Imperial Brands Share Discussion Threads

[gary1966] 18/8/2021 17:30

1% and £600m, that is going some in one day.

[dmore2] 18/8/2021 16:54

Kenneth Dart at it again, seems to love tobacco

[spud] 18/8/2021 11:39

Imperial Brands Offers 8.5%+ Starting Dividend Yield And Is At Historically Low P/E Multiple



Aug. 18, 2021 12:59 AM ETImperial Brands PLC (IMBBY)

IMBBY is relatively undervalued by at least 45%.

The 8.5%+ dividend yield is safe for now.

The management’s new focus is on traditional combustibles first and then next generation products.

The risk-return profile is skewed towards more upside potential.

spud

[spud] 17/8/2021 12:11

Tobacco and vaping: A new leaf



The tobacco category has shown its resilience once again as it has shaken off the latest legal hurdle – last year’s ban on the sale of menthol cigarettes – to remain a valuable and growing category for convenience operators.

The latest in a growing number of restrictions kicked off by the display ban several years ago, there were fears the ban on menthol cigarettes last May would disrupt the category once again after too many legal upheavals in recent years.
At this early stage some 15 months on, it appears that those fears were misplaced as the category has remained buoyant and many former menthol smokers appear to have switched to alternative formats.

Tobacco companies have also been busy with new products to plug the gap left by the absence of menthol brands and many of these have proved popular with shoppers.
Vaping suppliers also spotted the opportunity with the launch of menthol alternatives since May 2020 to cater for smokers who prefer the taste. The result of this burst of activity from suppliers is that the menthol ban has not proved as significant as was feared at one stage.

The outcome is a relief for retailers who have faced a series of changes in recent years and are still coming to terms with the track-and-trace system that was introduced in 2019 with the aim of cutting illegal sales of tobacco.
It means all businesses involved in the supply of cigarettes and roll-your-own tobacco now must have an economic operator identifier code (EOID). There could be further changes to come as the new system is developed in the years ahead.

Steady growth
Ian Howell, JTI’s fiscal and regulatory affairs manager, says: “With everything that has happened over the last year, the tobacco market continues to be one of the biggest and most resilient categories in the UK, driving footfall and revenue for stores.

“In the UK, the cigarillo category saw significant growth during May and June 2020, as a result of the menthol ban, with smokers looking for alternatives in the cigarette category. This trend has continued to grow steadily since.”

Despite several years of increased restrictions on the way tobacco can be displayed, sold and marketed, it remains a valuable category for convenience outlets, being worth £6.3bnin the 12-month period to March 2021.

That was 8.3% up on the same period the previous year. While tobacco remains a sizeable category for retailers, the emergence of vaping is adding welcome new sales momentum, although in value terms it remains relatively small.

The positive aspect for convenience operators is that they have become a key route for vaping shoppers, accounting for more than a third of total take-home business.

Gaining momentum
Vaping sales through impulse outlets were worth some £126m in the 12-month periodto March – 30% up on the previous year, which was also up 21% and shows how buoyant this category is for convenience retailers.

This sales bonanza is even more remarkable given the rise of high-street vaping outlets and growing online sales of equipment. Specialist vape stores were forced to close for face-to-face sales during the recent national lockdowns, as they were classified non-essential by the government, which was a welcome boost for convenience outlets. The menthol ban also provided some new momentum for sales.

Vapouriz spokesperson Mike Godwin says: “Following the menthol cigarette ban in May last year, we did see a significant increase in people choosing our menthol products, and we continue to do so.

“As smokers regularly look to vaping to help them give up cigarettes, menthol remains one of the most popular and accessible flavours for many smokers making the switch to vaping for the first time, so vaping was always very well placed to cater to former menthol smokers following the ban.

“All of our brands, including Double Drip, Pocket Fuel and Vapouriz have a strong menthol offering that continues to be very popular with consumers.”

John Patterson, sales director at Juul Labs UK, says: “Both e-cigarette and menthol flavoured e-cigarette sales have increased over the past year, so it would seem that more smokers have transitioned away from both cigarettes and menthol cigarettes over the past year.”

Juul Labs UK launched menthol pods in April last year “to offer adult smokers, particularly those who preferred the taste of menthol, a wider choice of alternatives”.
John Taylor, chief marketing officer at Vape Dinner Lady, says: “Menthol has always been a popular choice for those making the switch from cigarettes, due to the familiar flavour profile it offers.

“There was certainly some increase in our menthol sales, around the time of the ban, and Dinner Lady’s blue menthol and fresh menthol e-liquids and vape pens remain very popular.”

