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BAT and Tobacco Regulation

CONSUMER STAPLES
  • BI's take on BAT; {NSN SAP3EADWX2PS <GO>}. We agree in not doubting its ability to delever into new targets & that buybacks (which have been restarted as expected) are not significant - it nets out with ITC sale proceeds (£1.6b) over next 2 years. We still don't see S&P moving to A- on new targets - yet it trades relatively tight to €PM's.
  • Regulation around Vapes remains a uncertainty for Tobacco names. BAT in the past has been quite specific in calls for regulation that suits it - licensing for vape sellers but bans on flavours that it doesn't sell. UK is rolling out disposable vape bans (expected to come in force early 2025) and restrictions on flavours & packaging restrictions. Hunt has also proposed in the budget a vaping tax.

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