By Maybank IB Research
13 September 2012
Underweight Tobacco. Regulatory risk on tobacco sector rose when the plain cigarette-packaging rule took a quantum leap in Australia towards actual implementation. The industry also faces a greater threat
from the emerging mutatef illicit cigarettes despite a recovery in industry volumes in 1H12. Aside from the rising risk, the sector is losing its appeal on lofty valuations and dwindling dividend yields. Thus, we recommend an Underweight on the tobacco sector. BAT is downgraded to a SELL at an unchanged DCF-based TP of MYR55.00 while JTI remains a HOLD with an unchanged DCF-based TP of MYR6.70.
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Showing posts with label BAT. Show all posts
Showing posts with label BAT. Show all posts
Thursday, September 13, 2012
British American Tobacco (M) - Time to Quit!
By Maybank IB Research13 September 2012
Downgrade to SELL. BAT’s valuations are at their peak and its dividend yield has dropped to a 10-year low following a run-up in its share price – a rising risk to investors. We expect 2H12 earnings to be largely flat as BAT’s market share growth has lost momentum in the last two quarters. Upside is also limited due to the competitive environment and rising threat from the illicits. Hence, we downgrade BAT to a SELL at an unchanged DCF-based TP of MYR55.00.
Downgrade to SELL. BAT’s valuations are at their peak and its dividend yield has dropped to a 10-year low following a run-up in its share price – a rising risk to investors. We expect 2H12 earnings to be largely flat as BAT’s market share growth has lost momentum in the last two quarters. Upside is also limited due to the competitive environment and rising threat from the illicits. Hence, we downgrade BAT to a SELL at an unchanged DCF-based TP of MYR55.00.
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