Cuộc họp công bố kết quả kinh doanh Quý 2 năm 2026 của RLX Technology: Mở rộng biên lợi nhuận và tăng trưởng tại Châu Âu

Điểm tin chính

• Doanh thu thuần quý 2/2026 tăng 14,8% so với cùng kỳ năm ngoái lên 1,01 tỷ NDT, chủ yếu nhờ tăng trưởng sản lượng tự thân tại thị trường quốc tế và thương vụ thâu tóm vào tháng 5/2025. Các thị trường quốc tế đóng góp khoảng 70% tổng doanh thu thuần.
• Lợi nhuận gộp tăng 47,8% so với cùng kỳ năm ngoái lên 357,8 triệu NDT. Biên lợi nhuận gộp đạt 35,4%, tăng 790 điểm cơ bản so với cùng kỳ năm ngoái và 360 điểm cơ bản so với quý trước, nhờ tối ưu hóa chuỗi cung ứng, hiệu suất sản xuất cao hơn cùng cơ cấu sản phẩm và thị trường thuận lợi.
• Lợi nhuận từ hoạt động kinh doanh phi GAAP tăng 28,8% so với cùng kỳ năm ngoái lên 149,6 triệu NDT, đánh dấu quý thứ 11 liên tiếp RLX Technology đạt lợi nhuận hoạt động phi GAAP dương. Lợi nhuận thuần phi GAAP đạt 238,8 triệu NDT.
• Doanh thu giảm so với quý trước sau khi quý 1 được hưởng lợi từ việc đẩy nhanh tiến độ giao hàng do các điều chỉnh quy định xuất khẩu. Ban lãnh đạo cho biết nhu cầu cơ bản tại các thị trường quốc tế trọng điểm vẫn lành mạnh.
• RLX đã hoàn tất khoản đầu tư nắm quyền kiểm soát vào một nền tảng phân phối tại Tây Âu vào tháng 7/2026. Hoạt động kinh doanh này sẽ được hợp nhất hoàn toàn từ quý 3/2026, làm tăng doanh thu quốc tế báo cáo nhưng làm giảm tỷ lệ biên lợi nhuận gộp của tập đoàn do mảng phân phối có biên lợi nhuận thấp hơn.
• Ban lãnh đạo dự kiến doanh số bán hàng cả năm tại Trung Quốc đại lục sẽ đi ngang so với cùng kỳ năm ngoái, trong khi thương vụ thâu tóm tại Châu Âu dự kiến sẽ mang lại sự tăng trưởng đột phá cho doanh thu thị trường nước ngoài báo cáo trong nửa cuối năm.

Dữ liệu tài chính chính

Kết quả kinh doanh và hoạt động

Mở rộng thị trường quốc tế tiếp tục là động lực tăng trưởng chính của RLX Technology. Ban lãnh đạo cho biết tăng trưởng quý 2 đến từ sản lượng tự thân ở thị trường nước ngoài và đóng góp từ công ty thuốc lá điện tử Châu Âu được thâu tóm vào tháng 5/2025.

Doanh thu giảm so với quý trước do các đợt giao hàng trong quý 1 đã được đẩy sớm trước các điều chỉnh quy định xuất khẩu. RLX cho biết công ty đang ưu tiên doanh số bán lẻ tới người tiêu dùng và mức tồn kho kênh phân phối lành mạnh thay vì đẩy sản lượng có biên lợi nhuận thấp vào các kênh phân phối.

Châu Âu tiếp tục đóng vai trò trung tâm trong chiến lược mở rộng của công ty. Nhà phân phối Tây Âu được thâu tóm vào tháng 7/2026 phục vụ trực tiếp hơn 30.000 điểm bán lẻ và vận hành nền tảng B2B độc quyền kết nối hơn 20.000 thương nhân độc lập. RLX dự định duy trì đây như một sàn thương mại đa thương hiệu mở, đồng thời tận dụng quy mô chuỗi cung ứng và mối quan hệ thương hiệu để giảm chi phí phân phối và cải thiện các điều khoản cung ứng.

