準則稀釋後每股美國存託股淨利為人民幣 0.200 元。

In terms of cash flow, we achieved an operating cash inflow of RMB157 million in the third quarter of 2024, up from RMB83 million in the same quarter of the previous year, driven by enhanced working capital and inventory management. Additionally, we are currently experiencing a negative cash conversion cycle exceeding one month.

現金流方面，在加強營運資金和庫存管理的推動下，2024年第三季我們實現經營現金流入人民幣1.57億元，高於去年同期的人民幣8,300萬元。此外，我們目前正經歷超過一個月的負現金轉換週期。

Our inventory turnover days stood at just 16 days in the third quarter of 2024, a sharp decrease from over 100 days in the first quarter of 2023 and 30 days in the first quarter of 2024, as we continuously optimized slow-moving SKUs while growing our scale.

2024 年第三季度，我們的庫存週轉天數僅為 16 天，較 2023 年第一季的 100 多天和 2024 年第一季的 30 天大幅下降，因為我們不斷優化滯銷 SKU，同時擴大庫存量。規模。

As of September 30, 2024, our total financial assets, including cash and equivalents, restricted cash, and various short-term and long-term deposits and investments, stand at RMB15.4 billion.

截至2024年9月30日，我們的金融資產總額為人民幣154億元，包括現金及等價物、限制性現金以及各種短期和長期存款和投資。

Finally, we are pleased to announce our second cash dividend since our IPO, reaffirming our commitment to delivering added value to our shareholders. Our objective is to return substantially all of our non-GAAP net profits at minimum through share repurchase programs and cash dividends, continuing the practice we have upheld over the past two years. We remain dedicated to generating sustainable, growing profits and enhancing returns for our shareholders.

最後，我們很高興地宣布自首次公開募股以來的第二次現金股息，並重申我們為股東提供增值的承諾。我們的目標是透過股票回購計畫和現金股息，至少返還全部非公認會計準則淨利潤，繼續我們過去兩年所堅持的做法。我們仍然致力於為股東創造可持續的、不斷增長的利潤並提高回報。

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) Lydia Ling, Citi.

（操作員指示）Lydia Ling，花旗銀行。

Hi, management. This is Lydia from Citi. So here, I have two questions regarding your overseas business. So firstly, actually, we see some progress for your overseas business this year, and so congratulations on some progress. So we're keen to actually understand what's your plan for the next year, as we are at year-end, and so very keen to understand what will be your overseas expansion plan for 2025.

嗨，管理層。我是花旗銀行的莉迪亞。那麼在這裡，我有兩個關於你們海外業務的問題。首先，實際上，我們看到你們今年的海外業務取得了一些進展，所以恭喜你們取得了一些進展。因此，我們渴望真正了解你們明年的計劃是什麼，因為我們正值年底，所以我們非常渴望了解你們 2025 年的海外擴張計劃是什麼。

And then my second question would be, what are the countries or regions that you already entered this year? So very interesting to understand that. How will you further drive your organic growth? And also, as Kate just mentioned, you target to gain your market share in the following year. So what will be your strategies to further gain your market share, and what's your target market share looking ahead? And if any, like, your product or marketing strategies and any color on that will be very helpful. Thank you.

那麼我的第二個問題是，你們今年已經進入了哪些國家或地區？理解這一點非常有趣。您將如何進一步推動有機成長？而且，正如凱特剛才提到的，您的目標是在下一年獲得市場份額。那麼，您將採取哪些策略來進一步獲得市場份額，以及您未來的目標市場份額是多少？如果有的話，例如你的產品或行銷策略以及任何顏色都會非常有幫助。謝謝。

Thank you very much, Lydia. So there are two questions: one is about future expansion, and the other one is about the organic growth.

非常感謝你，莉迪亞。所以有兩個問題：一是關於未來的擴張，二是關於有機成長。

First thing is determination of our non-competition agreements last year, -- we have entered into multiple international markets. So this quarter marks the first anniversary of our company entry into global markets outside of China. As of the third quarter of 2024, we operate directly in five countries in East Asia, Southeast Asia, and Oceania.

首先是我們去年確定了非競爭協議——我們已經進入了多個國際市場。因此，本季標誌著我們公司進入中國以外的全球市場一週年。截至2024年第三季度，我們在東亞、東南亞和大洋洲的五個國家直接開展業務。

Based on our internal estimates, we are currently the number one brand in three out of five countries in terms of revenue from the closed system e-vapor category. We are also one of the leading brands in the remaining two countries. We also sell products to affiliates that sell to their overseas distributors. In the third quarter of 2024, non-China business revenue accounted for more than half of our net revenues.

