British American Tobacco PLC (BTI): Bull Case Theory
We met A strong paper About Endowment’s Substack by next generation investor Judah Kang at the British American tobacco PLC (BTI). This article summarizes Bulls’ paper on BTI. The British American Tobacco PLC (BTI) share was trading at $48.6 at 12th June. According to Yahoo Finance, BTI’s successor P/E was 26.34 and 10.26, respectively.
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British American Tobacco (BTI) presents attractive investment opportunities fixed by strong cash flow, disciplined capital allocation, and a centralized transition strategy for low-risk products (RRP). While flammability still controls revenue, the new categories of BTI (Vapour, Heated Tobacco, and Modern Oral) reached 17.5% of sales, reflecting meaningful advances.
The company’s ambition to achieve 50% of revenue from Smokeless by 2035 is supported by increased adoption of the category, particularly in APMEA and the growing regions of Latin America. Combined with BTI’s pricing power in premium burnable markets like the US, this shift helps maintain margins, allowing for a generous and sustainable dividend yield of 7.4%, backed by strong free cash flow.
BTI is also actively repositioning its position as a sustainability leader despite working in the sin industry. Its climate strategy covers carbon neutrality (scopes 1 and 2) by 2030 and net zero by 2050, collaborating with the Paris Agreement goals. BTI emission reductions since 2017 and collaboration with the TCFD, GRI and CSRD framework will increase the reliability of ESG-focused investors. Its robust environmental governance and responsible agricultural practices further support long-term resilience.
On the valuation side, a two-stage dividend discount model incorporating a conservative -1.0% terminal growth rate – the factor in the secular decline in tobacco – shows the intrinsic value of 12.6% ($47.24). Given BTI’s litigation exposure, asset structure and unique global footprint, the relative valuation is inappropriate. Regulation and implementation risks remain, but prices are shown. BTI offers a rare combination of revenue, ESG progress and emerging market growth options in global nicotine transitions.
Previously, I emphasized a A strong paper With Brian Coglin’s BTI, it highlights Velo’s explosive growth, Zyn’s pricing edge, and its potential evaluation as a nicotine pouch scale. Since then, the stock has been highly valued at around 16%. Judah Kang repeats this optimism, but BTI repeats a comparable income that agrees to cash-rich ESG, citing a smokeless revenue target of 50%, sustainability progress, and an attractive 7.4% yield with a modest rise.