全球煙草行業(yè)報告：核心增長正處于拐點

1、Contents HYPERLINK l _TOC_250033 Executivesummary4 HYPERLINK l _TOC_250032 Companyinvestmentcases11 HYPERLINK l _TOC_250031 British American Tobacco (Buy,PT40)12 HYPERLINK l _TOC_250030 Japan Tobacco (Buy, PTJPY3,400)13 HYPERLINK l _TOC_250029 Philip Morris International (Buy,PT$101)14 HYPERLINK l _

2、TOC_250028 Imperial Brands (Neutral,PT24.00)15 HYPERLINK l _TOC_250027 ITC (Buy,PTRs375)16 HYPERLINK l _TOC_250026 Gudang Garam (Buy, PTRp95,000)17 HYPERLINK l _TOC_250025 HM Sampoerna (Buy, PTRp4,500)18 HYPERLINK l _TOC_250024 Altria (Neutral, PT $52)19 HYPERLINK l _TOC_250023 KT&G (Neutral, PTKRW1

3、05,000)20 HYPERLINK l _TOC_250022 BAT Malaysia (Neutral, PTRM38.00)21 HYPERLINK l _TOC_250021 Building a globaltobaccomodel22 HYPERLINK l _TOC_250020 Globaltobaccodrivers24 HYPERLINK l _TOC_250019 Volumes recorddeclines24 HYPERLINK l _TOC_250018 Revenue struggling to offsetdeclines27 HYPERLINK l _TO

4、C_250017 Tobaccoindustryoutlook28 HYPERLINK l _TOC_250016 Implicationsfororganicgrowththemodelisfine31 HYPERLINK l _TOC_250015 Volume upside taking share fromillicit?35 HYPERLINK l _TOC_250014 Who isgainingshare?36 HYPERLINK l _TOC_250013 PMI iQOS is/will be thesharedriver36 HYPERLINK l _TOC_250012

5、BAT consistentsharegrowth37 HYPERLINK l _TOC_250011 IMB stableoverallshare38 HYPERLINK l _TOC_250010 JT international businessgrowingshare39 HYPERLINK l _TOC_250009 Markets withUBScoverage40 HYPERLINK l _TOC_250008 United States40 HYPERLINK l _TOC_250007 Indonesia46 HYPERLINK l _TOC_250006 Japan48 H

6、YPERLINK l _TOC_250005 South Korea51 HYPERLINK l _TOC_250004 India53 HYPERLINK l _TOC_250003 Malaysia55 HYPERLINK l _TOC_250002 Globaloutlookdetail57 HYPERLINK l _TOC_250001 Macro context58 HYPERLINK l _TOC_250000 Prevalence64Taxes69Revenue andvolumes74Referencesheets80Combustible market summary81Gl

7、obal volumecountry drivers82Global constant FX revenue growthcountrydrivers83Global US$bn revenuegrowth drivers84Executive summaryWe see opportunity in the sectorHistorically, the key driver of tobacco company valuations has been the industry volume outlook. Despite the focus on next generation prod

8、ucts, most conversations on the industry begin with the core business; unsurprising given combustibles account for 90%+ of profit and 100% of cash flow. This is true for both the international and national tobacco companies.10% NGPupsideoptimism10% NGPupsideoptimismv20%aluationgap-26%Global Tobacco

9、PE relative (%)10%Industry volumes(%)0.00%5%-0.75%0%-1.50%-5%-2.25%-10%-3.00%-15%-3.75%-20%-4.50%-25%-5.25%-30%Jan-10 Jul-10 Jan-11 Jul-11 Jan-12Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18-6.00%Jul-18 Jan-19 Jul-19ReltoMSCIWorldStaplesVolumes(%,RHS) Volumes (%

10、,RHS)Source: UBS estimates, company data.Thegapbetweenindustryvolumesandtobaccovaluationsrelativetostaplesisthe widest it has been in 10 years. Our view is that there is a perception that the industry model is broken. For at least the next three years, we disagree, and we seeupsidebothforinternation

11、alandnationaltobaccocompanies HYPERLINK l _bookmark0 (Figure3).Figure 3: We see upside for both international and national tobacco companiesWe see opportunity in the tobacco sectorBritish AmericanTobaccoBritish AmericanTobaccoJapan Philip Morris InternationalImperialBrandsHM Sampoerna(Indonesia)ITCG