Shopper demand
Imperial’s Cunningham detects a significant change in the way consumers are shopping the tobacco fixture that convenience retailers need to be aware of.
“A trend that we have seen developing in recent years is a move towards more of a nicotine portfolio, with smokers buying different roll-your-own and factory-made cigarettes to suit different occasions. In fact, figures show a quarter of consumers are now dual-smokers.

“While many smokers may be experimenting with the nicotine products available across segments, shopper demand for value continues to dominate buying habits in tobacco overall.

“This is a trend we expect to continue and grow in 2021 and beyond. With this in mind, retailers must be well-equipped with a strong product range across all categories in order to cater for this trend and keep one eye on their sales so they can adapt their range to meet the needs of their customers.”

As the nation emerges from the Covid-19 outbreak, one impact may be that it speeds up the shopper shift to brands at the value end of the market.

“We may see shoppers down-trade from premium brands to more value-focused offerings. To help retailers cater for these shoppers, we have been busy developing a range of products across both the roll-your-own and factory-made cigarettes segments that offer the exceptional value shoppers are looking for, but with the premium features they have become accustomed to.

“As a result of this continuing shift into roll-your-own, the segment has expanded its market share and now accounts for 45% of tobacco sales, with recent data showing volume sales are growing by an impressive 30% as consumers seek out greater value for money.
“In line with this growing demand for value, sales in the economy RYO segment are also rising and Imperial is well positioned to help retailers tap into this trend, with more brands in the economy segment than any other manufacturer.”

Illicit trade
JTI’s Howell says the pandemic has had “an interesting effect on the tobacco market, with legal, duty-paid sales holding up well, particularly in the case of RYO”.

He adds: “That’s not to say the illicit trade has gone away. It remains a serious problem and takes revenue away from legitimate retailers, facilitates the supply of tobacco to under-age people, and supports organised criminal networks.”

“The illicit tobacco trade remains a serious problem for law-enforcement agencies, retailers and communities across the UK. In fact, research conducted for JTI last year found that, despite lockdown and travel restrictions, 32% of smokers were still able to purchase tobacco that was not subject to UK taxes.

“Our analysis of media coverage on illicit trade suggests that November 2020 saw the highest monthly volume of cigarettes seized in the UK in the past five years.

“This included one of the largest seizures of its kind taking place just outside of Dudley, with HMRC finding more than 30 million cigarettes worth a staggering £11.6m in unpaid duty.”

Howell believes the track-and-trace system may change further and this will present new challenges for retailers. “Further proposals would now involve giving trading standards officers the power to issue ‘on the spot’ fines to retailers selling tobacco without an EIOD

“This would, effectively, remove the need for cases to go to court, as retailers would have their right to sell tobacco instantly suspended or revoked, which could have a big impact.”

JTI, like other suppliers, has been busy with product innovation over the past 12 months. The company launched Sterling Rolling Tobacco Essential 30g in the spring.
The company claims “it offers the lowest price-point in the Sterling Rolling family as a less-for-less alternative, creating a great value tobacco option for shoppers”.

More recently, it has repositioned its Kensitas Club Rolling Tobacco with lower recommended selling prices, “giving the range the lowest RRP for a three-in-one rolling tobacco product”.

The company says it offers the same quality and convenient tobacco product in easy-to-use formats as previously sold. but with a better-value price.

spud

[philanderer] 11/8/2021 18:18

I just posted this on the BATS m/board (I hold both)


"Why tobacco stocks could soar on September 9th"


Morgan Stanley thinks September 9th could be a big day for the tobacco sector due to an anticipated FDA decision.

Analyst Pamela Kaufman points out that agency is scheduled to issue a decision on that date concerning "Premarket Tobacco Product Applications" from industry players.

Kaufman expects favorable decisions for many of the big names like Altria (MO +0.1%), British American Tobacco (BTI +0.6%), Swedish Match (OTCPK:SWMAF -2.2%) and Imperial Brands (OTCQX:IMBBY +0.8%) for their various brands.

Some of those companies could see a significant competitive advantage if their product is approved, while a rival product is rejected. While there is a chance that the FDA extends the timeline on the decision, Kaufman thinks big determinations are more likely.

[spud] 30/7/2021 12:08

Corporate redemption for Big Tobacco?



Redemption comes along regularly in Hollywood – or, at least, in the output of Hollywood’s major industry – rather less so in real life and perhaps not at all in that branch of real life we call ‘business’.

Not that it’s for want of trying. Go to the website of almost any listed company – and certainly those of the FTSE 350 index – and you will find an outpouring of confected virtue. Words such as ‘sustainable’, ‘stakeholders’ and ‘responsible’ figure prominently, while information about what the company does will be harder to find. It’s as though companies are too often ashamed of how they make money.

