Good answer of course inflation eroding debt. |
But all that debt has been deflated by 8% -10% in the past year (and more if the real world rate of inflation was higher than the official figures).So if the average interest cost of the debt is less than inflation, they are quids in holding on to more debt. |
Terry, out in Mauritius. Hardly the UK's answer to Warren who still lives in the same house in Omaha that he bought many years ago.
I can't blame Terry as I'm off to Mauritius for a holiday next Feb. But I'm not a tax exile like him. But then I don't need to be with the piddling amounts I have. |
Interesting on you tube search Terry Smith the uks Warren Buffett they say he's view on tobacco stocks, he's got or had a massive holding Phillip Morris very interesting. |
I agree MCunliffe.The interest rate environment was clearly on an upward trajectory at that stage as it was well sign-posted by the US Federal reserve.They were raising rates and diminishing their balance sheet after years of QE.That was clearly a time for the BATS CFO and board to make some paying down of debt a priority.The BATS share price now is suffering from its debt overhang to a large extent imho. |
I hate to rain on your parade monty but my research of the BB undertaken by BATS between 14th Feb 2022 and 14th Dec 2022 showed the average price ranged between £32 and £35 a share.
Then, when the BB stopped the share price dropped quite quickly.
Now, it was recently posted on another board here on ADVFN that Warren Buffet, whilst not disliking buy backs says they should be treated like buying shares. Buy Low.
Now may well be the time for a BB at BATS but Feb-Dec 2022 clearly wasn't. |
Ex div 21st December for another 57.72p, I think buybacks will return.Then off we go, massive dividend and buybacks soon get us back to 3400p in my opinion, the price we were 11 months ago. |
As long as the next update is satisfactory, I would be happy to see a buy back launch (as long as debt reduction is fully on track still of course).
Current dividend more than adequate IMO. |
With Bats they friendless no one wants, it seems, we got to start buybacks to get back up nearer the 3400p they were 11 months ago.Imperial up 1.8% today on buybacks helping, Bats should be up about that, as long as we finish 2525p another higher low. |
With cash on the sidelines coming back into equities then high yielders seem the natural choice in my opinion.
Plenty to pick from as monty mentioned earlier and I am sure all that money won't gravitate towards US equities / the magnificent 7 either.
Good luck all 👍🏻 |
 With consumers trading down to cheaper brands due to the cost of living pressures i don't think the share price here is going anywhere fast tbh.The trading update in December will reveal if brands like Dunhill,Kent and Lucky Strike have been affected by trading down to other cheaper brands and therefore how impactful it has been to profit margins at BATS as a result.Altria and IMB have reported flat revenues,with increased profitabily and i'm hoping for the same here.Profitability and NGP growth metrics are going to be key in the December report imho.Some buybacks would be a sign of confidence to the market and some debt reduction a bonus.I'm not expecting a dividend increase for 2024.The fall in global stick volumes is a known known so hopefully that's already reflected in the share price at its current level.What we don't want is some 'Diageo'-like event where they suffered big drops in volumes in S.America and it tanked the share price there ie an unexpected left-field event that no one could've predicted. |
Of course with inflation down, I can't believe the number, incredible.FTSE 100 high yielders should now come back into fashion, Bats, Phoenix etc. |
Another ex div 21st Dec, don't you love these quarterly dividends, not spent the last one yet, lol |
Yeah can we get a reaction like the US did today???
I doubt it, even if we do exceed expectation, but I do think a beat will lead to an FT100 boost.
Good luck all 👍🏻 |
Nothing goes up straight line, as long as we have a higher low, at close today, if we can close above or at 2520p bodes well for tomorrow, especially if inflation report down to 6.5% |
Hopefully U.K. next inflation report nice reduction, should boost the Ftse100 high yielding stocks. |
Worldwide T, what are you on about? If BATS has a heavy weighting in the FTSE it would affect the FTSE if it went up or down not the other way round.
A black swan by definition can't be assumed because of anything, if it could it wouldn't be a black swan. A black swan is an unpredictable/unexpected event. |
Bats stake in ITC must be worth around £16 billion, alone. |
That's why 2500p and not 3400p they were 11 months ago, I think all in the price. In the meantime collect another quarter div of 57.72p in the bag, ex dividend 21st December. |
Wall Street Journal: Pretty good run down on the state of the market.
Big Tobacco Can No Longer Name Its Price — Heard on the Street — WSJ
Nov 5, 202301:00 GMT+13
By Carol Ryan
America's cigarette market is in flux, and new smoking habits threaten to singe makers of pricey brands the most.
