British American Tobacco

Re: British American Tobacco

Postby winston » Wed Mar 25, 2020 11:16 am

not vested

What’s New

COVID-19 pandemic to impact sales volume, weak consumer sentiment may lead to further down trading

Cut FY20/21F earnings forecast by 17%/10% on lower ASP assumptions

Trading at 10x forward EPS, or -3 SD of its 10-year mean; attractive dividend yield

Maintain BUY with lower TP of RM11.90

Source: DBS

https://researchwise.dbsvresearch.com/R ... =fcfajkiia
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Re: British American Tobacco

Postby winston » Wed Apr 22, 2020 9:57 am

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MCO sales: A mixed bag

Sales volume during MCO increased in CVS & petrol stations but declined in F&B and hospitality outlets.

It is likely that illicit share remained high but restrictions at ports of entry during MCO may have deterred illicit shipments into the country.

No change in earnings estimates.

Our model imputes for no volume growth in FY20.

We lower LT growth rate to 1% (from 2% on structural decline in volume growth) to derive a lower DCF-TP of MYR17.50, implying 15.5x FY20 PER with attractive yield of >9%.

Source: Maybank

https://factsetpdf.maybank-ke.com/PDF/1 ... c21a80.pdf
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Re: British American Tobacco

Postby winston » Thu May 14, 2020 9:33 am

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British American Tobacco (ROTH MK)
Attractive Catalysts Beyond Near-term Earnings Blip


Although 1H20 earnings are expected to contract, weighed by the MCO, BAT’s outlook remains firmly intact.

We think investors would look beyond this earnings blip and instead look to its near completed restructuring exercise and over the longer term, regulation on vaping and e-cigarettes.

The addressable vaping market is significant and we are convinced BAT UK’s existing line-up of products could be well received locally.

Maintain BUY. Target price: RM14.95.

Source: UOBKH

https://research.uobkayhian.com/content ... a9db5ee4c1
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Re: British American Tobacco

Postby winston » Thu May 14, 2020 9:50 am

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Less smoking but less cost pressure

The extended conditional movement control order (CMCO) should help reduce BAT’s marketing spending giving its bottomline more breathing room.

We reckon this should more than compensate for the expected drop in FY20F sales. BAT’s business was halted during the MCO (18 Mar to 3 May).

While dividends should continue to fall progressively, we believe that the FY20-22F yields of 6.9-7.9% are compelling in this climate. Add BAT.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 1E577D8575
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Re: British American Tobacco

Postby winston » Fri May 22, 2020 9:08 am

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BAT shareholders to get lowest dividend in 30 years

by Arjuna Chandran Shankar

KAUALA LUMPUR (May 21): British American Tobacco (M) Bhd's net profit dropped again in the first quarter of its financial year 2020, as the continued contraction of the legal cigarette market impacted its business, its stock exchange filing today showed.

Its net profit for the three months ended March 31, 2020 fell 42.7% to RM50.77 million from RM88.6 million in the corresponding quarter a year ago, while revenue fell 22.5% to RM481.15 million from RM620.96 million as sales volume declined 21%.

The latest quarterly profit is the lowest since 2QFY16 and marks the fifth consecutive quarterly earnings decline for the tobacco player.

It also announced a first interim dividend of 17 sen, almost half the 30 sen it declared in the same quarter last year, payable on June 18.

According to Bloomberg data, this is the lowest interim dividend declared by the group since 1990.

The interim dividend, to be paid out on June 18, represents 96% of its 1QFY20 earnings per share of 17.80 sen – which was at 31 sen in 1QFY19 – or a total of RM48.54 million.

BAT said the decline seen in its net profit was due to contraction of the legal market as a result of illicit cigarette volume and illicit nicotine vaping growth, market downtrading, and lower duty-free sales as a consequence of travel restrictions put in place to combat the spread of the COVID-19 pandemic.

Total legal industry volumie decline year-on-year by 11%,
it said, as the sales of illegal cigarette and illicit nicotine vaping products continued to grow despite enforcement actions by Government agencies. "The results from enforcement actions were insufficient to drive a recovery in legal cigarette volumes," it said.

Its latest quarterly earnings were supported by its rationalisation exercise, launched last year, which helped reduce operating expenses by 19.4% to RM52.18 million from RM64.73 million previously, it said.

