China National Tobacco, the world’s largest cigarette maker, plans Hong Kong IPO for international unit
- China Tobacco International’s parent accounts for 40 per cent of global cigarette production
- Company derives revenue primarily from a fixed mark-up of 6 per cent on overseas tobacco leaf supplies to domestic cigarette manufacturers
China National Tobacco, a state monopoly that is by far the biggest cigarette maker in the world, plans to list its international unit on the Hong Kong stock exchange even as pressure increases on the government to curb smoking.
The unit, China Tobacco International, is primarily responsible for procuring overseas tobacco leaf from countries like Brazil and Canada for the cigarette giant, which churns out four of every 10 sticks made in the world.
The parent company may clock more profit than either HSBC Holdings or Walmart, according to a rare glimpse of financial data in 2012.
The international unit accounts for a tiny portion of China Tobacco’s overall business, which has a bigger market share than the next five global tobacco companies combined.
However, the listing represents a rare opening up of the state monopoly that is facing growing domestic concerns over China’s high rates of cancer and smoking-related disease.
China is the largest tobacco-consuming and manufacturing country in the world, and critics contend the government is not doing enough to prevent the spread of smoking because of the tax revenue it derives from the industry.
