Imperial Brands Share Discussion Threads

[daneswooddynamo] 19/5/2020 22:43

The statement wording on the dividend would appear to suggest not

[essentialinvestor] 19/5/2020 22:32

Perhaps worth keeping in mind, a potential % cut to the final pay out
may be significantly higher than the interim divi cut?.


Adjusted net debt Up by half a billion £ in just 6 months.

[eeza] 19/5/2020 18:23

The only reason for choosing IMB over BATS was the large yield.

[loganair] 19/5/2020 17:16

William Ryder, equity analyst at Hargreaves Lansdown, said: “A dividend cut is never pleasant for investors, but debt had been steadily growing at Imperial and now seems like an opportune time to cut to the payout. The group’s long-serving CEO Alison Cooper has been replaced by two joint interim CEOs, and if they can get a cut out of the way now a new long term CEO will have a cleaner slate to work from.

"The group’s first-half results were dragged down by a poor showing from Next Generation Products (NGPs) like vaping. Regulatory restrictions and health scare headlines have significantly tempered growth expectations and sent the European and American markets into reverse. We think NGPs will have a future, but it looks like the impressive growth many were hoping for isn’t going to materialise just yet."

He added: "Despite its defensive qualities Imperial does think COVID-19 will reduce profits, mainly because it’s losing duty-free sales and customers may choose cheaper brands in a recession. Social distancing measures are likely to make manufacturing less efficient too. Overall the group should still be less affected than many other groups, but the dividend cut will be painful for shareholders regardless.”

[lanaken] 19/5/2020 15:46

I note that Alison Cooper who absolutely didn't impress Terry Smith with her waffle and poor strategic decisions in moving IMB more towards emerging markets and lower risk nicotine delivery systems, has been a NED at Inchcape since July 2009. Stephen Bomhard, the incoming IMB CEO from July, has been recruited from Inchcape.

I'm less than sure that this is a sign of the new broom, that seems desperately needed to revive, what is essentially a very decent business that has been poorly managed. How much of a role did she have in appointing her successor, I wonder.

Even if the new CEO is very good, he faces an uphill task in getting new products launched or moving in the right direction in a market where PM having a big success with IQOS and Altria's Juul will come back, at some stage, I'm sure.The virus has slowed the transition to new products but IMB is still a long way behind. I think PM has invested something like $7bn in IQOS. I fear that IMB will fall further behind here, but it's orientation towards the value end in smoking products should help them.

[minerve 2] 19/5/2020 14:24

It could go lower. If you buy at these prices I think you would be very unlucky to lose capital on a medium/long-term view.

[kaffee] 19/5/2020 14:24

It'll get taken out once that debt is attacked, and not necessarily by a competitior. Maybe a sovereign wealth fund not constrained by health charters.

[milliethedog] 19/5/2020 14:23

I do agree, value might be there. I hope it is.
I'm long on BT & a similar arguement is being argued there too.
Also AV & LGEN (Long also)

I want to go long here, it's just the bottom & where it is that i need to work out.
But, sorry to repeat, if share price went to 12.68 then
Whats stopping it now?

As you say....market madness

M

[minerve 2] 19/5/2020 14:17

"Political correctness be damned, go make me a sandwich and let someone with balls do the job!"

LOL!

[minerve 2] 19/5/2020 14:15

Millie

The share price can do whatever the market madness wants it to do. All I am saying is that the intrinsic value of this company is much greater than £12 a share.

[milliethedog] 19/5/2020 14:14

Minerve...
But it has previously been @ 12.68 only 8 weeks ago.
Today's news can't improve on that previous bottom surely?
M

[meijiman] 19/5/2020 14:10

Expect the incoming ceo to do a big kitchen sink job to tidy up the mess and make his progress more obvious.

[minerve 2] 19/5/2020 14:07

With all due respect to loganair I think we need to straighten a few facts.

If you value this company on future earnings then even using very conservative DCF calculations you don't reach anywhere near as low as £12 a share.

The share price has just been driven down by the market and by general sentiment towards smoking as an investment. Woodford and his ilk have damaged the demand for value driven investments and the massive government/bank Covid capital injection have again made risk/growth investments the order of the day. The Ponzi scheme will run out eventually and the likes of Terry Smith and his supporters better make sure they have their chair when the music stops.