In the case of tobacco companies, that would be understandable even if not completely fair. After all, in a tally of human misery, arguably drinks and gambling companies do more harm than smoking. Despite that, tobacco companies are judged the business world’s pariahs – what they do is legitimate, but just wait until tax revenues from smoking shrink to marginal significance.

Therefore, nowhere is the need for corporate redemption greater than in the tobacco business and nowhere is the road to redemption being travelled more daringly than at Big Tobacco’s biggest beast, Philip Morris International (US:PM), with its £900m agreed offer for Vectura (VEC), which supplies drug-delivery expertise for inhaled medicines. The irony screams out; not so much the poacher turned gamekeeper as the poisoner turned physician.

The response from healthcare trade bodies and the like has been predictably toxic – falling over themselves to establish a safe distance from a company that may soon be owned by the maker of the world’s top-selling cigarette brand, Marlboro, also known as the ‘cowboy killer’. The implied threat is that, if Vectura becomes a part of Philip Morris, its employees will be as welcome as a chain smoker at the annual conference of Asthma UK.

However, is this fair or even sensible? That Philip Morris is acting legally in bidding for Vectura is hardly in doubt. Sure, Big Tobacco’s defence of smoking was often as unethical as business could be and Philip Morris’s predecessor company played a leading role in the nastiness. But that was then and now Morris is paying the price in healthcare settlements. Meanwhile, its bosses seem determined to transform their group and, in doing so, they might push lots of development capital Vectura’s way.

In a letter to Vectura’s employees, Philip Morris’s new chief, Jacek Olczak, says: “It may come as a surprise to many of you that Philip Morris is evolving into a broader healthcare and wellness company.” That is a surprise indeed; it could be more accurate to say Philip Morris will take its first step towards being a healthcare company if its offer for Vectura is successful. The company’s focus is on so-called ‘reduced-risk products’, which means vaping rather than smoking, where consumers get a nicotine hit but with fewer risks. Hence Philip Morris’s pledge to generate more than half its sales from smoke-free products by 2025. Currently, they produce $6.8bn (£4.9bn) out of $28.7bn, or 24 per cent, but sales from conventional tobacco products are trending downwards, and in 2020 were 14 per cent lower than in 2018. Management aims to generate at least $1bn revenue – also by 2025 – from what it labels ‘Beyond Nicotine’. Thus the offer for Vectura would add $0.3bn to that target, but probably more in terms of credibility. At a price of less than 1 per cent of Philip Morris’s equity market value, it is hardly a big gamble.

In big tobacco’s race to be virtuous, Philip Morris seems to be winning. Or at least its share price has skinned the other members of Big Tobacco. At $98.40 it stands at 80 per cent of its 10-year high and has gained 29 per cent in the past 12 months. The next best performer is British American Tobacco (BATS), whose stock price is 61 per cent of the 10-year high at £27.69 and has gained 14 per cent in the past year.

How Big Tobacco compare
Profit margin (%) Return on capital (%) Cash flow return (%) PE ratio Price/sales Div Yield (%) Payout ratio (%)
Philip Morris Inter'l 42.0 55.1 61.8 16.1 4.5 4.9 92
Altria Group 52.8 32.9 26.2 17.1 3.7 7.2 142
British American Tobacco 44.1 10.5 7.9 9.7 2.4 7.8 77
Imperial Brands 18.7 16.9 22.6 8.6 0.8 8.8 87
Japan Tobacco 20.7 11.8 15.4 12.0 1.8 6.0 88
Mkt Cap ($bn) Share price* % 10-yr high Ch on 1 yr (%) 3 yrs (%) 5 yrs (%) Non-tobacco sales (%)
Philip Morris Inter'l 153,360 98.4 80 29 18 -1 24
Altria Group 87,887 47.5 61 14 -18 -31 2
British American Tobacco 87,375 27.69 49 2 -29 -42 6
Imperial Brands 20,420 15.7 38 13 -45 -61 3
Japan Tobacco 39,108 2,157.5 44 12 -28 -49 11

Perhaps that’s as it should be since the proportion of Morris’s revenue derived from so-called non-combustible products far outstrips its rivals and the same could be said of its profitability ratios, such as profit margins and return on capital.

True, this is reflected in its share rating, which is the highest among Big Tobacco, although the 4.9 per cent dividend yield on Morris’s shares is still substantial. That’s important since, given the uncertainties, shareholders need to be confident of taking something from their investment and that scale of income return is more than halfway towards an acceptable total return, even though the payout is barely covered by accounting earnings. Makes you think that a redemption of sorts might even be possible for bits of Big Tobacco, at least for investors.

spud

[irenekent] 28/7/2021 08:07

careful

Won't have a smartphone for all the reasons you highlight. Irene

[medieval blacksmith] 27/7/2021 11:52

PM want to sell 'heat not burn' iQOS and will lobby government to help them get users to switch. What better way of selling product if you have regulation and campaigns fully behind you.