根據我們的內部估計，就封閉系統電子煙類別的收入而言，我們目前在五分之三的國家中排名第一。我們也是其餘兩個國家的領導品牌之一。我們也向聯營公司銷售產品，聯營公司再向海外經銷商銷售產品。2024年第三季度，非中國業務收入占我們淨收入的一半以上。

Looking ahead to 2025, we are considering entering a couple of countries, which could be in EMEA region and Central America. As we mentioned last quarter, we only can enter a country when its regulatory development is stable, our business model is built, and we have the right team in place to operate there. We currently think of a couple of candidates may be ready for entry next year, but this will depend on internal and external factors.

展望 2025 年，我們正在考慮進入幾個國家，其中可能位於歐洲、中東和非洲地區和中美洲。正如我們上個季度提到的，我們只有在監管發展穩定、我們的商業模式已經建立並且擁有合適的團隊在那裡運營的情況下才能進入該國家。我們目前認為一些候選人可能已準備好明年入職，但這將取決於內部和外部因素。

So regarding the organic growth of the countries that we are currently operating in, we mainly focus on two aspects to gain incremental market share: an optimal product development portfolio and the right route-to-market strategies. Together, this creates the right product market fit.

因此，關於我們目前開展業務的國家的有機成長，我們主要關注兩個方面來獲得增量市場份額：最佳的產品開發組合和正確的市場策略。總之，這創造了正確的產品市場契合度。

We deeply analyze the local market environments and user behavior, including new regulatory changes and user preferences in each market. For example, we have a leading market share in one of our markets, but we are currently only strong in small volume cartridge-based e-vapor products and the disposable band will become effective soon there, and user preferences are trending towards large-volume disposable products. Therefore, we have launched large-volume cartridge-based products and advocates for users converse in new channels.

我們深入分析當地市場環境和使用者行為，包括每個市場的新監管變化和使用者偏好。例如，我們在其中一個市場擁有領先的市場份額，但目前我們只在小容量煙彈式電子煙產品上佔據優勢，而一次性手環很快就會在該市場生效，用戶偏好正在向大容量方向發展。因此，我們推出了大容量墨盒型產品，倡導用戶以新的管道進行交談。

Regarding route-to-market strategies, we usually have one to two retail channels in which we excel, such as CVS, vape store channels, or RELX-branded store channels. Each country has a specific development path and reason behind it. In the past couple of quarters, we have been focusing on developing and enhancing retail channels by reaching out to new distributors and retailers.

在市場路徑策略上，我們通常有一到兩個我們擅長的零售管道，例如CVS、電子菸商店通路或悅刻品牌商店通路。每個國家都有特定的發展道路及其背後的原因。在過去的幾個季度中，我們一直致力於透過接觸新的經銷商和零售商來開發和增強零售通路。

With user preferences and market landscape in mind, we may launch a designated product series for these channels. This also shows we have great potential to further increase our market share. The e-vapor category is expected to grow by double digits each year in the next couple of years, and we believe we are on the right track to gain further market share and show growth as the category expands.

考慮到使用者喜好和市場格局，我們可能會針對這些通路推出指定的產品系列。這也顯示我們有進一步擴大市場份額的巨大潛力。電子煙類別預計在未來幾年每年將以兩位數的速度增長，我們相信我們正走在正確的道路上，獲得進一步的市場份額，並隨著該類別的擴大而顯示出增長。

Thank you for your questions.

謝謝您的提問。

Thank you.

謝謝。

Pei Hong Liu, CICC.

劉培宏，中金公司。

Thank you, management. This is Liu Pei Hong at CICC. My questions are about domestic regulation because we have recently noticed several e-cigarette companies being penalized for adding illegal ingredients. So does the management see there has been a change in the domestic regulation or law enforcement? And as Mrs. Wang mentioned in the beginning, the illegal products still count as the dominant part in China, and how do you perceive the future of the illegal market? Thank you.

謝謝你，管理階層。我是中金公司的劉培宏。我的問題是關於國內監管的，因為我們最近注意到幾家電子煙公司因添加非法成分而受到處罰。那麼管理階層是否認為國內監管或執法發生了變化？正如王女士在開頭提到的，非法產品在中國仍然占主導地位，您如何看待非法市場的未來？謝謝。

Thank you very much, Pei Hong, for your question. So according to the news release on the State Tobacco Administrator's official website last week, three brand manufacturers illegally produced e-vapor products that were inconsistent with the solution or product formula previously approved by the regulators. These brand manufacturers have been fined a total of RMB5 million, and one must stop operating for two months.