RLX cũng đang mở rộng ra ngoài các sản phẩm thuốc lá điện tử. Dòng sản phẩm túi nicotine uống hiện đại của công ty đã được thương mại hóa, với công suất sản xuất bổ sung được quy hoạch tại một trung tâm sản xuất đang xây dựng ở Đông Nam Á. Cơ sở này sẽ hỗ trợ nhiều danh mục sản phẩm, cải thiện vị thế thuế quan và tối ưu hóa logistics. RLX cũng sở hữu các công nghệ thuốc lá nung nóng và các sản phẩm sẵn sàng tung ra thị trường, đang chờ điều kiện thị trường và pháp lý phù hợp.

Kế hoạch định hướng của ban lãnh đạo

Ban lãnh đạo dự kiến việc hợp nhất nền tảng phân phối Tây Âu từ quý 3/2026 sẽ thúc đẩy sự tăng trưởng đột phá cho doanh thu quốc tế báo cáo trong nửa cuối năm. Tăng trưởng tự thân sẽ tiếp tục được quản lý xoay quanh doanh số bán lẻ tới người tiêu dùng và chất lượng tồn kho kênh phân phối.

Biên lợi nhuận gộp được dự báo sẽ trở lại mức mà ban lãnh đạo mô tả là lành mạnh và cân bằng khi cơ cấu sản phẩm và dòng hàng giao chuẩn hóa trở lại. Việc hợp nhất mảng kinh doanh phân phối có biên lợi nhuận thấp hơn sẽ làm giảm tỷ lệ biên lợi nhuận gộp, nhưng ban lãnh đạo kỳ vọng giao dịch này sẽ mở rộng lợi nhuận hoạt động và lợi nhuận thuần tính theo giá trị tuyệt đối.

Đối với Trung Quốc đại lục, ban lãnh đạo dự kiến doanh số cả năm sẽ đi ngang so với cùng kỳ năm ngoái. Dự báo này phản ánh mốc thời gian phê duyệt pháp lý thận trọng hơn mặc dù việc thực thi pháp luật chống lại các sản phẩm thuốc lá điện tử bất hợp pháp đang được thắt chặt.

RLX có kế hoạch phân bổ vốn cho tăng trưởng tự thân, các vụ M&A giúp tăng giá trị và hoàn trả cho cổ đông. Việc mua lại cổ phiếu và trả cổ tức vẫn phụ thuộc vào sự phê duyệt của HĐQT và điều kiện thị trường. Theo ban lãnh đạo, các mục tiêu thâu tóm phải có thời gian thu hồi vốn bằng tiền mặt rõ ràng, không làm pha loãng cổ phiếu về mặt cấu trúc và đóng góp vào sự tăng trưởng EPS.

Rủi ro và các yếu tố cần theo dõi

• Các quy định quốc tế đang trở nên chi tiết và thắt chặt hơn. Ban lãnh đạo đã đề cập đến các quy định tiềm năng tại Anh liên quan đến bao bì đơn giản, thiết bị chuẩn hóa, hạn chế trưng bày bán lẻ, mô tả hương vị và hoạt động của các cửa hàng giao hàng nhanh (dark-store).
• Thương vụ thâu tóm mảng phân phối tại Châu Âu sẽ làm thay đổi cơ cấu doanh thu của RLX và làm giảm tỷ lệ biên lợi nhuận gộp hợp nhất, ngay cả khi ban lãnh đạo kỳ vọng lợi nhuận tuyệt đối sẽ cao hơn.
• Biến động lãi suất và rủi ro tỷ giá hối đoái có thể tạo ra sự dao động do RLX báo cáo tài chính bằng nhân dân tệ trong khi tạo ra doanh thu bằng đô la Mỹ và bảng Anh.
• Xung đột thương mại, thay đổi thuế quan và sự không chắc chắn về địa chính trị vẫn là những yếu tố được cân nhắc đằng sau khoản đầu tư sản xuất tại Đông Nam Á của công ty.
• RLX đang chờ quyết định phê duyệt ứng dụng PMTA từ các công ty liên kết không niêm yết. Công ty chưa có kế hoạch triển khai thương mại quy mô lớn tại Mỹ cho đến khi lộ trình pháp lý và thực thi mang lại tầm nhìn dài hạn rõ ràng hơn.