[careful] 27/7/2021 10:00

nanny state.

They will control what we eat, what we drink, how much we exercise, how much we drive.
Big brother will be watching, you will get pinged.
Orwellian 1984.... but a few years late as with all HMG projects.

I can safely predict that this is the beginning of the end of the smartphone nightmare.
They will try to make smartphones mandatory and make it an offence if we switch off, but that will be unworkable.

Come the revolution. Freedom day will be when we go cold turkey and destroy our smartphones.

[fenners66] 27/7/2021 09:44

Phillip Morris says plans to end sales of cigarettes in the UK within 10 years.

Bloomberg suggested that the UK govt intends the UK to be smoke free by 2030.

So what does that actually mean?

Will there really be zero sales here in 9 years , what does that do to earnings and will the rest of the West follow suit ?

[gary1966] 25/7/2021 22:49

The people with savings will pay for it and the borrowers and the housing market will be protected as has been happening for years in the case of savers and decades in the case of the housing market and borrowers. Savers have been crucified by low interest rates for years and forced to take on more and more risk. Now the triple lock rules for the state pension look like they are going to be altered to avoid a large increase. The government honestly believe that pensioners don’t have an issue with not getting their 7-8% increase as these are one off times. One off times are never factored in when it favours the government conveniently. As I said it will be the savers that pay for it.

[redbaron10] 25/7/2021 19:22

With a $400bn public sector spend in the UK to offset the covid pandemic's worst affects on the economy over the last 18 months, and a total UK deficit of over £2Tn,one must begin to wonder where the tax take is going to fall to pay off these horrendous debts.With fuel duty revenue sure to drop as more motorists convert to electric vehicles and now tobacco tax revenue may disappear in 10 years if Philip Morris had its way (surprise surprise it's in their interest to say this and promote the IQOS heated nicotine product they've spent many millions on R&D on) then realistically there are only real estate and pension assets left to tax.Heaven help all those with a mortgage-free property and a private pension,the government is coming for you.

[spud] 25/7/2021 18:17

A cool head in charge here (SB) and no stupid rash decisions should ensure that this continues to be a very profitable business for many years to come. spud

[dmore2] 25/7/2021 14:56

Bigger market share for us

[philanderer] 25/7/2021 00:34

The boss of tobacco giant Philip Morris International has mounted a staunch defence of its controversial deal to buy a British inhaler company – and pledged to stop selling cigarettes in the UK within the next ten years.

[spud] 23/7/2021 15:54

More than happy here having banked nearly £45k in dividends since June '19.

All this ESG cr@p does is dilute the private pensions of the hard working individuals as the behemoth pension companies pander to the new age WOKE society.

All in my opinion of course....

spud

[redbaron10] 23/7/2021 15:14

zicopele they were good numbers but unfortunately global markets still seem to obsess over large tech growth stocks.Value defensives are too boring for todays new investors.ESG investing criteria and more possible pending health related measures from the FDA will limit any rises here in the short,medium and long term.Just keep banking the juicy dividend and realistically don't expect any significant capital growth from the share price rising.

[zicopele] 23/7/2021 11:51

PM numbers looked good ti me but the market was disappointed. at least temporarily.

[redbaron10] 22/7/2021 11:26

Sp around 1550p with approx £1.20 in dividends due in the next eight months.PM in the US coming out with encouraging H1 numbers and similar for BAT and IMB.PM dividend yield around 4.5 - 5% compared with 8.5%+ here and 7.5% for BAT.Unlike Unilever today which has reported growing inflationary costs to manufacture their products, thus eroding profit margins,tobacco companies have only one significant raw material cost and that's the cost of tobacco.Also tobacco companies historically have been able to increase their profit margins by increasing the price of their premium brands.Still looks undervalued to me imho but because of ESG investing strategies by funds and possibly a harsher regulatory environment to come globally from the likes of WHO and its recommendations,this share is always under a cloud it seems now.With the new CEO and the tackling of some of the debt issues and the dividend seemingly well covered i'm relatively happy to have this as my biggest holding right now.That's a cue if ever there was one for the FDA in the US to come up with another proposed menthol ban or something else health-related pretty soon, and a 5-10% sell off here!!!

[philanderer] 20/7/2021 15:41

Good chart support showing at 1470p

[irenekent] 19/7/2021 08:40

I am beginning to think that trying to immitate a steam train as a woke alternative to cigarettes has had its day. Heated tobacco may prove a better way forward with a lot less display.