Imperial Brands remains a relevant shareholding even for non-smokers considers Chris Bailey...

BREAKING: #BoycottLush if you don’t support those who decapitate babies, call for Jews to be gassed and the raping of women as an act of war. Tom Winnifrith writes HERE

You will have your own thoughts about proposed new UK tobacco control measures. My personal view is that the combination of high tax rates and accelerated introduction of ‘next generation products’ (which should also be highly regulated and taxed), allows those who want to indulge in such a personal choice an acceptable way. I have no personal interest in ever utilising such products but, if other adults want to spend some of their available cash on such a product, I have no problem with that. I am sure others utilise matters in the food, drink, pharmaceutical, gambling and other areas which may not help their average medium-term health. And of course, there are others who do little of such “excitements” and still get ill. Such is the excitement of life! Moving on to the latest business update from tobacco and more company Imperial Brands (IMB).

Is Twitter an anti-semitic company or just a sewer? Apparently this poster does not break its rules. Read from TomWinnifrith.com HERE

It is never shabby when a company observes that it is “on track to deliver full-year guidance and announces further £1.1bn share buyback”. If we did not have the noted latest UK news my guess is that the shares would be further higher as although, the detailed formal set of numbers will have some further insights, it is far from shabby to read about “strong tobacco pricing driving constant currency net revenue and adjusted operating profit growth”. I have bored you all many times before about the total-return attraction of a holding in Imperial Brands. You need to remember though - as discussed here in November last year - that the major attraction with holding this name is the dividend and not mega profit (and hence share price) growth per se. If you ever see Imperial Brands stock at or around a twenty quid level, then I’d sell some (even if it is going ex-div).

Read HERE: Eneraqua Technologies – “pleased to announce” interims. Er, what about ANOTHER material profit warning?!

I guess if I see the shares at sub 15 quid, I would buy some back but the key return is coming from that dividend. And, whilst the numbers of smokers are declining, the broader sector continues to change. As aforementioned, personally you will never see me vape and related but - via heightened regulation and taxation - Imperial Brands (and its key global peers) will dominate that market too. You have got to remember that the broader tobacco market - like so many fast-moving consumer goods businesses - is so much about marketing and distribution. Imperial Brands is not a top tier player globally, but like any global market number three, four or five, the key is to play the angles. Ultimately (outside of China and Russia and specialist alternative products in places such as Indonesia), there is probably one deal left involving the remaining tobacco industry players. As always with deals, you predict them at your peril but I think something is coming in the 2020s. You could also throw in the scope for the industry to get involved more overtly with cannabis and related. Again, something I will never try but I think it should be legalised, regulated and taxed.

BREAKING HERE: More Acquisitions and Peterhouse Capital – what the f**k are you playing at?

Coming back to Imperial Brands, it is good to read that “the US, Spain and Australia are expected to show market share growth, more than offsetting declines in Germany and the UK”. Spot the benefits from distribution skills and product quality again. And, despite the lagged continuing exit issues from Russia, I can understand why it is still talking about mid-single digit CAGR at constant currency over the next couple of years and that buybacks have been hiked again. In short, ignore what the headlines are saying and keep enjoying the total return scope of the stock. And if the headline share price is either 15 quid or 20 quid specifically…you know my observations. At a just north of 17 quid share price, for my portfolio Imperial Brands is a strong total return holding.

Good news (GSK), expected news (PageGroup), less good news (bricks and related)…and Sir Keir Starmer. Read more from Chris Bailey HERE

Filed under: Imperial Brands, Lush, Twitter, Eneraqua Technologies, More Acquisitions, Chris Bailey

2023-10-11 13:49:15

Latest Tips