Tóm tắt phiên hỏi đáp với chuyên gia phân tích

Phân bổ vốn và M&A: RLX sẽ ưu tiên các khoản đầu tư tự thân có tỷ suất sinh lời cao, bao gồm R&D đa danh mục, sản xuất tại Đông Nam Á và ra mắt sản phẩm mới. Công ty cũng sẽ xem xét các thương vụ thâu tóm lớn hơn giúp tăng cường R&D, sản xuất, các thương hiệu sở hữu trí tuệ hoặc năng lực tiếp cận thị trường. Ban lãnh đạo không đặt ra mức trần định giá cố định hay ngưỡng doanh thu.

Tăng trưởng thị trường nước ngoài trong nửa cuối năm: Ban lãnh đạo dự kiến tăng trưởng tự thân duy trì kỷ luật và đóng góp doanh thu báo cáo đáng kể từ việc hợp nhất nền tảng Tây Âu mới thâu tóm bắt đầu từ quý 3/2026.

Cạnh tranh tại Châu Âu: RLX đánh giá việc triển khai đa danh mục trên các sản phẩm thuốc lá điện tử, túi nicotine uống hiện đại và thuốc lá nung nóng ngày càng trở nên quan trọng. Ban lãnh đạo đã nhấn mạnh hiệu quả chuỗi cung ứng, phát triển sản phẩm, mối quan hệ bán lẻ chuyên biệt và khả năng kiểm soát tốt hơn đối với mảng phân phối địa phương là những thế mạnh cạnh tranh của công ty.

Túi nicotine: RLX có kế hoạch kết nối trực tiếp danh mục sản phẩm túi nicotine của mình với mạng lưới phân phối mở rộng và các nền tảng B2B khắp Tây Âu và Bắc Âu sau khi công suất sản xuất mới được nâng cao.

Trung Quốc và Mỹ: Ban lãnh đạo đánh giá cuộc trấn áp các sản phẩm bất hợp pháp của Trung Quốc là tích cực trong dài hạn nhưng dự kiến mốc thời gian phê duyệt sẽ thận trọng trong ngắn hạn. Tại Mỹ, RLX sẽ duy trì phương pháp tiếp cận dựa trên ROI và chờ đợi sự rõ ràng hơn về mặt pháp lý trước khi cam kết nguồn vốn lớn.

Toàn văn Biên bản Cuộc họp Báo cáo Kết quả Kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Hello, ladies and gentlemen. Thank you for standing by for RLX Technology Inc.'s Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded and is expected to last for about 40 minutes.

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

Sam Tsang

Thank you very much. Hello, everyone, and welcome to RLX Technology's Second Quarter 2026 Earnings Conference Call. 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 our IR website at ir.relxtech.com. Participants on today's call include our Chief Executive Officer, Ms. Kate Wang; our Chief Financial Officer, Mr. Chao Lu; and me, Sam Tsang, Head of Capital Markets.

Before we continue, please note that today's discussions will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements typically contain words such as may, will, expect, anticipate, aim, estimate, intend, plan, believe, 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 are factors that are beyond our control.

The company's, its affiliates, advisers and representatives do not undertake any obligation to update these forward-looking information, except as required under the applicable law.

Please note that RXL 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.

For today's call, management will use English as the main language. We will also provide simultaneous interpretation on the Chinese line. Please note that the Chinese line is in listen-only mode and Chinese interpretation is for convenience purposes only. In case of any discrepancy, management statements in the original language will prevail.

I will now turn the call over to Ms. Kate Wang. Please go ahead.

Wang Ying

Thank you, Sam, and thank you all for joining today's call. We delivered solid second quarter financial and operational results, supported by our commitment to quality-driven resilience and compliant global growth.

