Author Topic: MO - Altria Corp  (Read 16316 times)

LC

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Re: MO - Altria Corp
« Reply #70 on: February 01, 2019, 03:19:14 PM »
Vaping products use propylene glycol or vegetable glycerin as the delivery system for associated contents (nicotine, flavorings)

Here is some analysis of the heating of propylene glycol:
https://chemistry.stackexchange.com/questions/14771/how-does-propylene-glycol-glycerin-form-formaldehyde-acetaldehyde-when-vaporized

The flavors may also be harmful when heated and inhaled.

Personally, I would rather smoke a cigarette than a vape-pen. The risks are known.

I am invested here because I think the valuation is attractive if we focus solely on running off the cigarette portfolio to adults. They need to get out of this nonsense that vaping is "healthier"
"Lethargy bordering on sloth remains the cornerstone of our investment style."
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brk.b | irm | mo | nlsn | pm | tap | v | vz | wm


Foreign Tuffett

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Re: MO - Altria Corp
« Reply #71 on: February 01, 2019, 03:47:34 PM »

I'm not trying to be pedantic with all of this. My overall point is that the structure of the US cigarette industry is changing surprisingly quickly from a two company oligopoly to a vaping free-for-all. The profit pool for the latter is likely to be much smaller than the profit pool for the former.

Thats the consensus view right now, the problem is it is wrong and that are the situations where you can make a lot of money. Look at the data, smoking decline rates have not changed the past years. Vaping is a new market and it doesn`t subtract from the cigarette market, it attracts more non-smokers than smokers. iQoS might attract more "normal" smokers, because it is more tobacco like. At least thats my view right now and i think i read that MO and BTI management is saying something similar. And it looks like margins for ecigs are even higher than for cigarettes, because it costs the same, but there are no taxes on it in a lot of countries (HEETS for example in germany are 5€ per pack, i bet that PM makes much more on them than on a regular pack of cigarettes).
And people just don`t change their ecig habits that easily, when you buy a device you stay with it (1% of iQoS users have switched to other ecigs when i recall that correctly). The companies make the money with the refills, like Nestle makes money with capsules and not with the nespresso machine (Or the printer manufacturers make their money with the cartridges.). Thats still a great business.

This quote is from a Seeking Alpha article: (https://seekingalpha.com/article/4222462-concerned-proposed-menthol-ban)
Quote
Therefore, the logical outcome is that the vast majority of menthol smokers will simply switch to non-menthol cigarettes, a view confirmed by people I know who have smoked menthol cigarettes in the past.

But i may be wrong on all of this, so take it with a grain of salt.

Analyst report quote: "[North American] cigarette vols contracted at a 2.9% annual rate over the 2012-17 period, including a -3.3% dip in Canadian vols and a -2.9% drop in US volumes."

Pretty clear MO's cig volumes are going to be down by more than -2.9% this year. Looking at the historical data can be misleading, since Juul (and vaping as a whole) is so new + growing rapidly.

I am probably going to take a break from posting in this thread for awhile. Carry on!

Just to follow up on the above: US industry cig volumes were down by -4.5% in 2018. 2019 decline is predicted to be -3.5 to -5%. Altria projects -4 to -5% volumes per year over the 2019 to 2023 time period.

All #s from Altria's Q4 CC.

frommi

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Re: MO - Altria Corp
« Reply #72 on: February 01, 2019, 11:48:52 PM »
Just to follow up on the above: US industry cig volumes were down by -4.5% in 2018. 2019 decline is predicted to be -3.5 to -5%. Altria projects -4 to -5% volumes per year over the 2019 to 2023 time period.

All #s from Altria's Q4 CC.

Yes, i think we can agree that we both were right to some extend. Vaping subtracted -0.4% from cigarettes, but also attracted 0.8% non-smokers into the nicotine world. To complete your post:
Decline rates:
2013: -4%
2014: -3.5%
2015: -0.5% <-- argumentation is that low gas prices contributed to this, look at gas prices in 2019!
2016: -2.5%
2017: -4%
2018: -4.5% <-- 0.5% volume decline to vaping, so nothing unusual, if you include 0.8% that goes to vaping, MO`s real volume decline is lower and in-line with the past.
2019: -3.5% -> -5% estimation.

So overall i am not really worried about volume declines anymore and think that 2019 can surprise to the upside like in 2015, because gas prices are way down from 2018.
In the conference call they mentioned that they include JUUL`s operating profit as soon as they get antitrust approval and expect it in late 2019. So they should easily be able to grow faster again in 2020 on that metric.

Foreign Tuffett

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Re: MO - Altria Corp
« Reply #73 on: February 02, 2019, 12:04:56 PM »
Just to follow up on the above: US industry cig volumes were down by -4.5% in 2018. 2019 decline is predicted to be -3.5 to -5%. Altria projects -4 to -5% volumes per year over the 2019 to 2023 time period.

