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China Tobacco International listed in Hong Kong, the first day against the trend

Viewers:648     Update Time:2019-06-12     Source:E-cigarette WeChat

  Ecigarette Public message:the legendary China Tobacco International has been listed in Hong Kong under the name:China Tobacco Hong Kong.As the"first share of tobacco"in Hong Kong stocks,China Tobacco Hong Kong rose 9.63%against the trend yesterday.

  

  On the first day of listing in Hong Kong on June 12,China Tobacco rose about 2%on its first day of trading.Then the share price rose all the way up,rising by more than 19%at one point,and finally closed at HK$5.35,up 9.63%,with a turnover of HK$1.088 billion.The latest total market value is HK$3.567 billion.

  

  The result was achieved under pressure from the Hang Seng Index,which fell 1.73%.

  

  China Tobacco had revenues of HK$7.033 billion and a net profit of HK$262 million in 2018,but had only 28 employees in Hong Kong,according to the prospectus.

  

  In other words,China Tobacco Hong Kong earned more than 250 million Hong Kong dollars per capita last year,and its per capita net profit was nearly 10 million yuan.

  

  Monopoly brings competitive advantage.

  

  The first day of listing rose against the trend.

  

  China Tobacco's upward trend in Hong Kong has been traced before listing.

  

  The listing,which is priced at HK$4.88 a share in Hong Kong,is at the high end of the previous offering range of HK$3.88 to HK$4.88,with a net fund-raising of about HK$735 million.

  

  In the previous public offering stage,China Tobacco Hong Kong was 102.04 times oversubscribed.

  

  China Tobacco's Hong Kong dark market opened at HK$5.2 and closed at HK$4.99,up 2.25 per cent from HK$4.88 and earning HK$110 each,according to dark market data from Fortune Securities last night.At today's closing price,there was a profit of HK$470 per hand.

  

  Industry insiders believe that relying on more than 300 million smokers,almost monopolistic business,has a strong bargaining power upstream and downstream,so that China Tobacco Hong Kong has formed a strong competitive advantage.

  

  According to the prospectus,China Tobacco Hong Kong is the designated overseas platform for capital operation and international business development of China Tobacco International.China Tobacco International is a wholly owned subsidiary of China Tobacco Corporation,which undertakes the management and operation of China Tobacco Corporation by organizing the trade of tobacco products and supervising the operation of overseas subsidiaries and the overseas investment of China Tobacco Corporation.

  

  On the other hand,China National Tobacco Corporation is the only entity in China engaged in the production,sale,import and export of tobacco monopoly products in accordance with the state tobacco monopoly system.

  

  Referring to the"competitive advantage"in the prospectus,China Tobacco Hong Kong said:"We are the sole operating entity in the area of business in which we are currently engaged.""We have strong bargaining power with suppliers and customers and sufficient cash flow."

  

  China has the largest number of smokers in the world,with 306 million in 2018,with cigarette sales of 1.4405 trillion yuan,accounting for 44.6 percent of global cigarette consumption,according to Li Yunyi,an analyst at Anxin International.With the continuous increase of disposable income of residents,the consumption of high-end tobacco products has been increasing as the consumption of tobacco products in China has been upgraded and the structure of the tobacco market has been optimized.

  

  China and Thailand International said that subject to the state tobacco monopoly system,only the China National Tobacco Corporation and its directly affiliated companies are currently qualified to monopolize the sale and sale of tobacco in China.Although tobacco control campaigns have been stepped up around the world in recent years,there is an adequate number of smokers,rigid demand in China and a stable monopoly position,with no market competition in the short term.

  

  28 employees earn more than 250 million per capita.

  

  The average annual salary is nearly one million.

  

  At present,China Tobacco Hong Kong has the exclusive right to operate in four major businesses:import of tobacco products,export of cigarettes and export of new

  

  tobacco products.Although the nature of the business is similar to that of the controlling shareholders,because of the separation of geographical location,the business of the company still has the monopoly attribute.

  

  Revenue from China Tobacco Hong Kong between 2016 and 2018 was HK$6.31 billion,HK$7.807 billion and HK$7.033 billion,respectively,and net profit in the past three

  

  years was HK$338 million,HK$348 million and HK$262 million,respectively,according to the prospectus.

  

  Although China Tobacco Hong Kong's total revenue and net profit fell in 2018,it was revealed that this was not the result of operating problems.Among them,the decline

  

  in income is caused by the accounting treatment of related projects in the import and export of tobacco products;The decline in net profit was due to the fact that document 250,which came into effect in 2018,set a minimum price limit for cigarettes,resulting in a reduction in the profit margins of the company's cigarette export business.

  

  Analysts believe that in the future,China Tobacco Hong Kong,which has no competitors,is likely to pick up its performance at a time when the industry is ushering in several advantages.

  

  What is surprising is that last year,China Tobacco Hong Kong,with an annual income of 7.033 billion and a net profit of HK$262 million,had only 28 employees in Hong Kong.

  

  As of the end of 2018,China Tobacco Hong Kong had only 28 employees in Hong Kong,China,according to the prospectus.Among them,5 were senior management,12 were business operations,3 were human resources,1 was securities and investor relations,4 were finance,1 was compliance and risk management,and 2 were strategy and investment.

  

  Based on 2018 revenue and net profit,the 28 employees in China Tobacco Hong Kong generated an average income of HK$250 million and a net profit of nearly

  

  HK$10 million in 2018.The total cost of staff is only about 25.914 million Hong Kong dollars,with an average annual salary of nearly one million Hong Kong dollars.