EU CONSUMER STAPLES: Japan Tobacco: 3Q Results
(JAPTOB; A2/A+ Neg/NR)
Earnings fine and FY guidance was upgraded partly on weaker Yen than initially expected. FCF guidance still muted while dividend now guided to be up 21% y/y. That may continue levering up the BS (most debt in USD or EUR). Leverage still likely to be around a low net 1x handle but it may cause issues at S&P who also looks at it excluding the 20% of EBIT from Russia.
YTD:
- Revenue ¥2.6t (€14.8b), +13%
- quoted growth includes acquired Vector group revenues (we est. 8ppt benefit)
- Non-combustibles ¥91b (4% of revenues) up 21% (volume +27%)
- Combustible volumes +2% (includes Vector)
- Total tobacco market share up in key markets (incl. Japan, USA)
- adj. EBIT ¥849b (€4.8b), +27%. Statutory at ¥763b, +21%
- Net debt of ¥768b vs. ¥542b to end last year
FY guide upgraded:
- Revenue ¥3.5t (€19.4b), +13% y/y
- adj. EBIT ¥903b (€5.1b), +22% y/y
- FCF of ¥280b, ¥110b higher than LY
- FCF was initially being guided at ¥348b
- last years was down on ¥265b spend on Vector acquisition
- this years kept down on Canadian litigation payments
- Dividend revised up to ¥234/share to keep it at a 75% pay-out rate
- implies over ¥400b and is >FCF
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US TSY OPTIONS: Nov'25 5Y Calls
- appr 12,000 FVX5 110 calls, 7.0-7.5 ref 109-07, total volume over 23,100
USDJPY TECHS: Trading Above Support
- RES 4: 151.62 61.8% retracement of the Jan 10 - Apr 22 bear leg
- RES 3: 151.21 High Mar 28
- RES 2: 150.92 High Aug 1 and a key resistance
- RES 1: 149.96 High Sep 26 and the bull trigger
- PRICE: 147.96 @ 16:33 BST Sep 30
- SUP 1: 147.59 50-day EMA
- SUP 2: 146.77 Low Sep 18
- SUP 3: 145.49 Low Sep 17 and a pivot support
- SUP 4: 144.23 Low Jul 7
USDJPY has pulled back from last week’s high print. The move down - for now - appears corrective. Moving average studies are in a bull-mode position, highlighting a dominant uptrend. Support to watch lies at 147.59, the 50-day EMA. Pivot support has been defined at 145.49, the Sep 17 low. A resumption of gains would signal scope for a climb towards key resistance at 150.92, the Aug 1 high.
LOOK AHEAD: Wednesday Data Calendar - In Light of Potential Shutdown
In the event of a government shutdown tonight - most of Wednesday's scheduled data should be released as most are generated by non-govt firms. Construction Spending the lone exception tomorrow as the U.S. Census Bureau is the source. Updates to follow if/when an announcement of a closing is made.
- US Data/Speaker Calendar (prior, estimate)
- 10/01 0700 MBA Mortgage Applications (0.6%, --)
- 10/01 0815 ADP Employment Change (54k, 51k)
- 10/01 0945 S&P Global US Manufacturing PMI (52.0, 52.0)
- 10/01 1000 ISM Manufacturing (48.7, 49.0)
- 10/01 1000 ISM Prices Paid (63.7, 62.9)
- 10/01 1000 ISM New Orders (51.4, --)
- 10/01 1000 ISM Employment (43.8, --)
- ** 10/01 1000 Construction Spending MoM (-0.1%, -0.1%) **
- 10/01 1130 US Tsy 17W bill auction
- 10/01 1215 Richmond Fed Barkin moderated discussion on economy (text)
- 10/01 ---- Wards Total Vehicle Sales
- Source: Bloomberg Finance L.P. / MNI