All #s from Altria's Q4 CC.

Yes, i think we can agree that we both were right to some extend. Vaping subtracted -0.4% from cigarettes, but also attracted 0.8% non-smokers into the nicotine world. To complete your post:
Decline rates:
2013: -4%
2014: -3.5%
2015: -0.5% <-- argumentation is that low gas prices contributed to this, look at gas prices in 2019!
2016: -2.5%
2017: -4%
2018: -4.5% <-- 0.5% volume decline to vaping, so nothing unusual, if you include 0.8% that goes to vaping, MO`s real volume decline is lower and in-line with the past.
2019: -3.5% -> -5% estimation.

So overall i am not really worried about volume declines anymore and think that 2019 can surprise to the upside like in 2015, because gas prices are way down from 2018.
In the conference call they mentioned that they include JUUL`s operating profit as soon as they get antitrust approval and expect it in late 2019. So they should easily be able to grow faster again in 2020 on that metric.

No, I think you were just wrong. Feel free to disagree if you'd like, but I think this is clear enough that it's not worthwhile to argue about it at length.

frommi

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Re: MO - Altria Corp
« Reply #74 on: February 02, 2019, 10:11:30 PM »
No, I think you were just wrong. Feel free to disagree if you'd like, but I think this is clear enough that it's not worthwhile to argue about it at length.

Haha, that is funny! Regardless, i wish you a great time.  ;D

DooDiligence

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Re: MO - Altria Corp
« Reply #75 on: May 10, 2019, 07:26:34 AM »
Once again, I believe Howard Willard & the BOD are idiots.

---

re: Chronos

"The company urged investors to focus on an “adjusted Ebitda” number, representing earnings before interest, taxes, depreciation, and amortization, with some one-time charges removed."

Of course they said that...

---

"Among its quarterly accomplishments, Cronos pointed to the receipt of the cash from the Altria deal, some management hires, and progress in building greenhouses in Ontario and Israel. It expects to complete construction on the projects in the second half of this year. Israel will allow producers of marijuana to export the product for medical use."

That ought to move the needle  :o

---

https://www.barrons.com/articles/marijuana-grower-cronos-pot-sales-earnings-weak-51557408137
Healthcare 25.2% - CVS EW NVO // BRK.B - 23.1% // Auto's & Oil 14.8% - CLB GPC VDE

Media & Communication 8.4% - CHTR DIS // Banking 6.6% - WFC // Drinkers & Smokers 5.5% - MO

Tech 0.0%

%'s held @ MV 08/15/2019 minus 16.6% investable cash

i trumpet my ignorance

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mwtorock

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Re: MO - Altria Corp
« Reply #76 on: July 11, 2019, 06:57:50 AM »
These guys are raising prices like nothing before. it would either prove that they have super strong pricing power, or they are desperate to make their numbers for the year.

Foreign Tuffett

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Re: MO - Altria Corp
« Reply #77 on: July 11, 2019, 07:23:29 AM »
These guys are raising prices like nothing before. it would either prove that they have super strong pricing power, or they are desperate to make their numbers for the year.

MO is trying to compensate for accelerating volume declines by jacking the price up on aging smokers who are too set in their ways to ever switch from conventional cigarettes to vaping.

DooDiligence

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Re: MO - Altria Corp
« Reply #78 on: July 11, 2019, 07:31:14 AM »
These guys are raising prices like nothing before. it would either prove that they have super strong pricing power, or they are desperate to make their numbers for the year.

MO is trying to compensate for accelerating volume declines by jacking the price up on aging smokers who are too set in their ways to ever switch from conventional cigarettes to vaping.

Gotta show something so shareholders don't get up in arms over the big comp packages coming in the wake of their "masters of the universe" investment activity this year.
Healthcare 25.2% - CVS EW NVO // BRK.B - 23.1% // Auto's & Oil 14.8% - CLB GPC VDE

Media & Communication 8.4% - CHTR DIS // Banking 6.6% - WFC // Drinkers & Smokers 5.5% - MO

Tech 0.0%

%'s held @ MV 08/15/2019 minus 16.6% investable cash

i trumpet my ignorance

https://twitter.com/tunawish

DooDiligence

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Healthcare 25.2% - CVS EW NVO // BRK.B - 23.1% // Auto's & Oil 14.8% - CLB GPC VDE

Media & Communication 8.4% - CHTR DIS // Banking 6.6% - WFC // Drinkers & Smokers 5.5% - MO

Tech 0.0%

%'s held @ MV 08/15/2019 minus 16.6% investable cash

i trumpet my ignorance

https://twitter.com/tunawish