China Tobacco, buoyed by monopoly in world’s biggest population of smokers, sees stock rise 307 per cent in Hong Kong
- China had 306 million smokers in 2018 and cigarette sales reached 1.44 trillion yuan
- China Tobacco raised HK$813 million from its listing
Shares in China Tobacco International (HK), a unit of state-owned China National Tobacco Corporation, have risen by 307 per cent since their initial public offering in Hong Kong last month, making the stock the best performer among 74 listings in the city this year.
China Tobacco stands out as the sole importer and exporter of tobacco leaves and cigarettes, respectively, in mainland China, the world’s biggest tobacco market.
“China has the world’s biggest population of smokers and that supports a stable and huge market for tobacco-related products,” said Hua Xiaowei, an analyst at CSC Financial. “China Tobacco has a supreme industry position, without any rivals in the business area where it operates. As China’s exclusive importer and exporter, China Tobacco has very strong power over pricing.”
China had 306 million smokers in 2018 and cigarette sales reached 1.44 trillion yuan (US$210 billion), accounting for 45 per cent of the global market, according to market-research firm Frost & Sullivan.
Procuring tobacco leaves from overseas, then selling these to domestic cigarette makers at a margin made up 62 per cent of the company’s revenue last year, according to its sales prospectus.