非常感謝裴宏的提問。根據國家菸草總局官網上週發布的消息稱，3家品牌生產企業違法生產與監管部門先前批准的溶液或產品配方不符的電子煙產品。這些品牌製造商被罰款合計人民幣500萬元，並且須停止經營兩個月。

Some industry participants suspect that these brands' motivation for producing a non-compliant illegal solution is that by increasing components like coolants, they can better attract users and increase their product competitiveness. As a compliant brand, we strongly support the regulatory crackdown on non-compliant e-liquid solutions and regulatory actions against illegal e-vapor products in China. And the overall regulatory framework and action have been consistent over the past two years, and we have consistently collaborated with regulators in combating illegal products now and also in the future.

一些業內人士懷疑，這些品牌生產不合規非法解決方案的動機是透過增加冷卻液等零件，更好地吸引用戶，提高產品競爭力。作為合規品牌，我們強烈支持中國監管機構對不合規電子煙油解決方案的打擊以及針對非法電子煙產品的監管行動。過去兩年來，整體監管框架和行動是一致的，我們現在和未來都將與監管機構持續合作打擊非法產品。

Thank you for your questions.

謝謝您的提問。

Thank you.

謝謝。

Charlie Chen, China Renaissance.

陳查理，華興資本。

Thanks, management, for taking my questions. This is Charlie Chen from China Renaissance. I have two questions here. The first one is regarding the overall consumer market in China. So with this softening consumer sentiment in China, we noticed that Chinese consumers' purchasing behavior has been rather conservative this year. So have you noticed any changes in consumer behavior or competitive landscape in China's e-vaping market this year?

謝謝管理層回答我的問題。我是華興資本的陳查理。我在這裡有兩個問題。第一個是關於中國整體消費市場。因此，隨著中國消費者情緒的疲軟，我們注意到今年中國消費者的購買行為相當保守。那麼您是否注意到今年中國電子煙市場的消費者行為或競爭格局有什麼變化？

And my second question is, interest income has been a substantial part of your earnings in the past couple of years. So with US Federal Reserve starting to take a rate cut and possibly taking more cuts going forward, how do you see your interest income going forward? Thank you.

我的第二個問題是，過去幾年利息收入一直佔你收入的很大一部分。那麼，隨著聯準會開始降息，並可能進一步降息，您如何看待未來的利息收入？謝謝。

Thank you, Charlie, for your questions. So the first one is about the confidence of Chinese consumers, especially the e-vapor markets and the second one is about the US Fed rate cuts.

謝謝你，查理的提問。所以第一個是關於中國消費者尤其是電子煙市場的信心，第二個是關於聯準會降息。

So for the first question, in the last two years, China's e-vapor industry has been deeply affected by illegal products. The number of industry-level retail stores have declined from about 50,000 in the pre-regulatory era to about 10,000 stores. And we estimate the compliance e-vapor category has fallen by 80% to 90% from the pre-regulatory era.

那麼對於第一個問題，近兩年來，中國的電子煙產業深受非法產品的影響。業級零售門市數量從監管前的5萬家左右下降到1萬家左右。我們估計合規電子煙類別較監管前時代下降了 80% 至 90%。

However, since the start of this year, our sales -- number of point of sales and market share have been relatively stable, with some uptake in certain months. Furthermore, the sales proportion among our three cartridge-based product series -- Qingyu, Phantom, and Phantom Plus -- has been stable. These series span the categories low to high price points. This demonstrates that the e-vapor category has not been affected by the economic headwind in the Chinese consumer markets.

然而，今年以來，我們的銷售量——銷售點數量和市場份額都相對穩定，在某些月份有一些增長。此外，清宇、Phantom、Phantom Plus三大墨水匣產品系列的銷售佔比也維持穩定。這些系列涵蓋了從低到高價位的類別。這顯示電子菸品類並未受到中國消費市場經濟逆風的影響。

In the last two quarters, we have launched the Daqian series, a cartridge-based e-vapor product series with a higher e-liquid volume, and the Feidiao series, a high-volume disposable e-vapor product. Users seeking products with good value for money can consider these two new series.