Our top line grew 14.8% year-over-year in the second quarter, mainly driven by our expanding international footprint. Gross profit increased 47.8% year-over-year to RMB 367.8 million. As expected, revenue and gross profit moderated sequentially, not due to any softening in demand, but rather reflecting a trade inventory normalization following the first quarter's shipment pull forward driven by regulatory export adjustments. Because our distribution partners manage multi-brand portfolios, first quarter pre-stocking temporarily secured visibility into sell-out rates, leading to the shipment adjustments we saw this quarter.

Underlying demand across our key international markets remains healthy and resilient. Against this backdrop, we focused on two strategic priorities: sharpening retail execution and optimizing our global operational infrastructure. These deliberate refinements are designed to lay the foundation for our next era of sustainable, profitable growth. Rather than chasing low-margin volume, we are directing our capital towards building an agile, compliant global platform that can absorb regulatory shifts and quickly adapt to evolving demand.

Regulatory oversight across our international market is becoming more detailed and more restrictive enforced, from customs enforcement priorities to refined frameworks. The United Kingdom is a case in point. Proposed regulations cover plain packaging, standardized device authentic retail display bans, restricted flavor descriptions, and limits on dark store operations.

As an industry leader, we welcome these regulatory shifts. It poses the operational agility required to address them proactively. Engaging these stakeholders to foster high standard sustainable compliance frameworks.

Over the long term, clear and consistently enforced boundaries push out non-compliant, low-quality competition and raise barrier to entry. Our robust compliance infrastructure, R&D, and supply chain enables us to meet those standards early, enhancing our platform's operational predictability and long-term sustainability.

Our hands-on operational experience across international markets has taught us valuable lessons. In mature environments, traditional wholesaling model are no longer sufficient to sustain high-quality margin growth. As hardware technology and product standards stabilize, competition is shifting from pure product development to route-to-market execution.

Direct retail, promise proximity, and channel agility. As such, we are aggressively upgrading our distribution architecture through a targeted mix of direct channel investments, strategic distribution alliance, operational support, and channel innovation, and moving away from reliance on a single rigid distribution model.

In Asia, where our brand equity and consumer trust remains exceptionally strong, we are selectively broadening our footprint through localized commercial entities and proprietary channel models.

In Europe, where barriers to entry are higher, we are expanding through capital-efficient strategic partnerships and equity investments. By combining our world-class supply chain with local distribution leaders, we empower existing trading ecosystems while securing direct sell-out visibility and dedicated retail shelf space, establishing a durable competitive moat.

Europe is the cornerstone of our global growth strategy, where we are methodologically expanding our presence on the dual engine model with balanced targeted M&A with organic growth across channels.

In May 2025, we acquired a long-established European e-vapor company with an integrated local retail and online footprint and have been supporting its expansion as a collaborative partner ever since. Over the past year, this integration has brought us deep localized market insights and demonstrated the immense commercial value of aligning our global supply chain with trusted local operators.

Building on that acquisition, in July 2026, we made a strategic controlling investment in a leading B2B and FMCG physical distribution leaders in Western Europe. This entity has a robust offline footprint, directly serving retail end points across the market.

In B2B digital commerce, its proprietary ordering app connects with over 50% of independent retail points of sales in the country. Our integration philosophy centers on empowerment, not operational disruption. We do not intend to restructure their core operations or convert the platform into an exclusive outlet for our own products. They will remain an open multi-brand marketplace serving the broader retail ecosystem.

By applying our global supply chain scale and portfolio of brand relationships, we are confident that we can reduce these platforms' distribution costs and optimize sourcing terms.

While expanding our distribution reach, we are also accelerating our transformation into a multi-category, next-generation smoke-free product platform, extending beyond our leadership in e-vapor into a broader smoke-free portfolio. We have commercialized our modern oral nicotine pouch line and are steadily ramping up manufacturing capacity and the channel distribution.

In the heat-not-burn category, we hold extensive proprietary technology and patent reserves, as well as the pipeline of market-ready products awaiting optimal market and regulatory conditions for commercial launch.

