2914:JPN - Embedded Expectations Analysis - 2018 10 24
Japan Tobacco Inc. (2914:JPN) currently trades below recent averages relative to UAFRS-based (Uniform) Earnings, with a 13.8x Uniform P/E, implying bearish expectations for the firm. Moreover, management has concerns about meeting volume targets, long-term industry headwinds, and the launch of the Ploom TECH+Specifically, management appears concerned about the expected decline in volume across the tobacco industry, and may lack confidence in their ability to meet increased volume targets. Additionally, they may be concerned about the launch of the Ploom TECH+, and appear to be exaggerating the quality of Ploom TECH compared to competing products. Furthermore, they appear concerned about long-term market conditions affecting the tobacco industry, and may lack confidence in their ability to maintain both top-line and bottom-line growth. Lastly, they appear to lack confidence in their ability to effectively estimate the size of their addressable market
Japan Tobacco is mainly engaged in the manufacture and sale of tobacco products in the domestic and overseas markets. Along with its affiliates, Co. operates in four principal business segments: Japanese domestic tobacco, international tobacco, pharmaceutical, and processed food. Co. is engaged in the manufacture and sale of cigarettes in Japan and overseas; the research, development, manufacture and sale of ethical pharmaceuticals; and the manufacture and sale of frozen and ambient processed foods, bakery items and seasoning. In addition, Co. is involved in the leasing and management of real estate and the other businesses.
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