Supreme Plc - 100p

News re Tory ban of disposable vapes should put an end to the overhanging fear

Markets often dislike lingering uncertainty even more than the eventual bad news when it actually comes. It now seems clear that there is an imminent announcement of a ban on disposable vapes.

Whilst this may be marginally negative to cashflows versus a situation without a disposables ban, the move by the Conservative Party to ban disposables puts an end to a lingering uncertainty that has been hanging over Supreme.

Investors just don’t like to be in a stock when there is a negative headline risk of that perceived magnitude. This usually results in a disproportionate valuation multiple discount being applied to the whole group earnings, not just the earnings that are subject to the risk factor. Now that the big headline is known, what further major negative headline risk remains?

We estimate that if you totally zeroed all disposables revenue, the company would still make