China Tobacco unit plans listing in HK

Source: Xinhua | 2019-01-03

The international wing of the world’s largest cigarette maker — China’s state tobacco monopoly — plans to list on the Hong Kong stock exchange, filing documents showed yesterday.

The unit seeking listing only accounts for a fraction of the China National Tobacco Corporation, a hugely profitable state-run behemoth that has a monopoly on tobacco inside the world’s most populous nation.

China National Tobacco buys leaf from overseas markets such as Brazil and the United States and then sells it to domestic cigarette manufacturers at a 6 percent mark-up.

It also has a monopoly on all tobacco exports from China, a fairly limited market largely catering to Chinese tourists in duty-free outlets across Asia.

China National Tobacco does not publish data on its accounts but Bloomberg News said a rare release of financial data in 2012 suggested it earned profits on par with huge businesses like HSBC or Walmart.

The international subsidiary planning to list — China Tobacco International — is a much smaller fish, recording revenue of HK$5.1 billion (US$651 million) for the nine months ended September, according to documents filed with the Hong Kong stock exchange.

The listing comes at a time of growing global pressure, including inside China, to curb smoking.

Tobacco kills almost 7 million people yearly and accounts for about one-in-10 deaths worldwide — a million in China alone, according to the World Health Organization.

Although the percentage of adults who smoke has dropped in rich nations and plateaued in some emerging ones, the total number of smokers keeps climbing, driven by an expanding global population and more people in poor countries lighting up.