Imperial Brands Share Discussion Threads

[jezza123] 23/3/2018 09:58

the market is nowhere near pricing in a serious recession - too many new investors I see these days don't even know what a proper crash looks like.... reminds me of '06 and '98 and even '87.... being an old man I've seen 'em all.

seems in every cycle there's always a new bunch of over confident investors who get to see what hubris feels like.

[essentialinvestor] 23/3/2018 09:47

Phil, if you look at some of the UK consumer cyclicals, motor retailers etc,
some peaked late 2015. So at best we are late cycle here.

[philanderer] 23/3/2018 09:43

Looks as though the market is starting to price in for a recession down the road.

[jezza123] 23/3/2018 08:55

Holts - hope you are enjoying your ciggies mate

[essentialinvestor] 23/3/2018 07:44

The fall in bond yields late yesterday was supportive.

[andyj] 23/3/2018 07:15

Was definitely an interesting late 3% upward move, particularly against the strong downward momentum of the market. The first signal that the market feels they are oversold.

[philanderer] 23/3/2018 00:00

Yep, ftse100 futures showing -100pts now

[holts] 22/3/2018 21:36

Jezza , your theory will be seriously tested tomorrow.

[philanderer] 22/3/2018 18:04

Six good 'uns for me today ITV, IMB, BATS, ABF, DOM and GNK , fourteen down though :-)

[action] 22/3/2018 17:20

All of the Ftse 100 are unpredictable.

[jezza123] 22/3/2018 16:40

when the market goes seriously south... it seems we all reach for a packet of ciggies :-)

only thing blue today as far as I can see.

[action] 22/3/2018 16:04

TP 2300 reached. Is next TP 2000?.

[andyj] 22/3/2018 15:15

I know the health benefits of IQOS are disputed depending on which research one believes, but from my own experience the benefits have been substantial. My cough vanished, my breathing improved dramatically and my heart rate when running has plummeted. There are millions like me, who don't want to give up smoking enough to give up. IQOS tick both boxes and they, or something like them, are the future for smokers. For tobacco companies they are ideal in that they are addictive but with considerably less stigma, they will replace lost revenues.Many will be happy to pay more for the health benefits but most smokers in developing countries will not be able to afford them. As competition increases and production costs fall, I suspect there will be a race to market them to the masses.

[essentialinvestor] 22/3/2018 13:16

Andy, good to hear you kicked the sticks, PM's huge investment in IQOS not waisted then!.

[andyj] 22/3/2018 12:40

The unchanged did not last long. That is fine, expediating the journey to the area 20 to 22 that interests me for adding to my investment here. One of my very few core long term holdings.

[essentialinvestor] 22/3/2018 10:25

Andy, good to hear your experience.

[philanderer] 22/3/2018 10:00

Unchanged so far today , that's as good as being up ;-)

Morning everyone.

[warranty] 21/3/2018 19:39

Deadly, they said that of him during the tech boom but he proved them wrong. Buffett says buy when shares are on sale and these certainly are at the moment. It seems nobody can come up with a good reason for the continued fall which is what gives me confidence that it's just one of those occasional bargain buying opportunities.

[deadly nightshade] 21/3/2018 19:12

woodford must be in very deep water with this share as his holding nearly 7% of his fund in this so it must be well down in value, the bloke can not do anything right at the moment

[andyj] 21/3/2018 15:03

As a lifelong smoker who switched from cigarettes to IQOS I am a huge fan. They really are the miracle product that allows smokers to continue smoking with less harm to their health. I feel like I am still smoking but my body has reacted like I have given up.However out here in Asia, a packet of cigarettes costs 1 USD, whilst IQOS heetsticks cost 6 USD. Until they can significantly reduce costs their impact on the vast smoking market of the developing world will be minimal. Imperial are not disadvantaged by being a late entrant and may well benefit from monitoring the front runners and moulding their own product accordingly.

[speedsgh] 21/3/2018 14:09

phil - Thanks for the link. Some useful titbits there. Interesting to read Exane's view...

"The big risk for Imperial could lie in the tobacco pricing model unravelling. If IQOS as a concept starts to gain traction, with consumers gaining the belief it is much less bad for them, Imperial may not be in a position to take its ‘usual’ quantum of combustible pricing (or if it did, volume issues would be compounded). In this event, 15 to 25% profit cuts could ensue."

"The material potential cuts to Imperial’s profit portrayed in this report may never come to fruition, but to avoid them, IQOS needs to flop in Europe (we wouldn’t bet on that) and/or Imperial need to conjure up a credible HnB alternative (which is good enough from a consumer point of view, doesn’t infringe patents...etc)."

"Visibility is limited to say the least in this regard and Imperial’s NGP stance / track record does not fuel confidence. Today Imperial seems like a sitting duck to us. We downgrade to Neutral given the dimmed takeover prospects and increased risk from IQOS (and forecast no dividend growth from next year)."

[philanderer] 21/3/2018 14:01

Plenty of negative comment on Alphaville this morning (towards the end)....

[speedsgh] 21/3/2018 13:13

phil - I'm not sure anyone is suggesting otherwise. It's univerally accepted that the market (whether purely traditional tobacco or combined with new gen products) is in long-term decline.

The share price is now back at the same level as early 2014. Taking a simplistic approach:

2013 adjusted EPS: 210.7p
2017 adjusted EPS: 267.0p

2013 DPS: 116.4p
2017 DPS: 270.7p

Do those figures justify the current share price?

But of course the market is forward looking so it's all about th future. In essence all we're discussing is whether the market is currently undervaluing IMB's future prospects. If it is, therein lies the oportunity. If it isn't, therein lies the risk. Anyone got a fully functioning crystal ball?

EDIT - One point worth noting. DPS has grown at CAGR of 10% over the above period whereas adjusted EPS CAGR is c6% which would suggest that the current divdend policy is going to have to be amended at some point with lower dividend growth likely in the future.