Every Sunday, we run a quick poll on the hottest subject in the Tobacco Industry. Hundreds of our Twitter/X followers vote, offering a collective wisdom on the subject matter or an immediate pulse on the market/industry developments.
Results of the Sunday polls:
In H1 2024, tobacco stocks slightly underperformed the overall market (mcap-weighted average +12% vs. +15% for the SP&500). What is your expectation for H2 2024? Recall: 54% expected tobacco to outperform in 2024 in our Dec 31, 2023 survey
– Outperform (61%)
– Market perform (20%)
– Underperfrom (19%)
What will the competitive landscape of the US vape market look like in 2030?
– Oligopoly: Altria, BAT and PMI-acquired JUUL (36%)
– Duopoly: Altria & BAT (31%)
– Who knows? (22%)
– Perfect Competition: large number of sellers (11%)
Do you think BAT should consider moving its primary listing to the US?
– Yes: 53%
– No: 47%
Will BAT’s financial delivery accelerate in the second half of 2024 (i.e., recover from low single-digit revenue and operating profit decline in H1 2024)?
– To some extent: 45%
– Unlikely: 22%
– Difficult to tell: 18%
– Significantly: 15%
What will you scrutinize first & foremost in the BAT H1 2024 Pre-Close Update?
– US cigarette volume decline: 33%
– Deleveraging & Share Repurchase Program (SRP): 28%
– RRP performance: 20%
– FY24 guidance: 19%
Does the acquisition of Eastern Tobacco stake contradict Philip Morris International’s publicly stated smoke-free ambitions? Recall: Eastern Tobacco is the largest cigarette company in Egypt with 70% market share. For further information: Egypt: Tobacco Market
– Yes: 54%
– No: 46%
Sunday Poll: Which tobacco major’s RRP/NGP approach do you endorse the most?
– British American Tobacco (Strong commitment – 50% smoke-free by 2035): 57%
– Philip Morris International (All in, at the expense of combustibles): 32%
– Altria & Imperial Brands (Focus on combustibles with some optionalities in RRPs): 6%
– Japan Tobacco (Balanced while aiming for an initial leap – $2Bn RRP investment in 2023-25): 4%
Which tobacco company do you trust the most in terms of quality of management actions?
– Philip Morris International: 50%
– British American Tobacco: 38%
– Altria: 7%
– Imperial Brands: 5%
Do you expect BAT to extend its share repurchase program for this year? Recall: (1) Current program: £700Mn in 2024, £900Mn in 2025; (2) Recent acceleration in repurchases
– Yes: 72%
– No: 28%
Despite the positive catalysts, BAT share price is not recovering. What is the main impediment?
– Lack of interest (in dividend, tobacco or British stocks): 40%
– US market decline: 31%
– Lack of trust (in Management or Strategy): 18%
– Stronger interventions expected (such as, a major change in capital allocation): 11%
What will you scrutinize first & foremost in the Philip Morris Q1 2024 results (April 23, 2024)?
– IQOS US launch: 30%
– Heated tobacco growth: 29%
– EPS adjustments & Operating Margin: 21%
– ZYN’s performance: 21%
What is the most important driver of the under-performance of tobacco stocks?
– Growth increasingly being favored over current cash-flow (disfavored industry in a secular decline): 38%
– Exclusion (unpopular, unethical, non-ESG): 32%
– High-yield alternatives (elevated Treasury yields): 21%
– Disappointing resilience against inflation: 9%
What will be the next big M&A deal in the Tobacco Industry?
– Altria – Japan Tobacco Merger: 39%
– Imperial Brands to be acquired: 38%
– KT&G to be acquired: 13%
– Other (STG, JUUL, etc.): 10%
