Imperial Brands Share Discussion Threads

[loganair] 19/5/2020 12:54

When Imperial fell to £24 I posted that I would start taking a look when its share price fell to £15 and thought the bottom will be between £12 & £10 and I was completely blown out of the water by other posters saying that I was just being ridiculous and that the Imperial share price will never full so far as the company was worth so much more.

City Index are now giving a price target of between £12.58 & £10.40.

I also posted at the time that instead of taking on more debt to buy back their shares Imperial would be much better to use this money to pay down debt - this has now come home to roost for Imperial as it was a reckless use of money by the company.

Again many posters said share buy backs were a good thing and poorly explained why using debt to buy back their shares was a good use of this debt for Imperial.

The management also made a massive error of judgement by putting most of their growth going forward into Vaping, even Juul a private company has written down their value by 35% saying that Vaping is no longer going to do as well as they have been saying over the past few years was going to.


I also posted at the time owning Imperial is rather like having a Pension Annuity, paying a high dividend income while its assets became more and more 'Stranded.'

[meijiman] 19/5/2020 12:37

How long before she is replaced? Terry Smith saw straight through her in 5 mins. A pc correct appointment from the start.

[creditcrunchies] 19/5/2020 12:36

BATS gets huge revenue from menthol cigarettes

[essentialinvestor] 19/5/2020 12:18

Daniel, Alison did rather well !!.

[minerve 2] 19/5/2020 12:17

Essential

"What's the buy case?."

Stable traditional tobacco volumes and an extremely low FCF to share price ratio.

[muscletrade] 19/5/2020 12:15

Maybe I'm in cloud cuckoo land but it seems to me that while the results read like a dogs breakfast(repeating myself from earlier this morning) the core tobacco business is doing well(costs down and market share up).The reduction in EPs is exclusively driven by lower Revenue and more impairment charges relating to the the NGP business (which is seeing significant reduction in investment) increased tax, and goodwill impairment on sale of cigar business which will be largely clawed back later.
as I say above Costs in the core business have been reduced market share increased and cash conversion is excellent at 103%
the reduction in dividend and income from cigar business will if all applied as promised should reduce deb by 1.6Bn more or less.
It makes sense to indicate possible greater impact on future results due to Covid 19 considering almost every company in the universe has done the same.
Seems to me that there has been quite a lot of kitchen sinking going on in readiness for the arrival of the new CEO. there cannot be much left of the NGP business to impair next time around. Happy to hold and in fact purchased a few more this morning.

[loganair] 19/5/2020 12:15

The news comes as the UK prepares to ban menthol cigarettes tomorrow (Wednesday, May 20).

The ban will stop the production and sale of any filters, paper, packaging, capsules or other component containing flavouring in cigarettes and hand-rolling tobacco.

According to the NHS, while menthol itself isn’t addictive, it can increase the addictiveness of nicotine.

It said: “Menthol is an additive that increases the addictiveness of the nicotine.

“Menthol is a mild anaesthetic that numbs your throat and stimulates cold receptors that creates a cooling sensation.”

[danieldruff2] 19/5/2020 12:14

IMB's problems stem from the current board running it like a job retention scheme for themselves. Pay huge dividends to keep holders happy, build up huge debt to put off predators. It has simply not been run properly. The new broom arrives soon and already a dividend cut and a debt reduction, which should have been done at least 3 years ago. If the new guy gets it right I think this will double in a few years and surprise a few holders, who are understandably depressed with the long run of poor performance.

edit - EI of a similar opinion!

[essentialinvestor] 19/5/2020 12:12

3 years ago I mentioned here that the running of the Company looked borderline reckless imv, it was not a very popular view back then.

What's the buy case?.

[loganair] 19/5/2020 12:11

Imperial brands: new down leg in sight? - Nicolas Suiffet:


Readers may want to consider the potential for short positions below the resistance at 1890p (channel upper boundary) with a first target at 1258p and then 1040p.

