(Note: traders need not reply given the way the question is posed.) Put another way the question to be answered is what are the indicators that this is an industry heading for the terminus of discontinuance?
When buying an investment, make a note of why you are buying it in the first place: Target performance, target price at what intervals, target dividends, how far the price can decrease from the maximum price before you will sell, etc. After a while, when in doubt if it is still worthwhile to keep, go back to your notes. Sell if it does/did not perform according to your original expectations.
After SOL my largest holding in my long term portfolio, and as a Rand hedge hard to beat. Maybe a little overpriced at present, but a "must have" in a local portfolio. How many other industries would have survived had they had to content with all the restrictive laws the tabacco industry has had to face? Good time girls, alcohol and smokes have been here before you and me and will still be here when we no longer are. So my answer to your question...sell? Never.
Where are sales volumes going?Â” According to the annual report they fell 1.6% to 694bn cigarette sticks sold last year. They fell the year before that and the year before that too. Â“It is difficult to say whether sales are falling because consumers are cash strapped or because regulations that ban advertising or force manufacturers to use plain packaging [as in Australia] are having an effect,Â” says Wimble.
Expensive share , falling sales, mounting legal action - offset by some share buy backs - applauded by grateful shareholders like me. The assumption being made in this discussion is that this will all decline over a period and the ageing star can move gratefully off the stage into retirement. But who says the only risk is gradual decline? This is like the titanic. So if the BIG iceberg appears in the mist - and the business is forced to wind down - who will buy the trademarks - what assets are there to dispose of? South of Nothing? Perhaps the best route to exit is via Reinet...?
leal action is all behind them, now it just about the west trying to stop smoking (new zealand may ban smoking on the entire island) and BTI moving eastwards .. but I don't get your iceburg, we know the issues - nothing new, and we know the risks with the issues, it will be a process not an event
as at June 2012 about 11.8bn of the total asset value of 26.9 consisted of intangibles...and ignoring current assets which together with intangibles make up about 2/3 of value - there is not such a big party going on there : certainly not as the price indicates. The west is desperate in the face of falling state revenues to cut the cost of social spending - and there is no prize for guessing what the big ticket item is - health care (cf UK) :tobacco related illnesses make up a significant part of health care costs....at the expensive end. The pressure is going to crack the wall which these companies throw up - it won't be a taking down brick by brick. That is the iceberg scenario - if I can mix my metaphors.
You want to sell a stock that generates so much cash - and trades at a modest 19 times earnings? They continue to improve margins. The problem with BTI is that they can never really do anything with their cash - so now diversification, etc. But if by some miracle, the chinese market deregulates - BTI will have access to a market dominated by a state owned company bigger than Phillip Morris and BTI combined - and a market which single handedly caters for 40% of the worlds demand. I think you would see a huge spike in the share price if they by some miracle manage to penetrate that market - and in the meantime, you are enjoying decent dividends, margin improvement - and - dare I say it - a strongly trending stock. So why sell?