To support these multi-category expansion and reduce our exposure to trade friction in the macroeconomic and geopolitical uncertainties, we are currently constructing a state-of-the-art manufacturing hub in Southeast Asia. The facility will cover multi-product categories, improve our tariff positions, and streamline logistics, supporting long-term sales resilience across our international markets.

Our mandate is clear: leverage our R&D capabilities, regulatory infrastructure, and newly strengthened route-to-market networks to capture market share and establish leading position across the global smoke-free ecosystem.

To sum up, we made meaningful progress this quarter, executing from a position of balance sheet strength. Our solid capital position gives us flexibility and the patience to say no to suboptimal, marginal, dilutive projects.

We remain financially disciplined, ensuring capital is deployed exclusively towards high-quality, value-accretive assets. By pairing direct channel control with multi-category product innovation, we are building a more resilient, diversified global platform structured to deliver sustainable long-term growth as the industry matures.

Now I will hand the call over to Chao to review our financial results in detail.

Chao Lu

Thank you, Kate, and hello, everyone. We delivered solid second quarter top line results with net revenues reaching RMB 1.01 billion, representing a 14.8% year-over-year increase from RMB 880 million in the prior year period.

Our top line growth was primarily driven by organic volume expansion in international markets, alongside incremental contributions from our acquisition completed in May 2025. For the quarter, international revenues remained our principal growth engine, accounting for approximately 70% of total net revenues.

As anticipated, second quarter net revenues moderated sequentially from first quarter 2026, which benefited from a one-time policy adjustment boost.

Turning to profitability. Gross profit rose 47.8% year-over-year to RMB 357.8 million in the second quarter. Gross margin expanded sequentially to 35.4%, up 790 basis points year-over-year and up 360 basis points sequentially, mainly due to supply chain optimization, manufacturing yield improvement, and favorable geographic and product mix shift.

We delivered our 11th consecutive quarter of positive non-GAAP operating profit, driven by top line expansion, favorable product mix and disciplined operating cost control. Non-GAAP income from operations reached RMB 149.6 million, up 28.8% year-over-year. Non-GAAP net income for the quarter stood at RMB 238.8 million.

Now let me provide additional financial and strategic context regarding the Western European transaction Kate highlighted earlier. In July 2026, we made a controlling investment in one of Western Europe's leading distributors of next-generation smoke-free products and FMCG goods. This entity brings two strategic assets to us, an extensive offline network directly serving over 30,000 retail endpoints across key national accounts and specialized retail, and a proprietary B2B digital commerce platform, connecting over 20,000 independent merchants. We expect to unlock significant operational and supply chain synergies from this transaction.

Furthermore, we are confident we can enhance this platform's margin profile over time by integrating RLX's global supply chain scale and brand portfolio. The entity's financial and operational results will be fully consolidated into RLX Technology's financial statements starting in the third quarter of 2026.

Behind our financial and operational progress is a deep commitment to corporate sustainability and long-term value creation. We published our 2025 ESG report this quarter, highlighting our advancements across corporate governance, product quality and safety, youth access prevention protocols, supply chain labor ethics, and environmental stewardship. From expanding employee welfare initiatives to enforcing ESG compliance across our supplier base, we continue to elevate our standards.

Furthermore, by embedding eco-friendly materials and adhering to responsible marketing practices, we ensure our expansion in both ethical and sustainable. Integrating these ESG principles into our core operations strengthens trust amongst adult consumers, regulators, employees and commercial partners, creating enduring value for all stakeholders.

Our robust balance sheet continues to serve as the bedrock of our global expansion strategy. As of June 30, 2026, our total capital resources, comprising cash, cash equivalent, restricted cash, short-term bank deposits and liquid investment securities stood at RMB 13.9 billion.

In closing, our second quarter performance underscores our operational and financial strength. Supported by this quarter's structural gross margin expansion, disciplined capital allocation and a healthy balance sheet, we are well positioned to strengthen our market leadership and deliver long-term value to our shareholders.

Thank you. Operator, we are now ready to take questions.

Operator

[Operator Instructions] The first question today comes from Christine Peng with UBS.