12、udang Garam(Indonesia)BAT Malaysia KT&G (SouthKorea)Altria(US)InternationalBuyNeutralNational0%5%10%15%20%25%30%35%NationalSource: UBS estimates2013 to 1H18 was a bleak period for the industrySowhathasdriventhede-rating?Thevolumedeclinesofthepastfiveyearswere the worst on record HYPERLINK l _bookmar

13、k1 (Figure 4). While 2018 ended up better than expected, for mostoftheyearitwasexpectedtobeevenworsethan2017.Inourview,thishas created a perception that the industry model isbroken.Figure 4: RecordvolumedeclinesFigure 5: Driven by developingmarketsGlobalexChinaandUSvolumegrowth(%) 8%6%4%2%0%-2%19601

14、962196019621964196619681970197219741976197819801982198419861988199019921994199619982000200220042006200820102012201420162018Contribution to volume growth3%2%1%0%-1%-2%-3%20022003200420022003200420052006200720082009201020112012201320142015201620172018DevelopedmarketDevelopingmarketSource:UBSestimates,

15、FTC,companydata,Euromonitor.Note:1991-2001are estimated based on bridging twosources.Source: UBS estimatesThis has been observable in the reported revenue growth of the industry; most notablyfortheinternationaltobaccocompanies HYPERLINK l _bookmark2 (Figure6)BATandPMI,butalso forITCandBATMalaysia HY

16、PERLINK l _bookmark3 (Figure7).Thishasbeenfurthercompoundedbyadverse currency moves impacting the most material tobaccomarkets.Figure6:Internationalcompanies2013-18wasweakerFigure7:NationalcompaniessimilartrendsReported revenue growth (%)6%5%4%3%2%1%0%-1%-2%Reported revenue growth (%)20%15%10%5%0%-5

17、%-10%British American Tobacco*JapanTobaccoPhilipMorrisImperial BrandsITC(India)HM Gudang GaramBATMalaysiaKT&GAltria (US)(Indonesia)*(Indonesia)Korea)2008-20132013-182018-23Source: Companydata,UBSestimates.*AdjustedforRAI,whichweviewas transformational.2008-20132013-182018-23Source: Company data, UBS

18、 estimates. *Data pre 2012 not available.Henceamajortobaccode-ratingwhenPMIrevealedthatiQOSgrowthhadslowed in Japan back in Apr-2018. One potential out for the industry (heated tobacco) was thought to have been closed. The emergence and impact of JUUL in the US drove the de-rating over the rest of t

19、he year.Tax outlook is betterAs HYPERLINK l _bookmark4 Figure8shows,therehasbeennorealstepchangeinprevalencetrends.We expect the current trajectories to continue over the next five years. We instead attributetheaccelerationinvolumedeclinestotax-drivenchangesinaffordability, which have disproportiona

20、tely hit high volume markets HYPERLINK l _bookmark5 (Figure9).Taxesas%ofdailyPCGDP, rebasedto2005=100180FcastUnweighted ave.160140Taxesas%ofdailyPCGDP, rebasedto2005=100180FcastUnweighted ave.160140Volume weighted1201008060Smokingprevalence(%)Fcast26%24%22%20%18%DevelopedWorld16%14%12%Emerging200520

21、06200720082009201020112012201320142015201620172018201920202021202220052006200720082009201020112012201320142015201620172018201920202021202220232024202520262027202820292005200620072008200920102011201220132014201520162017201820192020202120222023Volume weighted average ex ChinaEmerging marketsSource:Top

22、40markets.UBSestimates,Euromonitor,WHO.Weightedby population over 15.Source: UBS estimatesWe forecast the tax environment over the next five years for the top 40 tobacco markets. Based on the current legislative environment and currently announced plans, we expect a similar trajectory in terms of th

23、e number of excise shocks, but thatthemarketshitareonaveragesmallinvolumeterms(meanreversion).Welay outtheseexpectationsonacountrybycountrybasisindetailin HYPERLINK l _bookmark49 Figure85.From external tax shocks to revenue growthExcisetaxchangesare(largely)independentoftobaccocompanybehaviourandin

