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Non-Tech : General Cigar Holdings (MPP)
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To: Terror who wrote (63)8/5/1998 3:26:00 PM
From: Bob Rudd  Read Replies (1) of 75
 
ÿTalked to MPP yesterday Wouldn't get specific but seemed comfortable with +/- 10% of street's annual estimates of 1.17
This implies 6.4 x low-end of that range as PE.
My calcs: IF MPP grows that 1.05 by 10% annually for 5 years that's 1.70 in earnings. IF they get a 12x multiple on that, that's 20.35 share price. That would give a 25% annualized return over 5 years. NOTE THE IF'S - Also note I got no SPECIFIC confirmation of downside earnings estimate.
No indication at all was given an next year's numbers.
MPP indicated most of aggressive discounting is in 2nd and 3rd tier latecomer brands - not in top tier brands like Macanudo that represent most of sales of MPP. This branding is a key to the value story - If members on this board are seeing substantial discounting of their top tier brands please drop me an email.
IF Cuba does open up MPP appears to be well positioned, but nobody's putting this in the numbers.
Regulatory risk - key point is that cigar industry and MPP don't market to kids and aren't used by them and product isn't sold by vending machines that might be hit by new laws. Nothing looks sillier than a kid with a cigar - and they realize that.
MPP looks to me undervalued. There's inventory reduction earnings disappointment risk, but it appears largely in the price. MPP could definitely go lower and expecting a immediate large bounce is wishful thinking IMO.
There's an active board at YAHOO on MPP for those interested.
messages.yahoo.com
Be well all,
Bob
ÿ
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