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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
CONSUMER STAPLES
Some of Altria/MO trading wide of BAT may be reverse yankee discount (trades tight in $) but some of it we think is warranted on fundamentals - bar a firm view from investors on US regulation being more beneficial - which we don't have a skew on - we think current secondary (BAT trading tighter) will hold. We keep FV unch at +130, Guidance is +155.
- BAT is looking like it will price wide of MO's curve that goes through at +145. We've had questions if BAT secondary that currently trades tight to it is justified - key metrics for Tobacco issuers below that give some insight into that.
- Key differences for us is; 1) BAT is still deleveraging, Altria/MO is not, 2) Altria has entire geographical exposure to US (vs. 45% for BAT) and bar a firm investor view on regulation there leaves it less diversified 3) Has slightly lower exposure to high-growth non-combustible segment - arguably continued deleveraging (& not capex) from BAT may see that converge though.
- As mentioned before, higher non-combustible exposure is a positive given forecasted growth in double digits over coming years vs. flat/no growth in combustibles. Lower exposure is also likely to see catch-up capex spend (see JAPTOB & Altria as examples).
- Supply dynamics don't point to a firm skew to BAT either - in €'s it has a single Oct 24 maturity & both have only single 25 maturity with none in '26 (again €s)
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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