Imperial Brands Share Discussion Threads

[jrphoenixw2] 20/6/2018 09:36

'In broker note action, British American Tobacco and Imperial Brands were started at ‘buy’ by Liberum' [source: DL]
BATS is +2.5% intra-day. Maybe Liberum's broker notes 'were wot did it'. I'm still surprised Liberum covered neither company before...

[philanderer] 20/6/2018 09:06

Liberum initiates coverage with 'buy'

[philanderer] 20/6/2018 08:55

Canada becomes second country to legalise cannabis use

Cannabis Act passes, with the legislation expected to take effect in a few months

[philanderer] 19/6/2018 14:39

Imperial Brands PLC @ImperialBrands

4 hours ago

Our pod-based vaping device myblu is now in 7 markets following its Italian launch this week.

[philanderer] 19/6/2018 09:51

Fag shares doing ok on a day like today.

[philanderer] 19/6/2018 09:10

Getting nearer..

"..Former Conservative leader Lord Hague has called for a "decisive change" in the law on cannabis - suggesting that the Tories should consider legalising recreational use of the drug"

[philanderer] 13/6/2018 00:10

Read across from BATS update..


"..Amid fears that alternative tobacco products are struggling to offset the decline in cigarette sales, Imperial Brands, which recently ramped up its investment in the products, dipped 21p to £25.90."

[philanderer] 12/6/2018 14:48

Imperial Brands PLC @ImperialBrands

11 minutes ago

We’re at the @gfnicotine in Warsaw later this week to present on the emissions of our e-vapour brand blu, and on the relative harm of e-vapour compared to smoking

[philanderer] 12/6/2018 10:13

12th june Barclays 'overweight' tp 3350p cut from 4300p

[lomcovaks] 11/6/2018 19:12

EJ, a share tip is a share tip and it's inevitable that many will be wrong. However, the saving grace of the Investors Chronicle is its perpetual admonition to diversify, search for quality and think long-term. The moment I started doing that I started to make money.

[philanderer] 11/6/2018 09:51

speeds, many thanks for posting that :-)

[speedsgh] 11/6/2018 09:19

Are tobacco investments going up in smoke? -

... Favourites

Imperial Brands is our pick of the two. Granted, our most recent buy tip hasn’t quite played out as we hoped. Over that time, the share price was hit by bad news, including the collapse of wholesaler Palmer and Harvey, as well as suggestions that the US Food and Drug Administration (FDA) would cut down the amount of nicotine in combustible cigarettes sold in the US. Still, the company looks well placed to deal with the shift from traditional tobacco to next-generation products. Its exposure to the US, regardless of the FDA’s decision, is less than its closest rival. It’s also done well to maintain cash flow, and maintain its place on our list of income majors. At 2,721p, or 10 times forward earnings, the shares don’t look expensive compared with their own history, either.

Outsiders

British American Tobacco isn’t a traditional ‘outsider’. In our view, the buy case for Imperial is just a touch stronger. BATS recently completed one of the biggest M&A transactions in history with the £41.8bn purchase of Reynolds America – the largest ever purchase of a tobacco company. This has made it the biggest vaping company in the world, so it too looks well placed to benefit from the shift to alternative products. But the Reynolds deal also made it more exposed to the US market, which could see a tightening in regulation. At 3,774p, or merely two times forward earnings, the shares look unbelievably cheap. But there’s likely a reason for this.

The expert's view

Sector consolidation means that tobacco is now dominated by a small handful of very large multinationals, known as the 'Big Five': Philip Morris International, British American Tobacco, Japan Tobacco, China Tobacco and Imperial Brands.

Numerous smoking bans imposed around the world have put pressure on the industry to develop markets and alternative products to help grow revenues. Fortunately for the industry, declines in tobacco consumption volumes in the UK, mainland Europe and the US have been offset by growth in regions such as the Middle East, Eastern Europe and other emerging economies.

The development of next generation products, such as e-cigarettes, which are heavily marketed, is also helping to meet demand for less harmful forms of smoking. Currently there are few restrictions on the use of e-cigarettes, but some countries have raised the possibility of banning them in future.

