Stock Name: BAT
Company Name: BRITISH AMERICAN TOBACCO (M)
Research House: CIMB
KUALA LUMPUR: CIMB Equities Research is maintaining its Underperform recommendation on BRITISH AMERICAN TOBACCO (M) [] Bhd and lowered the target price from RM42.00 to RM40.
It said on Friday, April 23 although BAT's 1Q10 core net profit accounted for 25% of its full-year forecast and 26% of consensus, it regarded the results as being below expectations.
CIMB Research said 1Q has traditionally made up 26%-28% of full-year numbers. In addition, it expects a weaker 2H in view of the ban of the higher-margin small packs in June this year.
As expected, no dividends were declared for 1Q. It is cutting FY10-12 earnings by 2%-5% for lower sales and margin assumptions.
"FY10-12 dividend forecasts are also crimped 3%-5%, which reduces our DDM-based target price from RM42.00 to RM40.00. Given the tough environment, we see little room for share price appreciation.
"We maintain our Underperform recommendation on the potential de-rating catalysts of 1) this poor set of results, 2) more regulatory negatives, 3) continuous market share loss to rival JT International, and 4) investors' appetite for higher-beta stocks," it added.
Company Name: BRITISH AMERICAN TOBACCO (M)
Research House: CIMB
KUALA LUMPUR: CIMB Equities Research is maintaining its Underperform recommendation on BRITISH AMERICAN TOBACCO (M) [] Bhd and lowered the target price from RM42.00 to RM40.
It said on Friday, April 23 although BAT's 1Q10 core net profit accounted for 25% of its full-year forecast and 26% of consensus, it regarded the results as being below expectations.
CIMB Research said 1Q has traditionally made up 26%-28% of full-year numbers. In addition, it expects a weaker 2H in view of the ban of the higher-margin small packs in June this year.
As expected, no dividends were declared for 1Q. It is cutting FY10-12 earnings by 2%-5% for lower sales and margin assumptions.
"FY10-12 dividend forecasts are also crimped 3%-5%, which reduces our DDM-based target price from RM42.00 to RM40.00. Given the tough environment, we see little room for share price appreciation.
"We maintain our Underperform recommendation on the potential de-rating catalysts of 1) this poor set of results, 2) more regulatory negatives, 3) continuous market share loss to rival JT International, and 4) investors' appetite for higher-beta stocks," it added.
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