24、most markets impact all participants equally. The industry will aim to raise prices sufficiently to grow revenue enough to offset the volume decline, with the constraintthatthefurtherpricesareincreasedthebiggerthevolumedecline.For each market we use implied price elasticity as the check. The end res

25、ult is we expect a return to growth for industry net revenue HYPERLINK l _bookmark6 (Figure10).Figure 10: Under the current tax outlook, the industry can grow againFcastTop 40 industry net revenue(USDbn) Fcast140In reported terms, we expect the sector to return to growthEx USOf which USWorld20200520

26、062005200620072008200920102011201220132014201520162017201820192020202120222023Source: UBS estimates, national sources, Euromonitor, Haver. *Includes heated tobacco volumes but assumes no tax advantage for illustrative purposes.We lay out our volume, price/mix and FX expectations overleaf.The consume

27、r can absorb improved price/mixBased on our market by market analysis, we anticipate a recovery as shown in HYPERLINK l _bookmark7 Figure 11. In addition to price increases tolerable by each market, this takes into account positive geographic mix (for example falling Pakistan volumes), price increas

28、esinresponsetoexciseincreases(suchasthePhilippines),andrecoveriesin market revenue (most notablyBrazil).Figure 11: We expect a recovery in price/mixSector price/mix has proved robustConstant currency price/mixFcastEx USFcastEx USIncUS12%10%8%6%WorldExUS4% 5yrave2%(exUS)200820092010201120122013201420

29、152016201720182008200920102011201220132014201520162017201820192020202120222023Source: Top 40 markets, company data, UBS estimatesOntheonehand,excisetaxincreaseshitallindustryparticipantsanddemandfor cigarettes is inelastic. On the other, consumers respond to price increases with downtrading and illi

30、cit cigarettes, there are competitive pressures, and tobacco companies may aim to absorb some of thechange.We expect an improvement in the volume outlookThe volume outcome is that we expect declines of 2.1% for 2019/20, behind the 1.9% for 2018 but better than the average since 2013 (and better than

31、 expectations for most of 2018).Figure 12: Our volume expectations compare favorably to past five yearsCurrent legislative landscape implies volume declines 2%FcastGlobal ex China volume growth (%)Fcast1.5%1.0%0.5%0.0%-0.5%-1.0%-1.5%-2.0%-2.5%-3.0%-3.5%20032004200320042005200620072008200920102011201

32、220132014201520162017201820192020202120222023Global ex ChinavolumegrowthForecastSource: UBS estimatesPMI expects -2.5% to -3.0% for 2019, and acknowledged 1Q was better than expectations. Meanwhile, BAT expects a 3% decline for 2019.Mid-single-digit organic growthTheresultisthatwethinkthecorebusines

33、scanachieve4-5%constantcurrency growth HYPERLINK l _bookmark8 (Figure13).Thisisanimprovementversusthepastfiveyears.Figure 13: Constant FX growth of 4-5% achievableFigure 14: Translating to real growth of2%Tobaccoindustryorganicgrowth(%) Organic growth and inflation(%)12%10%8%6%4%2%0%-2%-4%-6%Fcast10

34、%8%6%4%2%0%-2%-4%-6%Fcast20062007200820092010201120122013201420152016201720182019200620072008200920102011201220132014201520162017201820192020202120222023200620072008200920102011201220132014201520162017201820192020202120222023OrganicgrowthReal growthSource:UBSestimates.Top40markets.Source: UBS estima

35、tes. Top 40markets.Basedonthemacroassumptionsunderpinningourmodel,theimplicationisalso improving real growth, which we view as attractive in a sector context (see our note: HYPERLINK /shared/d2QeL4w2kmxUm Keeping it real).The sector has been unlucky when it came to FXThe sector has been unfortunate

36、in being overweight markets which have seen verylargecurrencydevaluationsoverthepastfiveyears(largelyEasternEurope). OurcurrencyexpectationsarebasedonspotFXfor2019,withdevaluationsversus the USD thereafter based on expected inflationdifferentials.Figure 15: The sector has been disproportionately imp

