New Toyo

[Curiousparty]

3.05pm - 21 Sept 2012

Bid 28 cents (131 lots)
Ask 29 cents (131 lots)

So coincidental that the two matched?

[Underdogger]

"I'll tell you why I like the cigarette business. It cost a penny to make. Sell it for a dollar. It's addictive. And there's a fantastic brand loyalty."
-- Warren Buffett

[pianist]

"I'll tell you why I like the cigarette business. It cost a penny to make. Sell it for a dollar. It's addictive. And there's a fantastic brand loyalty." -- Warren Buffett

hmm..didnt know he said that before. yesterday in 'interviewed' a smoking friend (returning from US) over lunch, and asked him whether he would switch to electric cigar...he said he would like to...but he is a social smoker and still prefers the traditional type and moreover, electric cigar is banned in sg (partly becos govt will also

not able to derive sig tax revenue from electric type).

[Underdogger]

The big tobacco companies will make big profits either way.
Don’t think the draconian legislation or exorbitant excise tax will kill them. In fact, they will continue to recruit more and more smokers in the emerging markets in Asia Pacific, Eastern Europe and Latin Americans. They will have their "means" to market cigarettes in any segment of the population in any part of the world. They are the “consummate” world players….

Supporting industries such as tobacco packaging/printing, etc will continue to do well when the world is in deep recession. SIN industries will always win at the end of the day…
Every government knows the revenue potential.

The plain packaging law in Australia is just a political gimmick to score some points. I think at the end of the day, the government will get so many headaches from "illicit cigarettes" that they might regret their actions.

Can anyone list down sectors or trades with higher profit margin than tobacco manufacturing?

Tks.

"I'll tell you why I like the cigarette business. It cost a penny to make. Sell it for a dollar. It's addictive. And there's a fantastic brand loyalty." -- Warren Buffett

hmm..didnt know he said that before. yesterday in 'interviewed' a smoking friend (returning from US) over lunch, and asked him whether he would switch to electric cigar...he said he would like to...but he is a social smoker and still prefers the traditional type and moreover, electric cigar is banned in sg (partly becos govt will also

not able to derive sig tax revenue from electric type).

[Curiousparty]

Based on the last few years, the regular dividend record date is next week (1st week of October).

If there is any special dividend, would it be announced during the same period?

[Stockerman]

I also understand that the big tobacco companies are now trying to target the female segment of the population in the so-called emancipation of woman. The smoking rate is picking up in Spore despite all the measures. Govt seemed to have been dumbfounded.

Is the higher smoking rate suggestive of higher income inequality and the emergency of a larger underclass in Spore? The female smoking rate is also going up. Smoking in developed countries tends to have a high correlation with lower income segment of the society.

The big tobacco companies will make big profits either way.
Don’t think the draconian legislation or exorbitant excise tax will kill them. In fact, they will continue to recruit more and more smokers in the emerging markets in Asia Pacific, Eastern Europe and Latin Americans. They will have their "means" to market cigarettes in any segment of the population in any part of the world. They are the “consummate” world players….

Supporting industries such as tobacco packaging/printing, etc will continue to do well when the world is in deep recession. SIN industries will always win at the end of the day…
Every government knows the revenue potential.

The plain packaging law in Australia is just a political gimmick to score some points. I think at the end of the day, the government will get so many headaches from "illicit cigarettes" that they might regret their actions.

Can anyone list down sectors or trades with higher profit margin than tobacco manufacturing?

Tks.

"I'll tell you why I like the cigarette business. It cost a penny to make. Sell it for a dollar. It's addictive. And there's a fantastic brand loyalty." -- Warren Buffett

hmm..didnt know he said that before. yesterday in 'interviewed' a smoking friend (returning from US) over lunch, and asked him whether he would switch to electric cigar...he said he would like to...but he is a social smoker and still prefers the traditional type and moreover, electric cigar is banned in sg (partly becos govt will also

not able to derive sig tax revenue from electric type).

[Underdogger]

I believe BAT will "take the Australian Govt to task".

One year ago, BAT said that the prices would be driven down and they have launched the Budget Brand "Just Smokes".



********

Response to decision of the Australian High Court in plain packaging case
15 August 2012


The Australian High Court case centred on three key legal arguments:

•first, that items including trademarks, copyright, designs, patents, goodwill, physical products and packaging constitute property;
•secondly, that plain packaging legislation would see British American Tobacco stripped of any right to this property; and
•thirdly that a related benefit had been passed on to the Australian government as a result.
The decision of the Australian High Court was not accompanied by a full written judgement setting out the rationale for their decision. We understand this will be made available in the coming months.

We are extremely disappointed by the decision of the Australian High Court and remain convinced that the Tobacco Plain Packaging Act is not only a bad piece of law, but that it is one that will have many unintended consequences for years to come.

It is important to remember that the scope of the High Court proceedings was tightly focused on addressing whether plain packaging legislation is contrary to a very specific point in the Australian constitution. As such, today’s decision only concerns Australian constitutional law.

In addition, this decision is wholly separate from the various other investment and trade-related disputes which Australia is currently facing as a result of introducing the Tobacco Plain Packaging Act. These include Australia’s World Trade Organisation dispute with Honduras, Dominican Republic and Ukraine, and the claim Australia is facing for breaching its Bilateral Investment Treaty with Hong Kong.

