Source: Daily Economic News
China has the largest number of smokers in the world. According to the consultancy Frost & Sullivan, in 2017, the number of Chinese smokers was 306 million.
With the increase in per capita disposable income of Chinese residents over the past few decades, China's tobacco products have been upgraded, and domestic sales of high-end cigarettes have risen from 133.5 billion in 2016 to 145 billion in 2017. This also makes China National Tobacco Corporation the "most profitable" company in China.
Recently, the tobacco industry has heard big news! The Hong Kong Stock Exchange announced that China Tobacco International (Hong Kong), a wholly-owned subsidiary of China Tobacco, plans to list in Hong Kong stocks.
A subsidiary's annual net profit exceeds 300 million yuan
According to the prospectus disclosed by the Hong Kong Stock Exchange, China Tobacco International (Hong Kong) was established in 2004 and is the designated overseas platform for China Tobacco International to be responsible for capital operation and international business development.
China Tobacco International is a wholly-owned subsidiary of China National Tobacco Corporation. It undertakes the management and operation of China National Tobacco Corporation by organizing trade in tobacco industry and regulating the operation of overseas subsidiaries and overseas investment of China National Tobacco Corporation.
Specifically, China Tobacco International (Hong Kong) mainly operates the following four businesses:
The first is the import of tobacco products. The company purchases tobacco products from all over the world (such as Brazil, the United States, Argentina, etc.) and eventually resells them to Chinese tobacco manufacturers;
The second is the export of tobacco products. The company exclusively sells tobacco products to Indonesia, Thailand, Singapore and other countries and regions;
The third is cigarette export. The company exclusively exports Chinese brand cigarettes to duty-free shops and cigarette wholesalers, among which Yuxi, Yunyan, Hongtashan, Zhonghua and Liqun are the main brands;
The fourth is the export of new tobacco products, such as heating and not burning tobacco products.
From 2015 to 2017, China Tobacco International (Hong Kong) received 7.619 billion ports, 6.31 billion ports and 7.807 billion ports respectively. The net profit for the same period reached 391 million ports, 338 million ports and 348 million ports (305 million yuan).
Flush data shows that China Tobacco International (Hong Kong) ranks around 1,100 in A-shares with an annual net profit of 305 million yuan.
The tobacco leaf products imported from China are mainly high-end tobacco leaves. Cigarette manufacturers usually mix domestically grown tobacco leaves with imported tobacco leaves to make high-end cigarettes to enhance the taste.
According to the sales data of China Tobacco International (Hong Kong), in the first nine months of 2018, the proportion of cigarette exports (according to sales), China, Liqun and Yuxi ranked top, accounting for 38.2% of total cigarette revenue respectively. , 9.7% and 8.4%.
The China National Tobacco International (Hong Kong) landed in the capital market and wanted to finance the expansion of sales channels in major target markets such as Southeast Asia and strategic cooperation with other international cigarette companies.
Global smokers are gradually decreasing
In China, tobacco has a monopoly system. According to the data, at present, the total number of employees in the national tobacco industry is 550,000; there are 58 directly affiliated institutions; 446 prefecture-level bureaus (companies) and 2283 county-level bureaus (marketing departments); cigarette industrial enterprises and hood manufacturers 105, 56 tobacco re-baking enterprises, 140 other units and enterprises.
Although China National Tobacco Corporation is said to be China's "most profitable" company, it still has a certain gap with its international counterparts. In 2017, four multinational tobacco companies, Philip Morris International, British American Tobacco, Japan Tobacco and Imperial Brands, continued to monopolize approximately 70% of the global cigarette market outside China.
In 2017, the four tobacco giants earned 78 billion US dollars, 73.57 billion US dollars, 64.97 billion US dollars and 38.32 billion US dollars respectively. The total tax revenue reached 55.69 billion US dollars, 56.06 billion US dollars, 50.89 billion US dollars and 21.85 billion US dollars respectively.
Along with the continuous advancement of tobacco control work in various countries around the world, consumers' health awareness has continued to increase, cigarette sales have declined slowly worldwide, and the new tobacco product market has grown rapidly. It is expected that in the next few years, new tobacco products will surpass cigars, self-rolled tobacco, and cigarettes, making it the second largest tobacco product after cigarettes.
China Tobacco International (Hong Kong) said in the risk warning that the global demand for tobacco leaf products has dropped from 13.6 billion US dollars in 2013 to 11.5 billion US dollars in 2017, and is expected to further drop to 10.6 billion US dollars by 2022. At the same time, the number of smokers worldwide has decreased from 1114.3 million in 2000 to 1114 million in 2015, and global smokers are expected to drop further to 1095 million by 2025.
Based on the above news, although China National Tobacco Corporation is known as China's most profitable company, its subsidiary's annual net profit exceeds 300 million yuan. However, from the perspective of global megatrends, as consumer health awareness continues to increase, cigarette sales are slowly declining, and China Tobacco International (Hong Kong) is listed. It is not excluded that there is a possibility to consider this trend.
Editor in charge: Ge Hongyan
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