37、acted by devaluationsIndustry organic growth and FX (%)The tobacco industry has been unlucky in the FX headwinds it12%9%6%3%0%-3%-6%-9%-12%2007200820072008200920102011201220132014201520162017201820192020202120222023FcastOrganic growthFX impactReportedhas facedSource: Top 40 markets, UBS estimates, H

38、aver, Datastream.Whilewewouldexpectthecurrencydevaluationstobeearnedbackinpricing,this is constrained by the degree to which it impacts domestic inflation. For large devaluations we would not expect the pass-through to be 100% (and indeed, we observe that it is not).Which international tobacco compa

39、nies are performing best?In the context of an improving volume and revenue outlook for the industry as a whole, which tobacco companies are best placed?We combined both disclosed data with industry data sources to form a more complete view of share progression, in terms of volume, retail value (i.e.

40、 what is paidbytheconsumer),andnetrevenue(i.e.whatisavailabletothemanufacturers after taxes and distribution fees).PMIs share flat-lined over 2013-17 HYPERLINK l _bookmark9 (Figure 16), likely reflecting having a more premium portfolio in a rising price environment. However, iQOS is now driving shar

41、e growth, and we expect that to add 1% of share a year over the medium term.BATstrackrecordsince2013isbetter(disclosedbasisshownin HYPERLINK l _bookmark10 Figure17), evenifalargeelementhasbeenBangladesh.ReynoldsperformanceintheUShas been standout.The international tobacco companies are generally tak

42、ing shareFigure16:PMIiQOSshoulddriveshareFigure17:BATstrackrecordisgoodTop 40 ex US share30%29%28%27%26%25%24%23%22%21%20% Market share evolution, rebased1101081061041021009896942012201320142015201620172018Top 40volumeshare Top40netrevenueshare BATshareofdisclosedmarketsExTop 40 retail shareSource:U

43、BSestimates,Top40markets.Source: Company data, UBSestimates.InJapan,JapanTobaccohasbeenlosingsharetoiQOS.OutsideJapan,sharehas been growing for the past four years, thanks to an acquisition-led strategy. Meanwhile, IMBs share has been stable (the uptick in 2015 was due to the acquisition of brands i

44、n the US), benefiting from downtrading to its more value- oriented portfolio in developed markets.Figure18:OutsideJapan,JThasbeenperformingwellFigure 19: IMB share has been largelystableTop 40 ex Japan share13%12%11%10%9%8%7%6%Top 40 share11%10%9%8%7%6%5%4%3%2%Top 40volumeshare Top40netrevenueshare

45、Top 40 retail shareTop 40volumeshare Top40netrevenueshare Top 40 retail shareSource:UBSestimates,Top40markets.Source: UBS estimates, Top 40markets.What about next generation products?Inourview,thebiggestrisktocombustiblevolumescomesfromheatedtobacco; ithastakenmaterialshareinanumberofmarkets HYPERLI

46、NK l _bookmark11 (Figure20).Wedonotseethis as disruptive for the industry over the medium term; barriers to entry in heated tobaccoareevenhigherthancombustibles,andweexpecttobaccocompaniesto maintain their dominance of the category HYPERLINK l _bookmark12 (Figure 21). As a result, we include heatedt

47、obaccovolumesinthetotalwhendiscussingindustryvolumechanges.Figure 20: Cannibalization risk fromheatedtobaccoFigure 21: But dominated by tobaccocompaniesLast disclosed market shareSouth Czech RepublicFrance CanadaPMI: iQOS BAT: Glo JT / KT&GMarket share of net revenue, 2018 (%)Heat notburn0%20%40%60%

48、80%100%0%5%10%15%20%25%BATPMIIMBJTMOJUULRestSource:Companydata,UBSestimates.Source: UBS estimates, companydata.Themarketstructureofvapouriscurrentlyverydifferent,andmuchlessfavorable. However, the vapour products pre-JUUL are very much a known quantity, and while they may have increased elasticity o

49、f demand in markets like the UK and Italy, take-up has been more limited and in no markets has the cannibalization been similar to heated tobacco (see HYPERLINK /shared/d2u3V0griM iQOS vsJUUL).Thequestionisthereforeaboutthepost-JUULproducts;podbased,highstrength and nicotine salt based. In the US, a

