reports
- Jeanie Chen
Japan Tobacco's Russian Deal not as bad as Appeared
We were initially perplexed by Japan Tobacco’s decision to acquire Russia’s number four cigarette player Donskoy Tabak, or DT, and JSC Pereslavl-Tabak, or PT, for JPY 171 billion but think the deal make strategic sense from a perspective of protecting pricing flexibility after discussing our concerns with the company. Apart from a lift of Japan Tobacco International’s, or JTI's, market share to nearly 40% from current 33%, synergies arising from enhancement of production efficiency, join...
- Jeanie Chen
Launching Coverage of Japan Tobacco With Wide Moat and Negative Moat T...
We initiate coverage of Japan Tobacco with a fair value estimate of JPY 3,750, and assign it wide moat and negative moat trend ratings. The stock is trading at a 23% discount to our fair value estimate, although our earnings projections are 1%-7% below the consensus over the next three years. The current share price seems to imply flat earnings over the next five years, whereas we expect that growth in emerging markets, combined with prices hikes and share recovery in Japan, will sustain low-sin...
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