MCunliffe1, I take the point on buybacks. Many (most?) companies do it poorly. I can't comment on ABRDN, but with BATS on such a low multiple I can't see it being a mistake to do so. I'd expect the dividend to be maintained.
Reverse ITC takeover is something I've herd mentioned a couple of times. Interesting Idea.
All the best,
0x3F
PS Good detective work. 63 is an ASCII code... |
Hope1815: thanks, a considered explanation.
I had seen that the holding in ITC drops each year - due to the employee incentive scheme at ITC.
It's ironic really, I'm only holding BATS because of the dividend yield and the fact that it's paid quarterly helps. Perhaps BATS will have a similar view of their (albeit diminishing) large divi. paying investment. |
Thanks Number 63 - I do now know what aggresive means.
Using most of the free cash for the BB. Perhaps at the expense of the dividend? Or alongside the dividend?
ABRDN went through a BB, about 15% of the shares were bought back. The share price failed to move and the resulting cap. of the company caused it to drop from FTSE-100 to FTSE-250. It also reduced the number of the shares that a predator would need to buy to gain a control.
Same may work for BATS if the BB is aggresive enough. Perhaps ITC will reverse takeover.
See, 63, I thought want I wanted. :-) |
 I did some research on ITC 78% of its revenue is from Tobacco within India (Growth of the Population is set to rise in the coming years and then flatten). ITC is going to float part of the Business and BATS will hold 17/19% which they want to sell.
The projection of ITC as a company is set to grow if forecasts are correct. In the meantime, Bats has lowered the Debt, controlled costs, maintained Revenue, and looking to expand its product line.
The only time to offload ITC is if someone else wants BATS shares. There seem a few suitors in India for that. I would think Bats will hold ITC for now and see how it progresses. It is always best to sell an asset when your asset has appreciated to the point that it might even be overvalued, selling can be a good way to realize other avenues of investment. Bats shares in ITC stand at 29.02% which each passing year will reduce.
British American Tobacco with no debt does seem appealing with constant Revenue. That is another discussion for another time.
The subject could be on Debt repayment ratio to ITC Dividend to BATS plus other subject matter on Bats Portfolio. (The debt repayment taken out does show Profit Growth). |
#0x3f, interesting viewpoint, ITC have had a fantastic recovery from the Covid lows mid 2020 and R150 to today R450, a very valuable asset to hold 29% of.. :o)
Whereas BATS have gone the other way and pretty much back on the Covid mid 2020 lows all bar a 100 pence..
We will see how it plays out from here.. |
You think what you want. Plenty of merit in my thoughts:
- Selling a company on a PE of 27 to buy another on PE of 6 makes a lot of sense. The question is how much growth is reflected in the ITC multiple vs BATS. BATS has it's own growth catalysts (eg Next Gen products, Cannabis etc) which are being overlooked by the market.
- There comes a point where the value of ITC is so large that BATS effectively becomes an Indian(/American) tobacco company, rather than an internationally diversified company. I know, growth prospects there are good, but worth considering the concentration risk.
- Having a large mispriced asset on the balance sheet (it's reflected at a fraction of it's true value) must make BATS more of a takeover target. Competing company could takeover, sell ITC: resulting in getting BATS for a fraction of it's true value. Management must realise this.
- BATS have recently written down the value of their US assets, resulting in a large capital loss on the books. Could this be because they are expecting to make a large capital gain in the near future which they could offset (ITC sale)? At least gives them some flexibility in this regard.
I'm not saying any of the above will happen, but good investors must be open to alternative viewpoints instead of sticking to "ITC is the jewel in the Crown and must never be sold" mantra.
Oh, and aggressive means diverting the majority of free cash flow, or proceeds from disposals into buying back stock. I would have thought you'd be able to figure that out.
-0x3F |
Sell the Jewel in the Crown (ITC) to pay off debt? Really?
The divi. from that Jewel could be better used to service the debt and also make repayments against the capital thus reducing the servicing costs.
Sell the Jewel to fund an agressive BB? What does agressive mean?
Does it mean: Blow it all in one go and watch the share price shoot up - temporarily until sensible investors realise there's no longer the Jewel in the Crown?
I think your suggestion Ox3f is without merit. |
How about BATS sell some/all of ITC and pay back large proportion of debt overhang and bid for IMB? Or Pay off debt & start aggressive buyback. |
Interesting, thanks spier |
if mr dart continues to buy shares like he has then its very possible for a takeover going forward ,just a waiting game really glad |
Hardly likely IMO.
More likely just a play on an undervalued high yielding company. |
#Speir40, my view also, which I why I hold both BATS/IMB and will just let it play out.. |
valentine was a report on google finance on pre results day ,they see mr dart with his large holing as a takeover waiting to happen |
BlackRock Inc 6%
Spring Mountain Capital LP 8%
Capital Group Companies Inc 13%
Some strong holdings there.. :o)
Sooner or later there will be some MnA in the space, we need to see how the Vape juice rollout goes, and then perhaps IMB will become a target..? . |
Spier, what makes you think of a takeover? Not heard that being pitched before. Also, by whom? |
moving up nicely pre-results ,mr dart keeps increasing his holding now over 10% BOUGHT another load in January , takeover could be on the cards |
Money moving to APH , excellent results & growth |
I will reinvest my dividend here |
hopefully break through to the 24 today then onward and upward |
At IMB with their divi and sharebacks they're giving a great percentage annualised return to shareholders so if we have the same here I'm happy.At my time in life shareholder returns are what I'm after. |
Buyback to start in H2 we are led to believe so prepare for take off in second half imo |
P/e here is just over 6.IMB and MO are between 7 and 8 while PM is 17+ from HL sources.As BATS and PM are more advanced in sales of NGPs and these are the revenue drivers going forward then BATS p/e is low.The debt overhang at BATS is the main drag. |
I see £30 on the way here in next 6-12 months .. |
Could be right there topazfrenzy |
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