China Tobacco International Reports Solid FY2025 Growth as Leaf Trading Drives Performance
China Tobacco International (HK) Company Limited reported solid financial results for fiscal year 2025, supported by stronger tobacco leaf trading activity and improved profitability. The company, which serves as the international arm of China National Tobacco Corporation, plays a central role in sourcing tobacco leaf for China’s domestic market and distributing Chinese tobacco products overseas.
Total revenue for FY2025 reached HK$14.58 billion, representing an 11.5% year-on-year increase. Operating income rose to HK$1.46 billion, up 8.8% compared with the previous year. The company’s net profit attributable to shareholders increased 14.8% to HK$980 million, while earnings per share rose to HK$1.42, compared with HK$1.23 in FY2024. The improvement in net income outpaced revenue growth, helped in part by a 21% decline in financing costs, which supported bottom-line profitability.
The company’s performance continues to be driven primarily by its tobacco leaf import business, which remains the largest segment by a wide margin. This segment generated HK$9.54 billion in revenue during the year and HK$772 million in gross profit, accounting for roughly two-thirds of total company revenue. Through this business line, China Tobacco International sources tobacco leaf from global suppliers and sells it to cigarette manufacturers in mainland China. Demand from the domestic Chinese tobacco industry remained strong during the year, supporting higher procurement volumes and revenue growth.
The tobacco leaf export segment also recorded growth in FY2025. Revenue increased to HK$2.48 billion, up from HK$2.06 billion in FY2024, while gross profit reached HK$157 million. The company exports tobacco leaf to a range of markets, including Southeast Asia as well as Hong Kong, Macau, and Taiwan. Growth in this segment reflects expanding demand from international manufacturers for Chinese leaf as well as improved shipment volumes.
The cigarette export business delivered stable results during the year. Revenue from this segment reached HK$1.67 billion, generating HK$381 million in gross profit. China Tobacco International exports cigarettes manufactured by China National Tobacco Corporation to designated international markets where it holds distribution rights. While growth in this segment was relatively modest compared with the leaf trading businesses, it continues to provide a steady source of earnings for the company.
In contrast, the new-type tobacco products export segment experienced a notable decline in FY2025. Revenue fell to HK$64 million, down sharply from HK$135 million in the previous year. Gross profit was only HK$3.4 million, indicating significantly weaker demand for the company’s next-generation tobacco products, such as heated tobacco devices and related products, in overseas markets.
The company’s Brazil operations also recorded lower revenue during the year. The Brazil segment generated HK$829 million in revenue, compared with HK$1.05 billion in FY2024, although it still produced HK$160 million in gross profit. This segment oversees tobacco leaf procurement, processing, and export activities from Brazil, one of the world’s largest tobacco-growing regions. The decline in revenue largely reflects lower shipment volumes from the Brazilian supply chain during the year.
From a geographic perspective, the company’s revenue remains heavily concentrated in Asia and mainland China. Sales to mainland China totaled HK$10.95 billion, reflecting the importance of the leaf import business that supplies China’s domestic cigarette industry. Outside China, Indonesia was the company’s largest export market with HK$1.82 billion in revenue, followed by Brazil with HK$515 million, Vietnam with HK$370 million, and Hong Kong with HK$334 million.
Overall, the FY2025 results highlight the central role of tobacco leaf trading in China Tobacco International’s business model. The company functions primarily as a global procurement and distribution platform supporting China’s state-controlled tobacco industry, rather than as a conventional consumer-facing tobacco manufacturer. Strong demand from China’s cigarette producers continued to drive the company’s revenue growth, while improved cost management and lower financing expenses helped boost profitability.
Looking ahead, the company’s performance will likely remain closely tied to global tobacco leaf supply conditions and the procurement needs of the Chinese tobacco industry. While traditional leaf trading and cigarette exports continue to generate stable earnings, the decline in new-type tobacco product exports suggests that China Tobacco International still faces challenges in expanding its presence in emerging nicotine product categories outside China.
Valuation: Following a 40% share price surge over the last 12 months, China Tobacco International trades at 27x FY25 EPS.
