China Tobacco Corp plans IPO for international unit
By Frank Prenesti
Date: Wednesday 02 Jan 2019
(Sharecast News) - The world's biggest cigarette manufacturer plans to list its international subsidiary on the Hong Kong stock exchange, according to filing documents.
China Tobacco International (CTI), a unit of China National Tobacco Corp, reported revenue of HK$5.1bn (£517m) for the nine months to September 30, pre-listing documents issued on Wednesday stated.
The company also warned that the US-China trade dispute would result in a "significant decline" in 2019 revenues in its tobacco leaf import business.
"Similar to Brazil and Argentina, the United States is one of our principal sources of tobacco leaf products, accounting for 29.2%, 34.8%, 24.0%, 28.8% and 33.5% of our total revenue for the tobacco leaf products import business for the years ended 31 December 2015, 2016 and 2017 and the nine months ended 30 September 2017 and 2018, respectively," CTI said.
It added that US tobacco leaf imports had been hit by the 25% retaliatory tariff imposed by the Chinese government in response to the same move by US President Donald Trump.
"We typically place orders for tobacco leaf products in the preceding year of delivery. Since the recent imposition of the tariff, we have not procured tobacco leaf products from the U.S," CTI said.
"As a result, our revenue from the tobacco leaf products import business is expected to experience a significant decline in 2019 as compared with that of 2018."
CTI gets most of its revenue primarily from a fixed 6% markup on overseas tobacco leaf supply sold to domestic cigarette manufacturers.
It also has full control of cigarette exports sold primarily in duty-free locations overseas to Chinese tourists in Thailand, Singapore, Hong Kong and Macau.
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