One of the attractions of investing in tobacco stocks has been cigarette manufacturers' amazing ability to continuously grow their profits through price hikes, even though the industry is in long-term decline. This helps cigarette companies pay generous dividends to their shareholders.
In a potential red flag, though, cigarette profits at Marlboro-maker Altria fell from a year earlier in its latest quarter. The company wasn't able to raise prices enough to offset falling sales. The same thing happened in 2018, when Juul e-cigarettes were rapidly grabbing market share from old-school smokes.
The problem for tobacco companies is that the American cigarette market is shrinking faster than anyone expected. Over the three months through September, the number of sticks sold across the industry fell 8% year-over-year, almost double long-term averages. Smoking trends became less predictable during the pandemic and never settled back to normal.
Something has happened to underlying demand. Altria thinks illegal disposable vapes are now taking customers from cigarette companies. The market for these vapes is booming, growing 20% so far this year according to Barclays estimates. If Altria is right about the trend, better enforcement by the Food and Drug Administration could help to stabilize cigarette volumes.
But the tobacco industry's customer base is also getting older and dwindling as fewer young people take up smoking. Two decades ago, a fifth of U.S. smokers were aged 50 or older. This figure will reach 50% by 2030 according to Vivien Azer, analyst at TD Cowen.
Expensive cigarettes such as Marlboro or Newport, which is made by British American Tobacco, face a double whammy. Smokers have also become much more sensitive to prices as inflation remains sticky, leading to widespread switching to cheaper brands.
The difference between a $5 and $9 pack of cigarettes is partly the quality of the tobacco blend. But smokers of "premium" cigarettes also pay through the nose for branding and posher packaging such as embossed lettering and thick cardboard boxes that feel more luxurious. At a national average of $8.77-a-pack including taxes, Marlboro is now 43% more expensive than cheaper rivals, according to Altria data, compared with 31% five years ago.
This fat price gap is a gift to smaller brands that are grabbing market share. According to Vector Group, whose Montego brand is now the biggest discount cigarette in America, volumes of the cheapest cigarettes rose 15% over the 52 weeks through September, compared with an 11% decline for the priciest smokes. Imperial Brands is also benefiting from smokers trading down. The London-listed company has grown its share of the U.S. cigarette market from 7.7% in late 2018 to 9.2% today, according to Bernstein estimates.
Big tobacco companies are scrambling to hang on to smokers. BAT cut the price of its Lucky Strike cigarettes by 50% in 2021. The strategy appears to be working, as Lucky Strike has grown its share of the U.S. market to 4% from almost nothing in two years, based on Bernstein analysis. BAT is still losing share of the U.S. market overall, however.
Altria won't do anything as dramatic. Thirty years ago, the company cut the cost of Marlboros by 20% as a price gap had opened up between it and cheaper brands. The shock move tanked its share price by more than a quarter and became known as Marlboro Friday.
Marlboro's owner hopes the worst may be over. Altria executives point out that the market share of deep discount cigarettes has been stable for three consecutive quarters. But slowing their march has been expensive. Altria is offering promotions to Marlboro smokers to boost volumes. It also launched a cheaper line of cigarettes, Marlboro Black Gold, which accounts for around one-tenth of the Marlboro franchise overall. These moves help, but at the expense of profits.
Major tobacco companies face a delicate balancing act. They need to squeeze as much income as possible from traditional cigarettes so that they can invest in new smokeless products like heated tobacco sticks or oral nicotine pouches that are increasingly the industry's future.
That task will be much harder so long as cheaper cigarettes and illegal vapes are inhaling their market share.
Write to Carol Ryan at carol.ryan@wsj.com |
Those ugly, very long red day candles usually don't mean anything good. |
Took some more at £24.63. |
Looking at the fundamentals and valuation of BATS and PM, I have to conclude that either BATS is grossly undervalued (assuming PM is fairly valued) or PM is grossly overvalued (assuming BATS is fairly valued)
I assume the former. BATS is extremely undervalued compared to PM.
BATS is an FCF machine with moderate growth tendencies.
Strongly positioned in new categories, second only to PM and leader in vaping.
BATS is more diversified regionally and across products than PM.
BATS' valuation offers plenty of room for improvement.
I would definitely feel more comfortable with BATS than with overvalued US stocks.
If BATS falls by 8-10% in a broad market panic sell-off I will probably buy. 10.5% dividend yield would be too tempting and with a payout ratio of less than 60% on FCF a safe bet.
As they say, if the dividend is higher than the FCF valuation you should be able to assume an attractive valuation.
BATS ... you should keep an eye on it... |
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