STOCK FOCUS OF THE DAY
British American Tobacco: Selldown overdone BUY
We think the selldown related to perceived negative prospects such as heat-not-burn products, a potential excise duty hike and the FBM KLCI exclusion on British American Tobacco (M) (BAT) is overdone. We maintain our FV of RM36.70/share (WACC: 7.2% terminal growth: -1.0%) but upgrade our recommendation to BUY from SELL.
BAT’s share price has slumped some 17% since it was determined it was to be excluded from the FBM KLCI in late November. Valuations are trading at a multi-year low. It is currently trading at a forward P/E of 15.4x, well below its -2SD of 17.6x (Exhibit 4). At these levels, the reward-to-risk appears attractive, especially when valuations eventually mean-revert. Apart from that, we like BAT’s more adaptable business model and capped downside risks.
Others :
Prestariang: Final box to tick to unlock a blockbuster year BUY
Hup Seng Industries: All bite, no crunch HOLD
STOCKS ON RADAR
Hiap Tek Ventures, Ann Joo Resources, Kronologi Asia, Malaysian Pacific Industries
STRATEGY
Bonds: Is the bull run coming to an end?
ECONOMIC HIGHLIGHTS
Philippines: Bracing for a more hawkish tone
UK: BOE turns more hawkish
NEWS HIGHLIGHTS
Building Material Sector: Steel players seek measures to prevent dumping- sources
Property Sector: Property market will not ‘collapse’, says Cheah
IPO: QES to raise RM28.8m from IPO
RCE Capital: Posts higher Q3 earnings of RM22.92m
DISCLAIMER:
The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.
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