British American Tobacco

Re: British American Tobacco

Postby winston » Mon Oct 14, 2019 9:56 am

not vested

British American Tobacco(ROTH MK)

Share Price: MYR17.24
Target Price: MYR24.80
Recommendation: Buy

Getting serious; U/G BUY

We are positive on the Govt’s initiative to reign in high illicit cigarette industry share through stricter regulations and increased enforcement budget.

While consumer affordability remains an issue, legal industry volumes should benefit in tandem with lower illicit share, allaying a key concern for investors.

With 42% share price correction post-2Q19, BAT is undervalued based on our unchanged DCF-based TP of MYR24.80 (WACC:8.1%; LTG:2.0%).

We U/G to BUY with 44% upside and FY19 yield of 6.5%.

Source: Kim Eng

https://factsetpdf.maybank-ke.com/PDF/1 ... 4df013.pdf
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Re: British American Tobacco

Postby winston » Wed Oct 30, 2019 3:27 pm

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CGS-CIMB cuts BAT target price to RM18.53 from RM21.88

by Nazuin Zulaikha Kamarulzaman

KUALA LUMPUR (Oct 30): CGS-CIMB Securities Sdn Bhd said today it had lowered its British American Tobacco (M) Bhd (BAT) share target price (TP) to RM18.53 from RM21.88, after cutting its BAT earnings per share (EPS) forecast by 2% to 15% for financial year ending Dec 31, 2019 (FY19) to FY21.

CGS-CIMB analyst Kamarul Anwar wrote in a note today that in the research firm's view, the problem plaguing the tobacco industry, namely consumers' waning purchasing power, is a structural issue that cannot be ameliorated overnight.

"De-rating catalysts are a ban on vapes, and illicit cigarette market share growth. Upside risks are a meaningful reduction in illicit cigarette market share, and the legalisation of vapes and electronic cigarettes (e-cigarettes).

"While our estimated 6% FY20 (dividend) yield seems attractive, we expect this to fall progressively as earnings erode going forward," Kamarul said.

CGS-CIMB contends that BAT and its peers will stand to lose if the Malaysian government decides to ban vaporisers and e-cigarettes.

Kamarul said CGS-CIMB thinks it will be difficult for authorities to extinguish vapes, should a ban be instituted, when they are already struggling to contain illicit cigarettes.

"YTD (year to date), vaping commands circa 10% (of the) local tobacco market share, from virtually zero in 2015. Nicotine vapes are already illegal in Malaysia under the Poisons Act 1952 but the grey market continues to flourish.

"Cigarette prices have jumped by RM7.40/pack, or 74%-87% (6-year CAGRs of 10-11%), between 2012 and November 2018. Even in the affluent Klang Valley area, smokers told us they are feeling the pinch from the now more costly cigarettes, which have led them to turn to vapes," he said.

Source: The Edge

https://www.theedgemarkets.com/article/ ... 853-rm2188
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Re: British American Tobacco

Postby winston » Fri Nov 01, 2019 9:14 am

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British American Tobacco (ROTH MK)
3Q19: Earnings Miss Yet Again


BAT’s 3Q19 results missed expectations.

Volumes contracted more than expected amid lower market share and further spike in illicits.

Downtrading compounds BAT’s margin dilution which is already plagued by lower economies of scale.

Thriving substitute products restrict any visibility of volumes reaching a bottom.

Downgrade to SELL from HOLD with a lower target price of RM16.00 (from RM22.00).

Source: UOBKH

https://research.uobkayhian.com/content ... de630e49d7
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Re: British American Tobacco

Postby winston » Sat Nov 02, 2019 7:33 am

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Kenanga downgrades BAT, cuts TP to RM18.30

KUALA LUMPUR: British American Tobacco (Malaysia) Bhd's (BAT) "heat-not-burn" products are not expected to deliver meaningful contributions in the near term, says Kenanga research.