I agree the debt could be brought down but when interest costs are at record lows one can afford to delay debt reduction for share buy-backs because you are borrowing at very low rates and getting returns on equity that are much higher. It makes financial sense if you can afford to pay back the debt and nobody is suggesting IMB can't because it has just been given a new RCF backed by about 20 banks!

As far as vaping/NGP is concerned I do think it was prudent to tread carefully to see what happens in this space. I don't know how much of an excuse Imperial Brands made it because incremental capex would have impacted on dividend and debt payments. They are relatively new markets and you don't really have a true idea on real returns until they are tested.

Nobody could have foreseen the issues with vapes, the incredible take up by youth and the action taken by the FDA. It was a risk and to me further supports IMB's policy to tread carefully. Just look at how Altria have been damaged through all this.

Today, there is really nothing new in what has been reported. Cash flows have not been impacted and equity holders are getting more NAV incrementation at the expense of dividends. Not a bad thing really. When the debt is reduced I do hope they continue with buy-backs because at these prices it is the best thing they can do. 17% cash return on price paid if I remember correctly. That means - if capital is invested properly and not wasted on some hair-brained CEO scheme - your equity in this company has pretty much paid for itself within 5 years. Everything else afterwards is return. Global smoking is not going to stop in 5 years time.

[daneswooddynamo] 19/5/2020 14:00

“We thought that the decision would rest with the incoming ceo”. I am sure it did, just he thought it better for someone else to deliver it!

[milliethedog] 19/5/2020 13:55

Hmmm....
Even saying it 3 times doesn't convince me to buy; not yet anyway.......
-£13 for me

[kiwi2007] 19/5/2020 13:50

They have a friend!

Panmure Gordon says "The move to cut the dividend by one-third has come earlier than we expected: we thought that the decision would rest with the incoming CEO. The shortfall in operating profit relative to expectations and the current situation with Covid perhaps brought the decision forward. We believe that there may still be risks to the basis of reported profits, but that is for another day. At least with the dividend dealt with the market can focus on a dividend yield of 8.3% which will be well covered. By the time the market has fully adjusted estimates for trading, Covid and the dilution of the Cigar disposal and even allowed for a further haircut on reported profits, the PER will be around ~7x. There is still much work to be done to rebase this business and set out a proper strategy that delivers for shareholders, but the valuation means that is more than priced in. BUY.
The move to cut the dividend by one-third has come earlier than we expected: we thought that the decision would rest with the incoming CEO. The shortfall in operating profit relative to expectations and the current situation with Covid perhaps brought the decision forward. We believe that there may still be risks to the basis of reported profits, but that is for another day. At least with the dividend dealt with the market can focus on a dividend yield of 8.3% which will be well covered. By the time the market has fully adjusted estimates for trading, Covid and the dilution of the Cigar disposal and even allowed for a further haircut on reported profits, the PER will be around ~7x. There is still much work to be done to rebase this business and set out a proper strategy that delivers for shareholders, but the valuation means that is more than priced in. BUY.

The move to cut the dividend by one-third has come earlier than we expected: we thought that the decision would rest with the incoming CEO. The shortfall in operating profit relative to expectations and the current situation with Covid perhaps brought the decision forward. We believe that there may still be risks to the basis of reported profits, but that is for another day. At least with the dividend dealt with the market can focus on a dividend yield of 8.3% which will be well covered. By the time the market has fully adjusted estimates for trading, Covid and the dilution of the Cigar disposal and even allowed for a further haircut on reported profits, the PER will be around ~7x. There is still much work to be done to rebase this business and set out a proper strategy that delivers for shareholders, but the valuation means that is more than priced in. BUY."

[milliethedog] 19/5/2020 13:42

Well, fwiw i'm with logan. I bought in mid March when the market collapsed; 12.68 & 12.92 respectivly.
Sat on a 27% profit so sold out at 17.29
Blue chips started to cut/cancel dividends. So thought, on balance, sell em. Take the money. Could'nt resist.
Anyway. Now all the bad news is in the open i'm tempted to dip several toes in again.

Question is; will today's results take it back to mid March lows? Sub £13?

[gabsterx] 19/5/2020 13:32

IMB, IBM.. what is it with these 3 letters that compels them to have women CEOs to drive the share price into the ground?

Political correctness be damned, go make me a sandwich and let someone with balls do the job!

[hernando2] 19/5/2020 13:00

fair play Logan thats exactly what you posted..