“Our 1QFY20 results were within expectations despite the disruption from the Movement Control Order (MCO) in the last two weeks of quarter one. However, due to the supply disruptions of legitimate tobacco manufacturers during the MCO period, consumers were forced to turn to cheap, black market cigarettes.

As a result, it has been highly disappointing to see a severe uptick in illegal cigarette activities,” said BAT managing director Jonathan Reed.

“The Government is losing RM5.1 billion in tax revenue to the tobacco black market at a time when the country needs every ringgit for the COVID-19 fight and the subsequent recovery. It’s alarming that at a time when movement controls were at their strictest and the legal business had distribution disruptions – the criminal syndicates were able to establish a virtual monopoly by brazenly flouting MCO orders and profiteer from a national health and economic crisis

“Now, more than ever, there must be focus given over to ensure that effective structural reforms are put in place to tackle this problem once and for all. The sustainability of the industry and livelihoods of our employees will be very much dependent on tackling the tobacco black market scourge, a regulated nicotine landscape and sensible fiscal policies,” Reed added.

BAT shares finished unchanged at RM13.03 per share today, giving it a market capitalisation of RM3.8 billion. The stock is down about 58% from a year ago.

Source: The Edge

https://www.theedgemarkets.com/article/ ... q-earnings
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Re: British American Tobacco

Postby winston » Tue May 26, 2020 9:17 am

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The storm before the calm

BAT’s 1Q20 core net profit made up only 18% of our FY20 forecast, which is on the low side even with the seasonal weakness factored in.

However, we expect sales to normalise in the subsequent quarters with the easing of lockdown restrictions. Lower marketing spend should also help.

We maintain our FY20-22F EPS forecasts.

Reiterate Add, with an unchanged DDM-based TP of RM14.81.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 0C00FF5BBC
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Re: British American Tobacco

Postby winston » Wed Jun 17, 2020 9:18 am

All priced in

In order to grow its turnover again, BAT’s new MD Jonathan Reed has exhorted all stakeholders to play a part in upending the illegal trade.

The domineering illicit market is a symptom rather than a cause of affordability issues. We do not think this can be solved overnight.

That being said, we believe the market overreacted to the 1Q20 blip.

We foresee sales volume nudging up after the partial lockdown; reiterate Add. TP RM 14.80

Source: UOBKH

https://rfs.cgs-cimb.com/api/download?f ... 9EAAE1E758
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Re: British American Tobacco

Postby winston » Fri Jul 24, 2020 3:31 pm

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British American Tobacco (ROTH MK)
2Q20: Green Shoots Of Recovery But Downtrading Weighs On Margins


BAT’s 2Q20 results were within consensus expectations but disappointed ours.

The less than optimal product mix weighed heavily on margins despite significant opex savings and encouraging first signs of recovery.

BAT also launched a new VFM product to combat competition.

The highly anticipated vaping regulation is likely to be deferred to 2021.

We continue to like BAT for its attractive valuations amid diminished downside risk.

Maintain BUY with a lower target price of RM14.10 (from RM14.27).

Source: UOBKH

https://research.uobkayhian.com/content ... 19f21eab5a
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Re: British American Tobacco

Postby winston » Fri Jul 24, 2020 3:34 pm

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British American Tobacco (ROTH MK)

Share Price: MYR10.38
Target Price: MYR10.20
Recommendation: Hold

2Q20: Within expectations

2Q20 results met expectations.

Industry volumes are expected to remain weak in light of high illicit share and continued consumer down-trading on weak consumer sentiment and low consumer affordability.

Government enforcement efforts might also remain unfocused until the containment of COVID-19 within Malaysia.

Our earnings estimates, HOLD rating and DCF-based TP of MYR10.20 (based on WACC: 8.6%, LT growth: 1%) are unchanged.

Source: Maybank

https://factsetpdf.maybank-ke.com/PDF/1 ... bf763e.pdf
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Re: British American Tobacco

Postby winston » Tue Sep 08, 2020 11:05 am

The coast is clear, capitalise on the fear

We maintain our positive view on BAT after learning that its sales volume has recovered after the partial lockdown was loosened in May.

This coupled with cost-rationalisation efforts, will boost BAT’s 2H20F earnings, in our view.

BAT offers 42.8% upside to our TP of RM14.45, and 8.7-9.6% CY21-22F yields.

A strong qoq jump in earnings is a short-term re-rating catalyst.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... CA03D6125B
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