Phần hỏi đáp

Christine Peng

Thank you, management, for the results summary as well as the strategy outlook. So I have two questions for the management. So the first question is about the capital allocation strategy. Obviously, Mr. Lu just mentioned there is abundant cash resources on the balance sheet. So I was just wondering what's going to be the capital allocation strategy going forward by leveraging on this very strong cash balance.

The second question is about the acquisition strategy, which has become a very important driver of the company's development going forward. So I was wondering what is the criteria in terms of valuation multiple as well as the revenue and profit contribution from the acquisition going forward?

Sam Tsang

Thank you, Christine, for your two questions. So the first question is on the capital allocation strategy. Our capital allocation strategy is financially disciplined and designed to drive sustainable long-term total shareholder returns. We allocate capital across three core priorities. The first one is organic growth and high ROI core business initiatives. This includes funding multi-category R&D, supply chain localization, specifically our manufacturing hubs currently under construction in Southeast Asia and strategic product launches. When regulations and tariff shifts in a given market, we take an ROI-gated approach. Sustainable organic growth remains our primary engine.

Second, we selectively deploy capital into highly accretive M&A. We target assets that boost strategic capabilities across R&D, local manufacturing, proprietary brands, and route-to-market distribution, while meeting clear financial standards.

Third, we remain committed to direct shareholder returns. Our strong cash generation and liquid capital reserves allow us to consistently reserve excess capital for systematic share repurchases and dividend distributions, subject to Board approvals and prevailing market conditions.

Regarding your second question about our M&A criteria, we do not have a specific valuation cap or top line contribution threshold, but we do adhere to strict financial and operational standards.

On valuation, we benchmark targets directly against transaction comparables and our own public trading multiple. Every potential transaction must have a clear time line for a cash payback, be structurally non-dilutive and generate EPS accretion.

In terms of execution, we actively empower our investing company by providing capital support, supply chain integration, procurement optimization, and operational capabilities to unlock structural value. While we prioritize strategic fit and synergy potential across arbitrary size stores, our fitness operational bandwidth means we intentionally focus on larger-scale opportunities that can move the financial needle and meaningfully enhance our global infrastructure.

In summary, we deploy capital only where discipline -- where valuation discipline and clear strategic synergies full align. Thank you very much for your questions.

Operator

The next question comes from Lydia Ling with Citi.

Lydia Ling

Management, this is Lydia from Citi. I also have two questions. So first one is on what's your expectation on the overseas growth in the second half of the year and especially considering the -- both from the acquisition as well as the organic growth in the overseas market?

And my second question is on the margin side and what's your outlook for the second half, especially like considering the acquisition impact on your operation or profitability?

Sam Tsang

Thank you very much, Lydia, for your questions regarding our growth outlook and margin expectations. So regarding our growth outlook for the second half of the year, we are taking a quality focused pragmatic approach to driving international growth.

On organic performance, we are prioritizing retail sell-through velocity and channel inventory health rather than pushing volume into channels at any cost. This prudent recalibration established a solid, sustainable baseline for our ongoing operations.

In addition to our organic baseline, the financial consolidation of our newly acquired Western Europe distribution platform starting in the third quarter will deliver a step change increase in reported international revenue growth for the second half.

Beyond the immediate top line expansion, we anticipate compounding commercial synergies across medium to long term. While our organic growth rates reflects disciplined inventory management, the consolidation of our European platform, combined with operational synergies, gives us full confidence in delivering strong overall overseas performance in the second half.

Regarding our margin trajectory, the gross margin expansion observed in the second quarter was primarily driven by temporary product and revenue mix shift. As our product mix and shipment flows normalize in the second quarter, we expect gross margin to settle back a healthy balanced range.

While non-operating factors such as macroeconomic interest rate movements and foreign exchange dynamics from reporting in renminbi, while generating revenue in U.S. dollars and sterling may create minor headline fluctuations, we maintain strict operational cost controls.

Regarding our European acquisition, as we mentioned earlier, starting in the third quarter, we will consolidate the Western Europe downstream distribution platform. Distribution businesses naturally operates on a lower percentage gross margin profile than proprietary brand operations. Consequently, while percentage margins will reflect this structural mix shift on an absolute dollar basis, this transaction will meaningfully expand our operating profit and net profit scale. Thank you for your questions.

