Banc Sabadell: Shares fell -1.7% in Thursday’s session after British Prime Minister Rishi Sunak suggested the possibility of a vote on a total ban on the sale of tobacco in the UK to new generations. This would raise the legal age for buying tobacco by one year every year, so that those born after a certain year would not be able to buy tobacco legally for the rest of their lives.
British tobacco companies reacted negatively on the stock market. Imperial Brands, with a great deal of exposure to the UK, lost as much as -5% in the session (closing at -3%).
Assessment: Although Logista (LOG) has no exposure to the UK, this kind of news obviously does not sit well with market sentiment towards the sector. It remains to be seen whether the measure will finally go ahead in the UK, and how effective it will be (barriers to the legal tobacco trade tend to encourage the illegal market, which is undesirable for most governments). It would not be the first time a country has banned the sale of tobacco to the younger generation. In New Zealand, people born after 1 January 2009 are banned from buying tobacco for life, even when they come of age.
The tobacco business represents ~57% of Logista’s economic sales but a significantly higher percentage of EBITDA (not broken down). In our estimates we assume a decline in perpetual growth of -2%.
BUY (Close €23.60 P.O. €28.14)
