Imperial Brands Share Discussion Threads

[fenners66] 10/10/2022 10:10

"ValueHurts
9 Oct '22 - 17:06 - 7786 of 7790
For those that don’t understand why the company has to keep a certain amount of debt on its balance sheet. If they didnt private equity would be come along and take over the company."

That view looks so jaundiced.

So who are the management saving ?

Saving shareholders from having a Choice , whether or not to accept more for their shares ?
We all have a choice to sell every day.
To extend your reasoning to the ultimate conclusion , borrow all the cash they can , buyback all the shares they can , incur as much interest as it takes , reduce profits to a minimum or maybe even make losses due to finance charges .....and guess what , probably ensure no private equity is interested.... job done , management gets to keep their jobs.

Meanwhile Apple strangely has not followed that strategy , they have $100's of billions of net cash...
the must lie awake every night in fear of a private equity bid....

Back in the real world , make the business as profitable as you can and if anyone wants to buy it put up a defence as to how its worth far more and will be worth far more in the future - if someone still wants it for a massive premium that's up to the shareholders to decide not the directors to poison pill it.

[action] 10/10/2022 09:59

Is it wrong for bid to come so that long suffering shareholders can say goo riddance to management??

[stronghands] 10/10/2022 08:39

Welcome back 2,000p :-)

PS ValueHurts, enjoying your posts, thank you.

[kiwi2007] 09/10/2022 22:07

Most debt repayable over the next 5 years and they will certainly be paying more interest on anything they decide to replace or roll over.

[valuehurts] 09/10/2022 17:06

For those that don't understand why the company has to keep a certain amount of debt on its balance sheet. If they didnt private equity would be come along and take over the company. You can only really get debt free in a very cash generative business like this if you have a controlling shareholder like a family to block takeovers. Look at Karelia tobacco for instance.

[jrphoenixw2] 08/10/2022 19:37

New recent highs on Friday, best since mid Jan 2020
I/D 1993.5
COB 1991

The 2072p high at week-of 12-Jan-2020 is now on the radar. Then 2145p in 3Q-2019


p.s/updated for typo in COB price indicated above^: 1991 not 1911 :)

[valuehurts] 08/10/2022 13:34

For anybody who doesn't want the buyback and would prefer cash just sell down your holding in proportion to the amount of shares being bought by the company -trading fees and any capital gains taxes this has exactly the same effect as getting a dividend instead of a buyback. You own exactly the same amount of future business earnings and you get more cash.

[valuehurts] 07/10/2022 16:24

They support buybacks because when executed at the right price they drive per share performance. I know you would disagree with Buffett and the long term performance performance of teledyne, carmax and recently dillards but at the right price it works.

[valuehurts] 07/10/2022 16:06

Plenty of liquidity from all the Johnny come lately buying in now. If anybody needs liquidity it's here and will stay around as performance drives flows. Fund manager suddenly deciding he doesn't give 2x sh??s about ESG when they can buy a company outperforming the market and paying 7%... want to have the best performing stocks in the portfolio before fund holdings go out to clients.

[marktime1231] 07/10/2022 13:39

Indeed why Credit Swizz who are having a bit of a confidence crisis and seem always mired in scandal.

Decided to do the buyback in two x £500M tranches, in case CS don't perform and/or to allow IMB to review strategy after H1 2023. In case of a surge in share price or runaway debt renewal costs. Or a bid?

Good to see brokers uprating IMB but I doubt it will satisfy those here in "moaners corner".

[philanderer] 07/10/2022 11:13

Goldman Sachs raises Imperial Brands price target to 2,300 (2,250) pence - 'buy'

JPMorgan raises Imperial Brands target to 2,350 (2,250) pence - 'overweight'

[fenners66] 06/10/2022 23:21

Value you are thinking stock specific.

The point is not stock specific.

Why do funds , that own the large quoted companies want liquidity ?
Why do they by default support buy-backs ?

Because there are events effectively outside of the managers control which mean they need to sell - see the examples given above.

Regardless of the quality of the investment and sometimes because of the quality of the investment ; again see above.