The research house said in a note that the Glo and refillable Neo sticks, could re-establish its presence in the new market but is not expected to be significant to earnings with an expected contribution of less than 5% of the group's FY20 sales.

BAT has been plagued by dwindling market volumes and a poorer product mix as evidenced by its disappointing 9MFY19 results, which saw net profit plunge 30% year-on-year to RM248mil.

The performance missed Kenanga's and consensus estimates at 68% and 66% of their full-year forecasts respectively.

"The underperformance is largely due to worse-than-expected decline in both industry volume (-4% QoQ) and BAT volume (-8% QoQ), coupled with the continual down-trading to lower-margin Value-for-Money (VFM) offerings," said Kenanga.

To tackle the slide in its fortunes, BAT is taking initiatives to implement more prudent cost constrols, particularly in marketing spend, which coupled with an internal reorganisation, could mean lower opex in the coming quarters.

Kenanga noted that the key challenges to the group remain the affordability issue, the illicit tobacco trade and a change in consumer preference towards vape products.

However, meaningful improvement in BAT"s fundamentals could only come from a sustained curb of illegal trades, it added.

Kenanga downgraded BAT to market perform with a lower target price of RM18.30 from RM23.10 previously.

"As we relooked at our valuations and applied a 16x PER (closely in-line with the stock’s -2.0SD over its 3-year mean), we trimmed our FY19E/FY20E earnings by 8%/11% to account for dwindling sales volume and poorer product mix," it said.

Source: The Star

https://www.thestar.com.my/business/bus ... eBZmBu9.99
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Re: British American Tobacco

Postby winston » Wed Dec 04, 2019 8:53 am

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British American Tobacco
When one door closes, another one opens


Deputy Health Minister Dr Lee Boon Chye told The Edge Weekly that the ministry plans to finalise its decision on regulating vapes by 2020.

But we foresee BAT’s earnings continuing to slide as the legal cigarette market faces pressure. New products, too, would require gestation periods.

Maintain Reduce with an unchanged DDM-based TP of RM15.45.

Yield pressure may arise with one-off expenses to rationalise workforce and costs

Source: UOBKH

https://rfs.cgs-cimb.com/api/download?f ... 9A12B83679
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Re: British American Tobacco

Postby winston » Fri Dec 20, 2019 2:52 pm

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BAT target price lowered to RM15.28 due to future earnings uncertainty – HLIB Research

by Nazuin Zulaikha Kamarulzaman

KUALA LUMPUR (Dec 20): Hong Leong Investment Bank (HLIB) Research has upgraded British American Tobacco (M) Bhd (BAT) to “Hold” at RM14.94 with a lower discounter-cash-flow (DCF) derived target price of RM15.28 (previously RM16) due to the uncertainty of the company’s future earnings.

In a note today, HLIB Research stated that it sees glo, a tobacco heating product (THP) launched by BAT, as a viable product offering for Malaysian consumers and that it will take some time and marketing investment for it to have a significant impact on earnings.

Glo was launched by BAT in response to IQOS which was launched by Phillip Morris International (PMI) in late 2018. Currently, glo is retailing for RM100, lower than the retail prices for PMI’s IQOS which retails for more than RM169.

“BAT shared the significantly lower retail price represents ‘marketing investment’ in the glo, which we reckon is necessary given IQOS’s head start in the THP market and high initial start-up cost for conventional smokers switching to THP,” it said.

It further noted that in other major THP markets, the launch of glo lagged IQOS by six to 18 months resulting the latter seizing first mover advantage.

According to the research house, given the relatively high cost of refills for glo, called neo, (RM14 [inclusive excise duty of RM4] versus less than RM5 for illicit tobacco), it does not see glo eating into the chronic illicit tobacco market share, which has now risen to 65% of the total smoking market.

Additionally, rising cost of living is fuelling the growth of value-for-money brand Rothman’s (RM12.40 shelf price) at the expense of premium brand Dunhill (RM17.40 shelf price) resulting in significant margin pressure.

