Capital Calls: China chokes its vaping startups

Smoore International Holdings

23/03/2021 05:20

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are their own. Refiles to add link.)
    HONG KONG, March 23 (Reuters Breakingviews) - Concise
insights on global finance in the Covid-19 era.
 
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COUGHING IT UP. Just two months after electronic-cigarette maker
Rlx Technology's  RLX.N  $1.4 billion debut in New York, Beijing
has quite predictably  urn:newsml:reuters.com:*:nL4N2K10KN cracked down further on
vaping. Having banned e-cigarettes' online sales in 2019, on
Monday the Ministry of Industry and Information Technology
proposed to govern the industry similarly to the tightly
state-controlled tobacco sector  urn:newsml:reuters.com:*:nL1N2LK0IQ, citing unspecified
"new problems" in current regulations. That could mean special
licensing requirements and much higher taxes of up to 65%,
instead of the 13% value-added rate companies currently pay. 
    That might ease some fiscal stress amid Covid-19, but it
could also put companies out of business. The news wiped $14
billion off Rlx’s market value overnight, halving its
capitalisation. Rival Smoore's  6969.HK  Hong Kong-traded stocks
plunged 27% on Tuesday. Given the lack of details, it’s possible
markets have overreacted, but Rlx still trades at 81 times
forecast earnings even after news. This could be bad for
investor health. (By Yawen Chen)

    Earlier in Capital Calls:
    
    Happiness survives the crisis urn:newsml:reuters.com:*:nL4N2LK3NE
    Black’s stamp lingers beyond Apollo  urn:newsml:reuters.com:*:nL1N2LK19L
    Deliveroo orders up fat valuation  urn:newsml:reuters.com:*:nL1N2LK0AX 
    Tata Motors hits leadership pothole  urn:newsml:reuters.com:*:nL4N2LK0L1
    Sabadell plays bank M&A spoilsport  urn:newsml:reuters.com:*:nL4N2LH2O6
    
         
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 (Editing by Pete Sweeney and Katrina Hamlin)