We fully support any form of evidence-based regulation but there is no proof to suggest plain packaging of tobacco products will be effective in discouraging youth initiation or encouraging cessation by existing smokers.

In fact, plain packaging would only exacerbate an already significant illicit tobacco trafficking problem, and would have other significant adverse unintended consequences including driving down prices which would lead to increased smoking while reducing government tax revenue.

British American Tobacco will continue to take every action necessary to protect our valuable brands and our right to compete in global markets as a legitimate commercial business selling a legal product, based on the full legal use of our intellectual property rights.

[Underdogger]

What would this mean for BAT-supporting companies such as New Toyo?

******
Analysts add if plain packaging succeeds in commoditizing the industry, it could raise pressure for takeovers to cut costs, and Evolution’s Manso says BAT and Japan Tobacco could be prompted into a break-up bid for world No. 4 Imperial.
Manso says BAT and JP have higher cost bases in Europe than Philip Morris and Imperial, and this may prompt them into a bid for the smaller Imperial, which would have to be a joint break-up bid to get around anti-trust problems.


Imperial better placed for plain packaging threat – Analysis
Posted on February 1, 2011 | Leave a comment
LONDON, – Britain’s Imperial Tobacco looks better placed than rivals with more expensive brands if plain packaging rules for cigarettes spread from developed to emerging markets, as health warnings did.
New rules are being explored in Australia and Britain, but analysts say the real risk from plain packaging is if it spreads to emerging markets, where it would slow consumers moving to more pricey and profitable brands.
Smokers in big emerging markets such as Brazil, Russia and Indonesia aspire to top western brands such as Marlboro and Lucky Strike cigarettes, which confer status on the individual and bigger margins to the maker.
Plain packaging interferes with that mechanism, helping makers like Imperial, with its focus on low-priced brands such as Lambert & Butler.
In mature markets, where Imperial makes 70 percent of its profits, packaging changes are expected to have a relatively low impact on smokers’ choices.
London-based BAT has a 50-50 split of earnings from mature and developing markets, and three of its four top brands — Lucky Strike, Kent and Dunhill — are premium priced.
“Plain packaging looks to be far less risky for value players … So far, Imperial Tobacco looks better placed versus its peers,” said analyst Chas Manso at Evolution Securities.
“We believe plain packaging would be negative for the entire tobacco industry, but we are doubtful it would represent a nemesis, especially not in mature markets. But it could knock out the main premiumisation driver in emerging markets.”
BAT’s two biggest global markets are in Brazil and South Africa, and analysts say the key to profitability there is luring smokers from cheap local to premium brands.
“With the price gap between premium and discount brands across the global typically around 35-40 percent, those with big brands in emerging markets will suffer,” said one analyst.
These include the world’s three biggest cigarette groups Philip Morris International, with its Marlboro cigarettes brand, BAT and Japan Tobacco, with its Camel cigarette brand.
Analyst Adam Spielman at Citi says industry profitability depends on consumers paying premiums for some brands, and plain packaging would reduce the power of the brand, especially expensive brands growing strongly in emerging markets.
“We certainly don’t see plain packaging as any sort of positive for the industry. We think the uncertainty it provokes would well weigh on the multiples,” he said.
Worries over slow global recovery and plain packaging have rattled tobacco shares; Imperial and BAT have underperformed the FTSE 100 by 9 and 6 percent so far this year.
BAT shares trade on 12.4 times 2011 forecast earnings and Imperial 9.5 times, well below top-rated consumer stocks such as Reckitt Benckiser on 15 times, and analysts say concern over plain packaging could widen that gap.
FRONT RUNNERS
Australia and Britain are looking at rules to force cigarette makers to sell their products in plain packages with the brand name in a standard typeface, removing the allure of attractive packaging, colours and logos.
Australia aims to introduce it by 2012. Its new government has not included the measure in its first legislation programme, but analysts expect a bill within 12 months.
Britain is considering introducing plain packaging and will publish a Tobacco Control Plan this winter to confirm its plans, while the European Union is expected to recommend that plain packaging should be considered.
Other countries are moving in a similar direction. Canada announced that health warnings would be required soon to cover 75 percent of both sides of the pack, and Uruguay has passed laws for 80 percent coverage. Analysts say the effect will be more or less the same as plain packaging.
Uruguay’s move could influence other emerging markets such as neighbouring Brazil, BAT’s biggest market.
No other countries have yet announced such plans.
Analysts add if plain packaging succeeds in commoditizing the industry, it could raise pressure for takeovers to cut costs, and Evolution’s Manso says BAT and Japan Tobacco could be prompted into a break-up bid for world No. 4 Imperial.
Manso says BAT and JP have higher cost bases in Europe than Philip Morris and Imperial, and this may prompt them into a bid for the smaller Imperial, which would have to be a joint break-up bid to get around anti-trust problems.
A BAT spokeswoman said the group was strongly opposed to plain packaging as it removed the last way it can differentiate its product from its rivals and says the measure would simply encourage the production of more counterfeit cigarettes.

[Stockerman]

there would probably be disappointment and sell-off if still no news of special dividends next week?

Based on the last few years, the regular dividend record date is next week (1st week of October).

If there is any special dividend, would it be announced during the same period?

[ken]

I think,

Next week or later, they will just declare the announced payment date of the 0.008 cts dividend.

The price support level should be around $0.28.

I doubt they would declare a dividend even in the 3rd Q financial report, which is in Novevember.

(vested)