近兩個季度，我們推出了大千系列（煙彈式、煙油量較大的電子煙產品系列）和飛雕系列（大容量一次性電子煙產品）。追求性價比的用戶可以考慮這兩個新系列。

And regarding your second question, as of September 30, 2024, our companies have total financial assets of RMB14.8 billion, or approximately USD2.1 billion. Approximately 70% of this total is USD denominated, and the remaining 30% is Chinese yuan or other currencies.

關於你的第二個問題，截至2024年9月30日，我們公司的金融資產總額為148億元人民幣，約21億美元。其中約70%以美元計價，其餘30%以人民幣或其他貨幣計價。

Although the Fed cut rates in mid-September and early November, short and medium treasury yields began falling in late April and have been going up since mid-September due to the key events in the US. Like other market participants, we have been actively monitoring the money markets and are aware of interest rate movements.

儘管聯準會在9月中旬和11月初降息，但受美國重大事件影響，短期和中期國債殖利率從4月下旬開始下降，並自9月中旬以來一直上升。與其他市場參與者一樣，我們一直在積極監控貨幣市場並了解利率變動。

Given that we have been expecting interest rates to come down since the second quarter, and we have about 50% of our financial assets in long-term vehicles as of the third quarter of 2024, we do not expect any drag on our 2024 interest and investment income due to Fed's recent interest rate cut. Based on the current yield curve, we expect a slight decline in 2025 interest and investment income, but we believe the impact will be relatively minor.

鑑於我們自第二季度以來一直預計利率會下降，並且截至 2024 年第三季度，我們約 50% 的金融資產屬於長期工具，因此我們預計 2024 年的利息不會受到任何拖累美聯儲近期降息帶來的投資收益。根據目前的殖利率曲線，我們預計2025年利息和投資收益將略有下降，但我們認為影響相對較小。

Thank you for your question.

謝謝你的提問。

Thank you, Sam.

謝謝你，山姆。

Yun Guo, CITIC.

郭雲，中信。

Thanks, management, for taking my question. This is Guo Yun from CITIC Securities. My question is about our new products. I want to know how the new product is performing and what are the future product plans? Thank you.

謝謝管理層回答我的問題。我是中信證券的郭雲。我的問題是關於我們的新產品。我想知道新產品的表現如何，未來的產品計畫是什麼？謝謝。

Thanks, Guo Yun, for your questions. So in the China market, we have launched the Daqian and Feidiao series in the second quarter and third quarter, and we will advocate for adult smokers to use these new series instead of illicit e-vapor products or cigarettes.

謝謝郭雲的提問。所以在中國市場，我們在第二季和第三季推出了大千和飛雕系列，我們將倡導成年吸菸者使用這些新系列而不是非法電子煙產品或香菸。

We hope Daqian will become a key player in the Chinese market in the short to medium term. We may also launch special products or series for different occasions subject to regulatory approval and explore products with other functionalities, more advanced materials, and better core components.

我們希望大千能夠在中短期內成為中國市場的主要參與者。經監管部門批准，我們也可能推出針對不同場合的特殊產品或系列，並探索具有其他功能、更先進材料、更好核心部件的產品。

Regarding international markets, we will continue to enhance our comprehensive product portfolio, which will help us craft the right product lineup for various local markets. For instance, we have launched RELX Prime, open-system products with one kit and 16 flavors. They have received positive feedback from users for their minimal e-liquid leakage issues, longer usage time, and affordable prices.

在國際市場方面，我們將繼續增強我們全面的產品組合，這將有助於我們為各個當地市場打造合適的產品陣容。例如，我們推出了RELX Prime，開放式系統產品，一盒16種口味。他們因其最小的煙油洩漏問題、更長的使用時間和實惠的價格而獲得了用戶的積極回饋。

And our new product is RELX Bin, which allows users to enjoy two flavors in one device and switch the mouthpiece to change the flavors. We will continue to innovate new products to cater to different user segments' evolving needs.

而我們的新產品是RELX Bin，它可以讓用戶在一台設備上享受兩種口味，並透過切換吸嘴來改變口味。我們將持續創新新產品，以滿足不同用戶群不斷變化的需求。

Thank you for your questions.

謝謝您的提問。

Thank you.

謝謝。

Due to time constraints, now, I'd like to turn the call back over to the company for closing remarks.

由於時間有限，現在我想把電話轉回公司做總結發言。

Thank you once again for joining us today. If you have further questions, please feel free to contact RLX Technologies' 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 Technologies 的投資者關係團隊。謝謝。

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

電話會議到此結束。現在您可以斷開線路。感謝您的出席。