[minerve 2] 19/5/2020 12:05

Why buy out IMB - increasing debt and paying a market premium - when you have superior NGP products/services/business plan which gives you better future prospects and return?

It would be like Tesla using capital to buy Daimler diesel engines.

Additionally IMB has lots of debt so any tangible benefits an outside buyer might have by loading the balance sheet with tax efficient debt are probably minimal.

PMI and BAT just need to continue their strategy and the game is won. IMB need to accept the game is over as far as world dominance and focus on getting maximum return from old tobacco for its shareholders.

IMB is unlikely to compete with PMI and BAT who have far greater profit margins and who invested $1Bn and £1bn in Capex every year.

[eeza] 19/5/2020 11:55

Anyone wanting to do that would have made a move when the share price was ~1300p.
They didn't want it at that price..........

[creditcrunchies] 19/5/2020 11:51

they could be taken over and asset stripped selling all of their brands off to BATS and other other large tobacco corps, basically consolidating global tobacco. You see it with breweries, drug companies. There must be a price where it becomes so cheap it's worth doing.

[irenekent] 19/5/2020 11:47

A board asleep on the job has brought us to this. Hopefully the new broom will impose a 33% cut to their remuneration including his own. Time to vote them down I think. That is of course for us on the share register to do. Unfortunately the nominees will do the exact opposite as they usually do. Those of you in nominee accounts who think the board should go must make your voices heard. Today's announcement, predicted though it was, may have an element of kitchen sinking about it but the issues raised by the underperformance of the NGP's should have been raised months ago. Perhaps BAT should take us over?

[philanderer] 19/5/2020 11:34

Selling off again..

Market report:

“Cigarette maker Imperial Brands is one of the last high yielding FTSE 100 companies to finally cave in and slash its dividend, in its case to reduce debt pressures. Prior to the news it was trading on a prospective yield of 11.5% which seemed too good to be true. Having slashed the payment by a third, investors can now expect an 8.7% yield after adjusting for today’s share price movement,” explained Russ Mould, AJ Bell’s investment director.

“Imperial Brands was a popular stock among retail investors because the shares were cheap and the dividends were generous; however, it was less popular among income funds with only 21 funds and investment trusts having it as a top 10 holding.

“Fund managers may have been put off by the business disappointing with earnings in recent years as a result of tighter regulation hurting its efforts to sell vaping products.

“The business has also lost favour with many investors who now prefer more ethical investments. The idea of owning shares in a company whose products create significant health problems and are addictive is unthinkable for a lot of people,” he added.

proactiveinvestors.co.uk

[philanderer] 19/5/2020 10:20

A takeout at £20 should win the day . Not sure about these uncertain times though.

Alliance News:

"By its own admission, it has been a disappointing time of late for Imperial and the renewed focus of concentrating on its strengths is possibly overdue. Its products give its stock a strong defensive quality, including the generous dividend yield, market share has been nudging higher in its main lines and margins remain strong given lower production costs, now entrenched after some years of focus," commented Interactive Investor's Richard Hunter.

[eeza] 19/5/2020 10:06

Cut their salaries - that'll help.

[daneswooddynamo] 19/5/2020 10:02

“The pace of debt reduction has not been as fast as we would have liked in recent years”.

Hmmmmm

[philanderer] 19/5/2020 09:55

Spot on CC , duty free is a p1$$ poor excuse.

I'll continue holding for now though.

[spud] 19/5/2020 09:42

I would be happier to see the funds allocated to buybacks being diverted to debt reduction personally. That, along with the divi savings, could make quite a sizeable dent in the debt mountain over a decade.

spud

[wskill] 19/5/2020 09:38

Happier holding IMB now the dividend cut is out of the way ,very decent yield for income seekers myself included and a progressive dividend policy to follow ,cannot see why BATS should be on a premium to this share now that our excess cash will pay down debt .

[spud] 19/5/2020 09:30

Providing he earns it, I don't begrudge him one iota!

spud

[eeza] 19/5/2020 09:19

He's going to sweep himself a lot of cheap(er) options.