The share price of China Tobacco Hong Kong has soared more than 300% since listing
Public information shows that China Tobacco Hong Kong is the designated overseas platform for China Tobacco International to be responsible for capital market operation and international business development, while China Tobacco International is a wholly-owned subsidiary of China Tobacco Corporation, responsible for the management and operation of China Tobacco Corporation’s international business, and China Tobacco Corporation (CNTC) group is the only one in China to engage in tobacco monopoly products according to the national tobacco monopoly system Entities engaged in production, sales and import and export business.
And China Tobacco is the most profitable company in China.
In 2018, China Tobacco achieved a total tax profit of 1155.62 billion yuan, almost 19 times that of Alibaba, 15 times that of Tencent and 4 times that of ICBC in the same period. Even in the world, it’s hard for any company to catch up. After all, Apple, the iPhone manufacturer everyone loves to use, has only a third of the profits of China tobacco.
China Tobacco Hong Kong and China Tobacco are in the same line, which is the grandson of the former. China Tobacco International holds shares of China Tobacco Hong Kong through Tianli international, a wholly-owned subsidiary of China tobacco. On August 16, Tianli international changed its name to China Tobacco International Group Co., Ltd., but it did not involve any change in the equity ratio. The controlling shareholder still holds 72.29% of the equity of China Tobacco Hong Kong (after the implementation of the over allotment equity).
On June 12 this year, China Tobacco Hong Kong was listed on the main board of the Hong Kong stock exchange, becoming the “first tobacco stock” of Hong Kong stock market. As of September 30, the share price closed at HK $20.0, more than 300% higher than the issue price of HK $4.88, and even reached 484% at the peak, becoming the new stock with the highest increase in the first half of Hong Kong market. As of today’s close, the share price has soared 307.79% in the past five months since its listing.
It is worth noting that, according to the prospectus, as of the end of 2018, China Tobacco Hong Kong had only 28 employees in Hong Kong, including 5 senior managers. The total cost of employees is about 25.914 million Hong Kong dollars, and the average annual salary is nearly one million Hong Kong dollars. In terms of operating revenue of HK $7.033 billion, the per capita operating revenue is more than HK $250 million.
On August 26, China Tobacco Hong Kong announced its first mid-term results after listing. In the first half of the year, its revenue decreased by 2.9% to HK $3.931 billion year on year; its gross profit decreased by 24.12% to HK $185 million year on year; its profit attributable to equity holders decreased by 29.6% to HK $130 million.
China Tobacco Hong Kong may benefit from the coming of e-cigarette national standard
On September 20, Wal Mart announced that all stores in the United States would stop selling e-cigarettes. The EU also promised to complete the scientific review of e-cigarettes by 2021, providing a new basis for updating the current measures. India has taken a tougher approach, with the government saying it will issue a law banning the production, import and export, sales and advertising of e-cigarettes.
At present, electronic cigarettes have been banned in Japan, Canada, Singapore, New Zealand, Thailand, Brazil and other countries or regions. China is the place of invention and main production of e-cigarettes. More than 90% of the world’s e-cigarettes are produced in China, but China’s regulation of e-cigarettes is still blank.