Investment Focus - The individual primarily invests in stocks and ETFs, with a preference for US companies but also analyzes European and Chinese companies [1] - Investments are long-term and often take a contrarian approach [1] Sector Interest - The banking sector is of particular interest as it is considered fundamental to understanding the health of an economy [1] - Macroeconomics is also a key area of interest [1] Analytical Approach - Fundamental analysis is the preferred method, focusing on evaluating the actual results achieved by a company rather than technical analysis involving charts and price movements [1]

Industry Overview - Despite declining cigarette usage, the tobacco industry remains strong in 2025, with consumers shifting to emerging products like oral nicotine pouches and electronic devices [1] Company Performance - British American Tobacco (BAT) has shown resilience by focusing on innovation and high-growth categories, with the stock returning 31% over the past year [2] - BAT operates in over 150 countries and is known for iconic cigarette brands like Dunhill, Lucky Strike, Newport, and Camel [3] - The company is progressing toward becoming a predominantly smokeless business by 2035, with 18% of revenue from new categories in H1 2024, up from 6% in 2017 [4] - BAT's Vuse brand is the global market leader in rechargeable vaporizers, while glo holds the No 2 position in heated products [4] - Velo nicotine pouches are a major growth driver and market leader outside the US [4] - In H1 2024, BAT achieved 7 4% organic constant currency revenue growth from new categories, offsetting a 2 6% decline in traditional cigarettes [5] - Adjusted EPS increased 1 3% YoY, with climbing operating margins [5] - BAT expects low-single-digit organic revenue and adjusted profit growth in constant currency terms for full-year 2024 [5] - Management anticipates progressive improvement into 2025 and mid-single-digit profitable growth by 2026 and beyond [6] Valuation - BAT shares trade at a forward P/E ratio of 7x 2025 consensus EPS, significantly below peers Altria (10x) and Philip Morris International (17x) [7] - The discounted valuation may be due to BAT's global profile and reliance on emerging markets, contrasting with Altria's US focus and Philip Morris' success with Zyn in the US [8] - BAT's diversified global footprint is a strategic advantage, providing flexibility to adapt to evolving regulations and consumer preferences [9] Dividend - BAT offers an industry-leading 8 2% dividend yield, supported by significant free-cash-flow generation [10] - The company has a 25-year track record of consecutive dividend increases, with management committed to continued dividend growth [10] Outlook - 2025 is expected to be a significant year for BAT as it builds momentum with its smokeless product lineup [11] - The company is well-positioned to deliver positive returns over the next several years and is a good option for diversified portfolios [11]

Investment Group Overview - Sensor Unlimited leads the investing group Envision Early Retirement, offering solutions for high income and growth with isolated risks through dynamic asset allocation [2] - The group provides two model portfolios: one for short-term survival/withdrawal and another for aggressive long-term growth [2] - Features include direct access via chat for idea discussions, monthly updates on holdings, tax discussions, and ticker critiques by request [2] Analyst Background - Sensor Unlimited is an economist with a PhD in financial economics and a quantitative modeler [3] - Over the past decade, the analyst has covered the mortgage market, commercial market, and banking industry [3] - The analyst writes about asset allocation and ETFs, particularly those related to the overall market, bonds, banking, financial sectors, and housing markets [3] Trial Offer - A 100% risk-free trial is available to test the proven method without incurring costly market lessons [1]

Core Viewpoint - British American Tobacco offers a high dividend yield of 8.2%, but the company faces significant risks due to declining cigarette volumes and the need to adapt its business model [1][5]. Business Performance - Cigarette volumes have been consistently declining, with a 6.8% drop in the first half of 2024 compared to the same period in 2023, following a 5.3% decline in 2023 and a 5.1% decline in 2022 [3][4]. - The combustibles division, which includes cigarettes, constitutes approximately 80% of the company's revenues, with cigarettes making up nearly 98% of the volume within that division [6]. Future Outlook - By the end of 2024, British American Tobacco's brands will have an estimated 29 years of "value" left, decreasing to 28 years by the end of 2025, indicating a continuous decline in brand longevity [4]. - The company is attempting to diversify its business, with new ventures accounting for around 20% of total revenue, but these efforts are not yet sufficient to counterbalance the declines in the cigarette business [4]. Financial Implications - If the current decline continues, cigarette sales could drop from approximately 555 billion in 2023 to around 517 billion in 2024, and potentially to 482 billion in 2025, assuming the rate of decline remains constant [7]. - Price increases have temporarily offset volume declines, but there is a limit to how much prices can be raised before further exacerbating the volume drop [8].