Both British American Tobacco and Imperial Brands were rising nicely until the middle of last year, partly due to well-regarded acquisitions in the US where both derive a significant portion of their revenues. But when the FDA announced plans to reduce nicotine addiction through tobacco products shares across the board were hit hard.

As dramatic as the plan may sound, it’s worth noting that the details of exactly how it will be implemented may not be clear for some time and it’s likely that any major changes will be phased in gradually, which gives companies time to adjust and grow their non-nicotine next generation products. Judging by recent comments from the largest tobacco group, Philip Morris International, the sector will need to work harder and faster to grow its next generation sales in order to avoid a gap as tobacco volumes fall.

Investors need to be especially careful not to become overly obsessed with short-term movements in the shares of the big tobacco groups. They are mainly suitable for investors with a medium- to long-term outlook who are mostly interested in maximising income in their portfolios thanks to the steady nature of their revenues and the amount of cash they generate.

That, along with the huge range of markets they operate in, gives them a great ability to pay dividends and increase those consistently over time. With that in mind factors such as cash flow and dividend cover are much more important than daily changes in the share price. On top of that both BAT and Imperial Brands pay quarterly dividends with above-average yields.

IC View

Both these companies have done well to adapt to an ever-changing market for nicotine products. Traditional cigarettes may well represent the core of both businesses for some time, as it still accounts for a chunk of revenues – not to mention the fact that customers are quite literally addicted to these products. This could support the development of next-generation products, preventing investment being at the expense of cash flow or dividends. Nicotine is still a highly addictive substance no matter the delivery method, be it combustibles, vaporisers or some other further innovation. If customers are hooked, then the cash flows should keep coming well into the future.

[philanderer] 11/6/2018 09:14

oh blimey, we're up ;-)

[loganair] 09/6/2018 08:49

ire - HMG will most probably do it like diesel fuel. To make diesel cars popular HMG had a far lower tax on diesel fuel then on petrol. Once diesel cars became popular, up went the tax until diesel fuel became more expensive then petrol.

As a non-smoker sitting in the proximity of somebody vaping is far worse then a tobacco smoker. The plumes of clouds of horrible scent that comes from the vapes.

[jrphoenixw2] 08/6/2018 13:32

@IreneKent Interesting thought you have re: 'vapable weed'.
Several countries ban tobacco vapes already; health concerns they say... but I reckon more because it erodes the high government tax revenue on tobacco.
So I wonder if it would trigger more countries outright banning vapes, since testing the contents of every vape taken x-border by travelers like this would be a big task.

[philanderer] 08/6/2018 09:58

Yep, that as well.


Spreadex analyst Connor Campbell said: "After ignoring the trade tensions for as long as they could, a rocky Asian session has left the European indices feeling rather tender.

"A likely feisty G7 meeting in Quebec appears to be the main thing driving the markets lower. Investors are either worried that nothing will get resolved, or Trump will become more entrenched in his aggressive approach to trade. Regardless, with little else to focus on the FTSE and co. seem intent on undoing a lot of the good work seen in the last week."

Investors are expecting US President Trump to find himself isolated from other leaders at the summit. French President Emmanuel Macron has already warned that he won’t sign the traditional joint statement unless progress is made on tariffs, while Germany’s Angela Merkel is expected to challenge Trump on trade, climate and security.

[loganair] 08/6/2018 09:41

It seems to me more to do with the Fed likely to raise rates at their next meeting and therefore bond yields will continue to rise.

[philanderer] 08/6/2018 09:31

Morning EJ , indeed , just two of my twenty in positive territory.

All down to Trump being let loose at the G7 today apparently, plus another day of press leaks to undermine our PM ;-)

[irenekent] 08/6/2018 09:31

It would probably be best to sell for vaping as no tax involved. If sold as 'taylor-mades' you would need tobacco which would carry considerable tax. If a substitute for tobacco could be found, all the better. Alternatively, sell it as currently sold in resin or leaf form but with proper packaging. Growers would have to be licensed for quality control. No matter what there is a huge business to be built out there and probably one of the few opportunities for expansion open to the tobacco industry.

[loganair] 08/6/2018 09:14

iren - I understand that at least 1.5mln people regularly smoke dope in the UK. I remember years ago, if was legalised would bring in over £1.5bln in taxes for HMG, in todays money will be well over £2bln.