“Since its launch in end-FY17, Rothmans has grown to 5.2% of the total legal market volumes (approximately 14% of BAT’s total volume),” HLIB said.

Plunging earnings has resulted in BAT announcing they intend to reduce 20% of their total head count, which should offer temporary reprieve for the group in facing unwavering negative macro factors.

HLIB has tweaked its DCF valuation metrics from (WACC: 9.2%, TG: 2.5%) to (WACC: 9.5%, TG: 2.5%).

Source: The Edge

https://www.theedgemarkets.com/article/ ... b-research
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Re: British American Tobacco

Postby winston » Mon Jan 06, 2020 9:57 am

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British American Tobacco
Still a drag for now

We upgrade British American Tobacco (BAT) from a Reduce to a Hold. Its share price is supported by c.7% yields, while downside risks are limited.

Based on the 2016-17 retrenchment cost, the upcoming retrenchment may cause BAT’s FY19F DPS to fall by 1.3 sen (10bp from 7.5% FY19F yield).

Still, earnings volatility should persist as the tobacco industry’s dynamics undergo changes. Marketing cost may cut into margins if vapes are legalised.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... A98565D141
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Re: British American Tobacco

Postby winston » Fri Jan 24, 2020 10:21 am

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British American Tobacco (ROTH MK)
Not Out Of The Woods Yet; Upgrade To HOLD


BAT’s recent share price decline has brought its valuation to unprecedented lows.

Its well-supported dividend yields have emerged attractive as a result.

However, underlying value suggests otherwise once we factor in declining dividends.

We think valuations are fairly reflective of the structural decline in tobacco consumption and
company-specific headwinds.

Upgrade to HOLD from SELL but with a lower target price of RM12.92 (from RM16.00).

Entry price: RM11.50.

Source: UOBKH

https://research.uobkayhian.com/content ... b2cecb015e
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Re: British American Tobacco

Postby winston » Wed Jan 29, 2020 2:08 pm

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A Sliding Share Price Has Us Looking At British American Tobacco (Malaysia) Berhad’s (KLSE:BAT) P/E Ratio

British American Tobacco (Malaysia) Berhad’s P/E of 8.09 indicates relatively low sentiment towards the stock.

We can see in the image below that the average P/E (17.2) for companies in the tobacco industry is higher than British American Tobacco (Malaysia) Berhad’s P/E.

British American Tobacco (Malaysia) Berhad saw earnings per share decrease by 16% last year. And it has shrunk its earnings per share by 17% per year over the last five years. This growth rate might warrant a below average P/E ratio.

British American Tobacco (Malaysia) Berhad’s net debt is 14% of its market cap.


Source: Simply Wall St.

https://simplywall.st/stocks/my/food-be ... p-e-ratio/
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Re: British American Tobacco

Postby winston » Mon Feb 03, 2020 8:34 am

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BAT says share price not reflective of its strength or quality

By DALJIT DHESI

“Simply put, any legal company will be challenged to operate in an environment that consists of a 65% black market.

The company’s market share in the legal tobacco market currently stands at 55%.

BAT registered a 42% year-on-year decline in net profit to RM84.8mil for the third quarter ended September 30,2019 on lower volume.

The group’s net profit for the first nine months of RM250mil, represented a 30% decrease as compared to the same period last year.

“Key areas for emphasis on expanding our share of segment within the Tobacco Heating Products (THP) space with GLO and ensuring that key brands like DUNHILL and ROTHMANS continue growing within their respective segments.

“Beyond that, we are exploring strategies to tap into potential new revenue generators like vaping once it becomes legalised in Malaysia, ” he added.

CGS-CIMB in a research note last month said it was upgrading BAT from a “Reduce” to a “Hold”, noting that its share price was supported by about 7% yields, while downside risks were limited.




Source: The Star

https://www.thestar.com.my/business/bus ... or-quality
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