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
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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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

not vested

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
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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