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Mayban Research: Hold on BAT at RM35
The Edge (my), 2002-04-24, via tobacco.org
ayban Securities Research has maintained its hold recommendation on British American Tobacco (Malaysia) Bhd at RM35.00 with a 12-month target price of RM37.
The research house said BAT was maintaining its supremacy in the industry, through Dunhill. With continued brand awareness and strong financial footing, it did not see any threat to BAT's position in the immediate term.
"Although the stock has under performed the KLCI by 5.4 per cent year-to-date, we do not expect a sharp re-rating due to its defensive nature," it said.
Mayban Research said BAT's first quarter results in terms of improved turnover and earnings were mainly due to higher sales volume. Domestic sales remained flat, while contract manufacturing and duty-free sales declined.
BAT has a 68 per cent market share. It sold 4.8 billion sticks in the first quarter, which represented a four per cent quarter-on-quarter improvement but a five per cent decline compared to 1Q01.
Dunhill maintained its lead with a 46.5 per cent market share, while volume of Kent continued to improve with a market share of 1.7 percent. Perilly's market share remained at six per cent.
Mayban Research said BAT was trading at prospective PER of 15.7 times, on par with JT International's 15.9 times. Both BAT and JTI offer similar dividend yield of six per cent.
It pegged BAT's target price at RM37 in line with its discounted cash-flow value. This represents a 5.7 per cent upside potential from the current price.
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