bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

helpersCheckIsPostiesArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

moreOnThisArticles

urlAlias

commentCount

authorLocations

authors

paywallTypes

corrections

sponsorType

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

socialHeadline

headline

flag

firstTopic

glossary

flattenTypeIds

publishedDate

additionalInfoBoxes

images

image

relatedLinks

relatedNewsletters

__typename

createdDate

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Peggy Sito

The mainland's leading tobacco firm plans to float its tobacco business - a state monopoly - on the domestic stock market to attract fresh capital for expansion.

Yuxi Hongta Tobacco (Group), based in the southwestern province of Yunnan, hopes to use the listing to strengthen its name in China and overseas.

According to the company's vice-chairman and president, Li Zhenguo, 'The preparation work [for the listing] has just started.

'It is still in the preliminary stage'.

He gave no details of the targeted listing time or the amount of capital it plans to raise.

However, a company official confirmed that Hongta had expressed its listing intention to authorities but no approval had yet been received.

'They [the authorities] may be more cautious about the listing as Beijing wants to retain tight control over the cigarette business,' said the company official.

'The industry is highly profitable and Beijing may be concerned that the listing will affect government tax revenues,' he said.

According to Xinhua,   turnover of Hongta amounted to 7.1 billion yuan (about HK$6.72 billion) last year.

The mainland's tobacco industry, with an annual production worth more than 60 billion yuan, contributes tens of billions of yuan in tax revenue to state coffers.

Hongta, which sold more than 33 million cases of tobacco last year -  about 1.65 trillion cigarettes - paid 12 billion yuan in tax, 1.7 per cent of the national budgetary revenue - the highest among taxed firms in the mainland.

The mainland's cigarette business is almost saturated and the company hopes to use the listing to diversify its business.

Hongta has interests in energy, traditional Chinese medicine, information and technology as well as hotel investments which have been estimated by mainland newspapers at almost 12 billion yuan.

The company is investing in a 4,200 megawatt hydro-electric power plant in Lancangjiang at the upper reaches of Meigong River, in Yunnan.

The project - in which Hongta has a 12 per cent stake - is estimated to be worth more than 30 billion yuan.

Mr Li said energy was an important industry with potential as Beijing plans to develop the western region.

The electricity would be for the eastern market, he said.

Hongta has 30 per cent stakes in the first two phases of the power project, which produce 2,500 megawatts of electricity.

The company also spent 800 million yuan on its St Regis Shanghai Hotel which opened last week after three years of planning and construction.

It has a 12 per cent stake in the Huaxia Bank and a minor holding in leading oil company China Petroleum & Chemical Corp (Sinopec), in addition to interests in numerous transport and hotel firms.

Hongta has a majority stake in listed Yunnan Enterprises Holdings, which distributes its cigarette products, including Hongtashan and Ashima, outside China.



Cigarette giant aims to strengthen name on domestic, overseas markets but Beijing fears move will hurt tax revenues