An overseas unit of a cigarette monopoly in China for its IPO in Hong Kong

By Julia Fioretti

HONG KONG (Reuters) – China Tobacco International, an overseas affiliate of China 's tobacco monopoly and the world' s largest tobacco producer, has filed an initial public offering in Hong Kong.

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The list will generate about 100 million dollars (78.6 million pounds sterling) for the unit, which represents a fraction of the global activities of the parent company, China National Tobacco Corp., said a person familiar with the Case, which refused to be identified because this information was confidential.

The unit mainly buys tobacco leaf products from countries such as Brazil and the United States and sells them to Chinese manufacturers. She also exclusively operates the cigarette export business in China, with sales in duty-free outlets in countries such as Thailand and Singapore, says her prospectus project.

Its parent company, better known as China Tobacco, sells 98% of all tobacco consumed in China and made sales of 1.1 trillion yuan (126.2 billion pounds sterling) in China. 2017, accounting for between 7% and 11% of the country's tax revenue.

This list comes as authorities attempt to tighten tobacco regulation in a country of 1.4 billion people where about 300 million people smoke. However, China Tobacco's opposition has progressively progressed, a senior national tobacco control official told Reuters.

Increases in taxes, public smoking bans, and tougher advertising rules have contributed to the drop in sales of China Tobacco in 2015 and 2016. Sales have only increased slightly in the last two years years.

China Tobacco International has announced its intention to use IPO proceeds to purchase tobacco operating entities, cigarette brands or tobacco product brands. It also aims to expand sales channels in markets such as Southeast Asia through new marketing campaigns.

The prospectus indicated that the profit per unit amounted to 222.3 million HK dollars (22.3 million pounds sterling) in January-September, for a turnover down by 21%. compared with the same period last year HK 5.1 billion.

The company did not immediately respond to requests for phone comments.

CICC and China Merchants Securities are co-sponsors of the IPO.

(Report by Julia Fioretti, additional report by Julie Zhu in HONG KONG and Adam Jourdan in SHANGHAI, edited by Christopher Cushing)