Excerpt from a wechat public account：印刷企業家（Original by Wang Sanhao）

A long-suspended deal has finally made substantial progress.

On May 20, Li Tuo Holdings, a cigarette pack printing company listed on the Hong Kong Stock Exchange, announced that it intends to sell its 31% stake in Changde Jinpeng Printing Co., Ltd. for 142.5 million yuan.

Changde Jinpeng Printing is a well-known cigarette pack printing enterprise in the circle. Hunan China Tobacco Investment Management Co., Ltd., which is 100% owned by Hunan China Tobacco Industry Co., Ltd., holds 69% of the equity.

Public data show that in 2015, the tax-inclusive income of Changde Jinpeng Printing once reached 2.253 billion yuan, and the fiscal revenue paid reached 311 million yuan, which is quite considerable.

In recent years, the revenue scale of Changde Jinpeng Printing has declined, but with the support of its major shareholder Hunan China Tobacco, it is still a powerful player in the cigarette pack printing circle.

The announcement released by Litu Holdings shows that the company chose to sell its equity due to the decline in operating performance of Changde Jinpeng Printing. It provided relevant data: in 2021, the attributable profit of the associated company (Changde Jinpeng Printing) was approximately HKD 70.1 million; in 2022, it decreased by 97.8% to HKD 1.6 million; in 2023, it turned into an attributable loss of HKD 30.4 million.

In 2023 and 2024, the after-tax net profit of Changde Jinpeng Printing was-88.938 million yuan and 10.415 million yuan respectively.

It seems that the performance of Changde Jinpeng Printing is not optimistic, and the sale seems reasonable.

In fact, in the view of the three good students, the performance of Changde Jinpeng Printing is directly affected by Hunan China Tobacco, and it will improve very quickly.

The deeper reason why Litu Holdings chose to sell its stake in Changde Jinpeng Printing may not be the decline in performance, but the fact that the two parties have no desire to continue their cooperation.

The reason why the three good students called it "a long pending deal" at the beginning is that: as early as December 28,2023, Litu Holdings had announced that it would sign a framework agreement to sell its 31% stake in Changde Jinpeng Printing.

At that time, the operating term of Changde Jinpeng Printing was about to expire at the end of the year, and the intended buyer was Hunan China Tobacco Investment Management Co., LTD., which held 69% of its shares.

For reasons unknown, the framework agreement was eventually terminated and not actually implemented.

Later, the intention of Litu Holdings to sell its equity remained unchanged, and the operating period of Changde Jinpeng Printing was extended several times, but each time it was not very long.

Its latest operating period ends June 30,2025, according to public information.

Like many cigarette pack printing companies, the former Guilian Holdings, now Litu Holdings, has been in a state of adjustment in recent years.

Its former main subsidiary, Shenzhen Kecai Printing, was forced to stop production at the end of 2022 after failing in bidding for business with big customers.

The revenue scale of TNS Holdings is also expected to fall from HK $1.496 billion in 2019 to HK $725 million in 2024.

After the transfer of Changde Jinpeng Printing equity, it is trying to control only one main subsidiary: Bengbu Jinhuangshan Intaglio Printing Co., LTD.

Having said so much, who is it that has accepted 31% of the shares of Changde Jinpeng Printing?

It is: Hunan Caixin Capital Management Co., LTD. (hereinafter referred to as "Caixin Capital"), which was established in 2014.

Cai Xin Capital is 100% controlled by Hunan Cai Xin Investment Holding Group Co., LTD. (hereinafter referred to as "Cai Xin Holding"), which is also controlled by Changde Municipal Finance Bureau. Its other shareholders are also from Changde and Hunan state-owned capital background.

In addition, Hunan China Tobacco, which originally held 69% of the equity, will become a national holding company after the completion of this transaction, just like some previous joint venture cigarette pack printing companies.

With the conclusion of this long pending deal, Changde Jinpeng Printing will also usher in a new stage of development.

With the combined support of new and old shareholders with both tobacco industry and local state-owned background, its future prospects should be worth looking forward to.