[valuehurts] 06/10/2022 21:39

Please could you name some names. Which fund would sell? We now have long term value funds like Dodge and Cox and individuals like Dart. There's hardly any UK funds with substantial capital invested just the big US value funds, IMB would just be a tiny part of their overall portfolio. We are far more likely to be attracting flows currently, especially with the management executing and allocating capital effectively.

[jrphoenixw2] 06/10/2022 17:33

A minor point I'd wondered about re: the 'Pre-close trading update' today, was when it would come out. In the event it appears to have been repleased pre-open. I wonder why they don't just call it a pre-open statement - hmmm.

[marktime1231] 06/10/2022 16:51

Scanning a few numbers, I think IMB net debt was around £9.1B at 31 Mar and ebitda on an annual basis is running at maybe £3.8B. Let's guess a further £1B of redeemed long term borrowing, so the debt ratio at 30 Sep will have been 2.1-2.2. Kind of what Bomhard said, but with a number on how much surplus cash has been wasted on debt reduction versus wasted on buybacks versus wasted on dividends. There may well still be cash available to redeem rather than replace some debt which is scheduled to expire in the near future alongside the buyback. No doubt at some stage Bomhard would like to be able to point to achieving the milestone of a debt ratio at 2 or just under.

To a first approximation a £1B buyback will mean hoovering up 200,000 shares per trading day. Starting tomorrow through to end Sep 2023. IMB daily volume typically 1-2 million, so the buyback activity is unlikely to dictate the share price The benefit / waste will be cumulative.

[fenners66] 06/10/2022 14:24

greygeorge - look back at the post it includes direct quotes from last years full accounts. (Note 20 as I put in the following post)

Also found and posted the quotes about Cuban claims - only because I took the time to go and look for the debt info ...

I can only conclude you were too lazy to read my post , before instead venting that made up BS

Feel better for all that ?

Now how about sticking to the issues we are actually here to discuss ?

[spud] 06/10/2022 14:24

If BOA say buy then they are probably lining up a large sell. All broker recs are counter intuitive. spud

[holts] 06/10/2022 13:59

Most buybacks are a disaster .

[greygeorge] 06/10/2022 13:57

fenners66, you are one of the laziest soothsayers I have come across on any forum. You speculate, you make stuff up, you summise, based on nothing but bs. Take two minutes to check out the debt of IMB, approx. 1.4 billion due for repayment in the next financial year, 4.6 billion in the next 2 - 4 years, 2.8 billion 4+ years out. But no, taking out a minute to actually look something up is tooo much hard work, you'd rather guess, pontificate, and anyone with an ounce of common sense you're nothing but a BS-er.

[fenners66] 06/10/2022 13:50

Agreed most companies do it in reverse.

When they have surplus cash the company is performing and so is the share price - the wrong time to buy.

That is the time to pay off debt or even (if you cannot put the funds to good use expanding the business ) hold cash on the balance sheet.

Hands up who gets dividends at the top of the market , salts the funds away and buys more shares when they are cheaper ?

Its not rocket science...

But we get an argument that holding cash is "not efficient use of capital" some anal-yst does a Return on capital employed calc and says its a mistake...
Buy expensive shares back , don't wait until they are half price its inefficient in the mean time.....

If only the looked after the cash , like the best of us look after their own money...

[this_is_me] 06/10/2022 12:31

If the share price is low buybacks are good; that is why investment trusts buy back shares below NAV

If the share price gets very high sell shares in the market; that is what investment trusts do. (pay down debt in the case of IMB)

I have never known investment trust shareholders to object to either.

Since the Board think the shares are undervalued they should aim to buy back as many as possible at low valuations.

The main problem with share buybacks is that too often clueless Boards fail to raise money when the share price is high and instead do buybacks and when they need money for acquisitions sell shares after the price has fallen.

[fenners66] 06/10/2022 12:22

As for the reaction in the share price - its transitory as we all know
This could be a bear market rally and today's gains wiped out a month from now
Any share BB today could look expensive soon enough.

I don't want a higher dividend next year , when I can have a much higher dividend and debt reduction this year.