Group 1 - British American Tobacco (NYSE: BTI) is a leading tobacco company with significant momentum in alternative tobacco products [3] - The company's Vuse vapor brand is experiencing very favorable key performance indicators (KPIs) [3] - British American Tobacco is increasing its shareholder distributions [3]

Core Insights - The individual has a strong interest in financial markets, particularly in fundamental analysis, which evaluates actual company performance rather than stock price movements [1] - The focus is primarily on long-term investments in stocks and ETFs, with a preference for US companies, while also analyzing European and Chinese firms [1] - The banking sector is highlighted as a key area of interest, as it is essential for understanding economic health [1] Investment Approach - The investment strategy is characterized by a contrarian view, indicating a willingness to go against prevailing market trends [1] - The individual emphasizes the importance of macroeconomics in investment decisions, suggesting a holistic approach to market analysis [1]

Core Viewpoint - British American Tobacco (BAT) has experienced a 7% decline in share price in the month prior to the article, indicating potential challenges in its market performance [1]. Company Analysis - The article highlights the recent struggles of BAT's share price, suggesting that the pullback may present a buying opportunity for investors [1]. - The author, Manika, has over 20 years of experience in investment management and focuses on opportunities in the green economy, which may influence the future direction of BAT's strategies [1]. Industry Context - The green economy is identified as a generational opportunity, which could impact traditional sectors like tobacco, as companies may need to adapt to changing consumer preferences and regulatory environments [1].

Group 1 - Traditional combustible cigarettes remain the primary source of sales for British American Tobacco (BAT), and this trend is expected to continue in the near future [2] - BAT is expanding its portfolio of alternative nicotine products, which is attracting a growing consumer base globally [2] - Although BAT lost the first-mover advantage in heated tobacco to Philip Morris International (PMI), it leads in e-vapour products and ranks second in smokeless tobacco and nicotine pouches [2] Group 2 - The company profile of British American Tobacco in the Tobacco industry provides a comprehensive strategic analysis, including performance metrics, regional and sector shares, product developments, and market strategies [3] - The report covers various product categories such as cigarettes, cigars, smokeless tobacco, e-vapour products, and heated tobacco [4] - Data included in the report encompasses market sizes (historical and forecasts), company shares, brand shares, and distribution data [5] Group 3 - The report aims to provide insights into growth sectors, competitive positioning, and factors driving change within the tobacco market [7] - Key topics covered in the report include the current state of the market, exposure to future growth, competitive positioning, and key findings [7]

Analyst's Perspective - The analyst is bullish on British American Tobacco (NYSE: BTI) and has previously expressed optimism about the company's prospects [1] - The analyst is a seasoned value investor with nearly 20 years of experience, focusing on undervalued companies with a significant margin of safety, attractive dividend yields, and strong returns [1] - The analyst prioritizes companies with a solid earnings track record trading at less than 8x free cash flow, which aligns with his investment philosophy [1] Disclosure and Position - The analyst holds a beneficial long position in British American Tobacco through stock ownership, options, or other derivatives [2] - The article reflects the analyst's personal opinions and is not influenced by compensation or business relationships with the mentioned companies [2]

Group 1 - The article discusses the investment group The Dividend Kings, which aims to help investors safeguard and grow their money through high-quality dividend investments [2] - The team of analysts associated with The Dividend Kings provides resources such as model portfolios, buy ideas, and company research reports to assist members in making informed investment decisions [2] - The article emphasizes the importance of intelligent investing in dividend stocks, highlighting the community aspect where readers can learn from each other [2]