50、t 4% share, search interest suggests that JUUL will need a tobacco company partner to get much further HYPERLINK l _bookmark13 (Figure 22), and that is in the least regulated vapour market in the world. Outside the US, nicotine capsappeartobeconstrainingitsabilitytogrow HYPERLINK l _bookmark14 (Figu

51、re23see HYPERLINK /shared/d2IIYqAiaLt0 hereformore).Figure22:JUULisatapointwhereitneedsapartnerFigure 23: outside the US not having animpact30010050452508040nada20030010050452508040nada20035603015025100402050201510Israel ited5dom0Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 May-19Sales($m,LHS)Tr

52、ends (RHS)00 CanadaIsraelUnitedKingdomJJUUL Search interestCaUnCaUnKingJan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19Source: UBS Evidence Lab,Nielsen,Google.Source: UBS Evidence Lab,Google.Asaresult,outsidetheUS,wedonotseevapourcannibalizationasaheadwindto tobaccocompanyearningsandcashflowsoverthe

53、nextfiveyears.Company investment casesIn this section we cover the investment cases of each of the companies we cover HYPERLINK l _bookmark15 (Figure 24). The next section will cover the key markets.Figure 24: UBS tobacco company coverageSource: UBS estimates, WIRE, Share prices as of 21 May 2019.Fi

54、gure 25:EBITmarginsFigure 26:ROICsEBIT%margin60%43%43%43%43%39%35%25%28%22%16%12%BATJTPMIIMBITC (IND)InternationalHMSP GGRM BATO KT&G Altria (IDR) (IDR) (MYS) (SK) (US)National40%30%20%10%0%EBITmarginGlobal staples ave. 50%ROIC (%)70%51%37%51%37%33%35%18%20%12%13%7%BATJTPMIIMBITC (IND)InternationalH

55、MSP GGRM BATO KT&G Altria (IDR) (IDR) (MYS) (SK) (US)National50%40%30%20%10%0%ROICGlobal staplesave.61%Source:UBSestimates,companydata.Lastdisclosedfullyear.Source: UBS estimates, company data. Last disclosed full year.Figure 27:PayoutratiosFigure 28:LeveragePayout ratio (%)PayoutratioGlobal staples

56、ave.Net debt / EBITDA (x, 2019E)Net debt / EBITDA99%99% 89%99%99% 89%80%73%68% 70%60%64%56%BATJTPMI IMBInternationalITC HMSP GGRM BATO KT&G Altria (IND) (IDR) (IDR) (MYS) (SK) (US)National4.03.5Global staples average100%0%3.00.80.5-0.1-0.71.00.0-1.0BATJTBATJTPMIIMBInternational-1.7ITC HMSP GGRM BATO

57、 KT&G Altria (IND) (IDR) (IDR) (MYS) (SK) (US)NationalSource:UBSestimates,companydata.Lastdisclosedfullyear.Source: UBS estimates.British American Tobacco (Buy, PT 40)BATs current discount to staples peers and history continues to represent a significantopportunity,inourview.Earningshavebeenrobust H

58、YPERLINK l _bookmark16 (Figure30)andwe have good visibility on its ability to continue to deliver its guidance of high single- digit earnings growth.Figure29:YTDBAThasre-ratedbutupsideremainsFigure30:Theearningstrajectoryhasbeenrobust1 year forward price to earnings relative (%)0%-10%-20%-30%-40%-50

59、%-60%Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19 ReltoMSCIWorldStaples1.00.6May-09 Nov-09 May-09 Nov-09 May-10 Nov-10 May-11 Nov-11 May-12 Nov-12 May-13 Nov-13 May-14 Nov-14 May-15 Nov-15 May-16 Nov-16 May-17 Nov-17 May-18 Nov-18 May-19BAT Earnings rel to UBS Consumer Index Price relative to UBS Cons

60、umer IndexSource: 1yearforward,MSCI,DatastreamSource: Datastream, UBSestimatesOurtobaccomodelimpliesamoreconstantcurrencyrevenueenvironmentforBAT going forward, although the coverage is less complete (covering 70% ofvolumes and 26 of the top 40 markets) than, say, PMI.The current debate for BAT is v