Operator

The next question comes from Yun Guo with Citic.

Yun Guo

Management, I also have two questions. And the first question is about the U.S. market. British American Tobacco is preparing to sell flavored e-cigarettes in the U.S. starting in the fourth quarter. What is our forward strategy for the U.S. market?

And the second question is about the domestic market. With the regulations on the illegal e-cigarettes becoming increasingly strict in China, what is the impact on the company?

Sam Tsang

Thank you for all your questions. One is on the U.S. market and the other one is on the China market. So for the U.S. market, we closely monitor U.S. regulatory developments and peers' action regarding PMTA enforcement. While adult smoker demand for diverse alternative proceeds, regulatory compliance and visibility remain the critical determinants for long-term commercial commitments in the U.S.

Our strategic stance towards the U.S. market is disciplined, agile, and strictly ROI-driven. Notably, our non-listed affiliates previously submitted PMTA applications, which are currently in advanced stages, awaiting regulatory approvals.

However, we will not commit large-scale capital growth to aggressively commercial rollouts until regulatory pathway and enforcement standards provide long-term credibility. In the interim, we are directing our capital and management bandwidth towards regulatory transparent markets across Europe and Asia, alongside scalable reduced risk categories such as modern oral nicotine pouches.

Regarding your question on the Mainland China markets, we view the tightening domestic regulatory environment and crack down on illegal non-compliant products as an overwhelming positive long-term development for the industry and for our company as well.

Eliminating illicit trade restores order to retail channels, removes bad actors and redirect consumer demand back to legal tax-paying brands like us. In the near term, as regulatory bodies intensify enforcement and refine administrative oversight, procedural time line for government approval has become more conservative.

Accordingly, we have adopted a prudent baseline in our internal forecasting and expect Mainland China sales for the full year to be broadly flat year-over-year. We remain in full compliance and continue to work closely with the regulators to support a transparent, legally compliant industry ecosystem. Thank you for your questions.

Operator

The next question comes from Zoe Zou with CICC.

Yuying Zou

Management, this is Zoe from CICC. I have two questions. First, with Philip Morris' growth rapidly in Europe, how do you see competition evolving ahead?

Secondly, could you walk us through the strategic plan for new categories like oral pouch?

Sam Tsang

Sure. Thanks Zoe, for your questions. So one is on the European market competition and the second one is on the oral nicotine pouches.

So for the first one, while we do not directly comment on our peers, multi-category execution across vaping, modern oral, and heat-not-burn tobacco products has clearly become mandatory for all major industry participants. While legacy tobacco companies have the capital to pay for key account listing fees, RLX holds distinct competitive advantages.

First, we are a pure-play non-cigarette business, meaning we are fully committed to harm reduction and replace combustible cigarettes without any internal channel conflict.

Second, we possess strong supply chain efficiency and product innovation capabilities, which combined with our deep relationships in specialty vape retail, position us to expand further into large chain channels.

Furthermore, through our strategic investments, we are actively strengthening our route-to-market and shelf space control. Combining our agile supply chain with direct control of local distribution gives us strong confidence in capturing market share across Europe.

So regarding our plans of the nicotine pouches, we think that modern oral nicotine pouches represents a principal growth driver in our business expansion. We have embedded specialized pouch production lines into our manufacturing hub currently under construction in Southeast Asia.

Once construction is complete and production ramp-ups, this facility will ensure supply chain resilience, scale and cost efficiency. Upon scaling, we will plug our oral pouch line directly into our strengthened European distribution architect, giving immediate access to retail point of sales and B2B platforms across Western and Northern Europe. Supported by a dedicated internal team, we are leveraging our proprietary R&D capabilities to continuously optimize product attributes. We are confident that our modern oral pouches will become a meaningful contributor to revenue and profits in the future. Thank you very much for your questions.

Operator

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

Sam Tsang

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

Operator

This concludes this conference call. You may now disconnect your lines. Thank you.